Li Auto (NASDAQ: LI) Shares Rocket Higher on Strong Li ONE August Delivery Numbers

Sep 2
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Li Auto (NASDAQ:LI), the manufacturer of hybrid EVs that can be powered either by batteries or gasoline engines, continues to benefit from the general euphoria that has been dominating the entire EV sphere lately. As an illustration, the stock soared over 12 percent yesterday, closing at the $18.29 price level and corresponding to cumulative gains of over 11 percent since the stock’s debut on the NASDAQ index toward the end of July.

Today, Li Auto investors have received a fresh impetus as the company has revealed the much-anticipated delivery figures for the month of August 2020. As per the press release, the company delivered 2,711 Li ONE units for the pertinent month. The following chart gives a detailed breakdown of Li Auto’s deliveries:

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(All figures represent deliveries of Li ONE units)

As far as Li Auto’s geographical coverage is concerned, the company maintains 31 retails stores spanning 26 cities across China.

Unlike the bulk of new players emerging in the EV space recently, Li Auto manufactures Extended-Range Electric Vehicles (EREVs). These are essentially hybrid vehicles that utilize gasoline to extend the range of the car, thereby, proving to be an effective solution for China’s growing, yet still relatively limited, EV charging infrastructure.

According to Li Auto’s press release, the company is at the forefront when it comes to the commercialization of EREVs:

“Li Auto is the first to successfully commercialize extended-range electric vehicles in China. The Company started volume production of its first model, Li ONE, in November 2019. With Li ONE, the Company leverages its in-house technology to create value for its customers, focusing on range extension, smart technology, and autonomous driving solutions.”

This development comes as Li Auto has landed material stock price upgrades from Wall Street behemoths in recent days. As an illustration, Goldman Sachs (NYSE:GS) initiated coverage of the stock on the 24th of August with a ‘Buy’ rating and a share price target of $15.71. The pre-eminent investment bank also added Li Auto its ‘Conviction Buy’ list. Thereafter, on the 25th of August, UBS followed suit with another ‘Buy’ rating and a stock price target of $19.50. The bank observed in its investment note:

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"We expect the China EV market to grow 5X from 2020 to 2025, and believe Li Auto has the potential to capture a meaningful share, as it has successfully built initial brand recognition, by selling 2.5k cars a month in July, priced above Rmb300k, a segment traditionally dominated by foreign brands. Debate on EREV technology routine."

Highlighting the importance of EREVs in the current paradigm and, by extension, the smart strategy of Li Auto, UBS noted:

"We view EREV as a pragmatic solution to address customers’ need for a suitable driving range and charging alternatives. We expect it to co-exist with battery electric vehicles and internal combustion engine cars, and think it is particularly well-suited for large vehicles due to the savings in the large battery compared with BEV."

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Investors have reacted positively to the announcement of August deliveries by Li Auto. As an illustration, the stock is up over 7 percent in the current pre-market trading phase.

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