$Li Auto(LI.US) After the release of the Q3 earnings report, why did the relatively decent performance reflect in a nearly 14%/10% drop in the stock price in the US/Hong Kong markets?

In yesterday's earnings review of Li Auto titled "Li Auto: A Mixed Bag, Can the New Pure EV Models Sustain the Dream?", Dolphin Research mentioned some reasons. Today, during Li Auto's earnings call, Dolphin Research gathered new information:

① The Q3 automotive business gross margin was 20.9%, exceeding market expectations of 20.2%. However, this quarter's gross margin included a rebate from the primary battery supplier (likely CATL), contributing approximately 1.4%. Excluding this, the automotive business gross margin was 19.5%, which is not significantly above expectations.

Since lithium carbonate prices have stabilized, the battery rebate factor is unlikely to continue in Q4. Therefore, Li Auto's guidance for Q4 automotive gross margin is 20%+, which remains modest.

Factors driving the Q4 gross margin guidance higher than Q3's actual 19.5% include: a. Scale effects from further sequential sales growth; b. Potential year-end supply chain rebates.

② The implied average selling price in this quarter's revenue guidance has dropped below 260,000 yuan. Dolphin Research previously suggested two possible reasons: a. Continued increase in L6's proportion; b. Potential further price cuts.

Based on current information, L6's production capacity is around 25,000-26,000 units. Assuming November/December sales of 26,000 units and a Q4 sales guidance midpoint of 165,000 units, L6's proportion in Q4 would be around 47%, compared to 49% in Q3. Thus, L6's proportion is unlikely to increase further in Q4.

Therefore, the reason for the price drop: Further price cuts are highly likely, reflecting intensified competition (especially with the potential year-end launch of the Aito M8). Combined with the modest Q4 sales guidance, this may imply that Li Auto currently has limited orders on hand.

Additional information gathered by Dolphin Research:

① There is no L5 model.

② With improvements in autonomous driving capabilities, the selection rate of the Max version is rising: The proportion of Max versions in models priced above 300,000 yuan is increasing rapidly. Due to differences in customer demographics, the increase is slower for the L6, currently improving by 10% to nearly 30%. For models above 300,000 yuan, the Max version now accounts for 70%.