Li Auto on Thursday slashed its delivery outlook for the first quarter on sluggish demand for its first pure electric vehicle. Li Auto stock plunged, with other China EV stocks falling in sympathy.
EV Startup Slashes Delivery Outlook
The Chinese startup announced it now expects to deliver 76,000-78,000 electric vehicles. That's down 24% from its prior outlook for 100,000-103,000 deliveries.
Li Auto already delivered 51,416 vehicles in January-February. So the updated guidance means the EV maker expects to deliver 24,584-26,584 vehicles in March. That's roughly half the 50,000 it previously targeted.
In an unusually detailed mea culpa, Li tied reduced guidance to its first purely battery electric vehicle, the Mega. Scroll below for details.
On March 1, Li Auto priced its seven-seat, all-electric minivan at 559,800 RMB ($77,764). That's nearly double the price of market leader General Motors' gas-powered competitor, the GL8, according to the South China Morning Post.
It's also more expensive than the recently launched XPeng X9 as well as the BYD-owned Denza D9. Market watchers often see Li Auto as the nearest rival to Tesla in China's market for premium electric vehicles. It mostly makes extended range electric vehicles (EREVs), a type of plug-in hybrid vehicle.
The magnitude of the March shortfall suggests some weakness for Li's existing EREV lineup of SUVs, the L7, L8 and L9. Huawei-backed Aito is also ramping up, taking aim at Li Auto.
Li Auto Stock, China EV Stocks
Shares of Li Auto sank 7.5% to 31.53 on the stock market today. Additionally, Li Auto stock extended its slide below the 50-day and 200-day moving averages.
Meanwhile, LI stock gapped up Feb. 26 on fourth-quarter earnings, gapping up again to a six-month high of 46.44 the next day. But shares faltered amid signs that the Mega minivan orders were weak.
Startup rivals Nio and XPeng fell nearly 2% and 3%, respectively, on Thursday. EV giants Tesla and BYD lost 1%- 2% as well.
Amid an intensifying price war, all the China EV stocks and Tesla remain below their 200-day averages. Their 50-day lines lag below their 200-day lines, reflecting short-term weakness as well.
On Monday, news reports had said Li Auto was looking to cut Mega EV prices to stimulate sales.
GM stock rose 0.8%, continuing its rally amid favorable EV mileage news.
Tesla Rival Admits A Mega Fail
Xiang Li, Li Auto CEO, said in Thursday's news release: "First, we want to acknowledge that the operating strategy of Li Mega was mis-paced. We planned operations of Li Mega as if the model had already entered the 1-to-10 scaling phase, while in fact, we were still in the nascent 0-to-1 business validation period." Further, he added that "Next, we will first focus on our core user group and target cities with stronger purchasing power, recalibrating the Li Mega strategy back to the 0-to-1 phase. After that, we will expand our reach to a broader user base and more cities.
"Second, we put excessive emphasis on sales volume and competition, distracting us from what we excel at — creating value for our users and driving operating efficiency. We will lower our delivery expectations and restore sustainable growth by refocusing on enhancing user value instead of competition, while maintaining operating efficiency."
