Li Auto (1Q25 Minutes): Confident that new L series models will quickly return to monthly sales of 50,000 units

The following is $Li Auto(LI.US) FY25 Q1 earnings call minutes. For the earnings interpretation, please refer to《 Li Auto: Range Extender Battle, AI Inflection Point Not Yet Here, Can Pure Electric Turn the Tide? 》

I. Core Information Review of the Earnings Report

1. Q2 Outlook

(1) Delivery Volume: Expected to be 123,000–128,000 units, a year-on-year increase of 13.3%–17.9%.

(2) Total Revenue: Expected to be RMB 32.5 billion–33.8 billion (approximately USD 4.5 billion–4.7 billion), a year-on-year increase of 2.5%–6.7%.

II. Detailed Content of the Earnings Call

2.1 Key Information from Executives' Statements

1. Operational Performance and Market Position

(1) Delivery Volume: Q1 deliveries of 92,000 units (year-on-year +15.5%), cumulative deliveries exceeding 1.26 million units as of April 2025.

1. Product and Technology Upgrades

New Product Launches:

(1) Li Auto MEGA Home: The flagship pure electric model launched at the 2025 Shanghai Auto Show, accounting for over 90% of MEGA orders. Production capacity is expected to increase to 2,500–3,000 units/month in July to support delivery targets.

(2) Li Auto i8 and i6: Scheduled for release in July and September 2025. The i8 has completed nationwide road testing, with a cumulative mileage exceeding 9.5 million kilometers.

Li Auto L Series Renewal:

(1) Intelligent Driving: The Max version is equipped with NVIDIA Thor-U chip, while the Pro version upgrades to Horizon Journey 6M chip + self-developed lidar.

1. Infrastructure and Technology Strategy

Charging Network:

(1) 2,350 supercharging stations have been built (12,800 charging piles), covering 50,000 kilometers of highways and 20 long-distance travel routes.

(2) Plans to reach 2,500 supercharging stations by June 2025, with a year-end target of 4,000 stations.

Progress in Intelligent Driving:

(1) VLA Driver: The next-generation architecture integrating spatial, language, and behavioral intelligence, planned to debut with the i8 and cover all Max models through OTA.

(2) Cloud World Model: A simulation environment built based on generative AI to accelerate the ADAS training loopSoftware and Ecological Layout

(1) Li Auto Halo OS: Open source smart in-car operating system code in April 2025 to promote industry collaborative development.

(2) OTA Upgrade: New features such as "Family Member Recognition" and voice assistant functions (appointment, package tracking, etc.) updated by the end of May.

1. Sales and Service Network

(1) Retail Stores: Covering 151 cities with a total of 500 stores.

(2) Service System: Layout of 500 service centers and authorized body spray centers in 223 cities.

(3) Downward Strategy: Expanding into lower-tier cities through the "Star Link Program" to enhance coverage efficiency.

2.2 Q&A

Q: How to maintain the sales growth and market share of the L series models to cope with competitors' pricing and configuration competition?

A: The market performance of the L series meets expectations, with current weekly sales exceeding 10,000 units, and a market share of 14.7% in the high-end new energy market above 200,000 yuan. We are confident that the monthly delivery volume of the new L series will soon return to the level of 50,000 units per month.

Q: Does the company plan to launch sedan models? Will the related product line adopt a dual power strategy of extended range (EREV) and pure electric (BEV)?

A: The company currently focuses on the extended range SUV series as its core product. After achieving a revenue scale of 300 billion yuan, it will assess the market demand to launch sedan and MPV models. The new models will cover a more affordable price range and will simultaneously adopt both extended range and pure electric technologies, with plans to layout in China, Asia, and Europe in the future.

Q: What is the intelligence level of Li Halo OS? How to achieve cost optimization? What are the differences from the AUTOSAR system?

A: Halo OS achieves vertical capability optimization by integrating hardware, software, and algorithms, continuously enhancing the AI user experience. Its open-source ecosystem attracts contributions from car manufacturers, chip manufacturers, and other partners to improve industry collaboration efficiency and reduce R&D costs. Compared to the AUTOSAR system, Halo OS significantly improves resource utilization efficiency and end-to-end real-time performance based on basic function replacement, and breaks through traditional framework limitations through a restructured lightweight architecture to support more agile technological innovation.

Q: What are the target user differences between L6/L8 and i8/i6? How does the i series win consumers in the BEV market?

A: The extended range models of the L series mainly target the upgrade needs of fuel vehicle users, while the pure electric models of the i series (such as i8/i6) are positioned for the existing new energy vehicle owner upgrade market. Currently, in the new energy market above 200,000 yuan, BEV accounts for about 2.13 million units (total 3.8 million units). The i series expands coverage by entering the BEV track, relying on high-end brand positioning and product upgrade strategies to meet users' demand for upgrading from basic NEV to high-end pure electric models.

Q: What is the company's target leverage ratio and payment cycle (including supply chain payables)?

A: The company is committed to maintaining a reasonable and healthy payment cycle with suppliers, with payable days at an industry reasonable level. The Q1 payable balance change is mainly due to adjustments in the payable base calculation caused by the decline in sales costs, and the actual payable scale is basically the same as the end of last year, with subsequent account reconciliation to be completed with suppliersQ: What are the core competitive advantages and market strategies of the upcoming i8 pure electric model?

A: The core advantages of the i8 include: 1. Innovative design that balances intelligent space layout and low drag coefficient; 2. Equipped with high-voltage fast charging technology, achieving a range of 500 kilometers with a 10-minute charge; 3. Optimized handling performance and ride comfort. On the supporting side, 2,500 supercharging stations will be built simultaneously at the time of launch, focusing on potential users' travel routes to enhance charging convenience and meet the upgrade needs of existing new energy vehicle owners.

Q: Has the company set a clear sales target for this year? How will it adjust strategies in response to market changes? Have there been any adjustments to the sales targets for mid-range high-end SUVs and family cars?

A: The company's sales growth target for 2025 remains twice the overall growth rate of the high-end new energy market above 200,000 yuan. Market strategies will be dynamically adjusted, focusing on entering a larger market through BEV models (the market size for BEVs above 200,000 yuan is expected to reach 2.13 million units this year) and launching the "Star Map Plan" to expand into fourth and fifth-tier cities, with plans to cover 100 cities by 2024, aiming for an incremental sales increase of 100,000 units by 2026. The mid-term targets remain unchanged, continuing to focus on the high-end SUV and family car market above 200,000 yuan.

Q: What are the core difficulties in the research and development of autonomous driving technology and the differentiated competitive strategies?

A: The difficulties in autonomous driving R&D focus on: 1. Pre-training phase: needing to build a VL foundational model that understands three-dimensional space (traditional models only support two-dimensional); 2. Reinforcement learning phase: needing to iteratively optimize in a virtual environment that simulates real physical laws. Differentiated strategies include:

1. Three-dimensional space modeling: incorporating stereoscopic video data into the foundational model to enhance spatial perception accuracy;

2. Virtual-real fusion training: generating road scenes that comply with physical laws in a simulation environment, validating complex cases at low cost, and shortening iteration cycles.

Q: What are the specific strategies for improving gross margin in the first quarter and the outlook for the second quarter? Will the configuration adjustments of new models affect profits?

A: The improvement in gross margin mainly comes from the product iteration strategy: 1. Smooth transition from the 2024 L series to the 2025 model, optimizing the cost structure; 2. Adjusting the delivery rhythm of MEGA model orders (suspending deliveries from April to May, resuming in June). The gross margin is expected to remain stable in the second quarter, and the combination strategy of old and new models will continue to support profit levels.

Q: What are the plans for expanding into overseas markets and the sales milestone targets?

A: The entry into overseas markets follows three main principles: 1. Competitiveness of hardware products; 2. Localized after-sales service capability; 3. Adaptability of intelligent software services. Currently focusing on the Asia-Europe market: 1. Channel construction: establishing a cooperative network with mature dealers; 2. Team building: coordinating internal elites with externally recruited international talents; 3. Sales targets: aiming for overseas sales to account for 30% of total sales in the medium to long term, with the first phase focusing on breaking 1,000 units in monthly exports as a key milestone.

Q: Will the VLA driving assistance system be launched as planned in July? Will stricter government regulations affect the progress?A: The VLA driving assistance system is scheduled to be launched in July alongside the all-electric SUV model i8, with a full rollout to all users in August. The company believes that strict regulations are more beneficial for companies with solid technology:

1. Safety technology assurance: Prioritizing safety throughout the entire R&D cycle through Super Alignment technology;

2. User experience first: Users can experience the VLA features in-store during test drives, validating the high alignment with regulatory requirements.

Q: What insights does the improvement in MEGA Home sales provide for the i8/i6 models?

A: The MEGA facelift has performed well, and we will subsequently increase monthly production capacity to 2,500-3,000 units to meet delivery targets. Key insights include:

1. User demand orientation: Avoid excessive focus on competition or niche markets, concentrate on the real scenario needs of family users, and provide product innovations that exceed expectations;

2. Space experience reconstruction: Create an AI experience that integrates software and hardware around mobile space (such as intelligent cockpit interaction and space function expansion), building differentiated competitiveness;

3. Brand recognition upgrade: Use "space experience" as the core label, benchmarking against Apple's leading position in the interaction field, and strengthening user mindshare.

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