Deutsche Bank: Li L6 Crucial for Li Auto’s Sales Growth Amid Intense Competition.
Li Auto (NASDAQ: LI) recently unveiled its latest offering, the Li L6 extended-range electric vehicle (EREV), positioned as the most affordable model in its lineup. According to Deutsche Bank analysts, the Li L6 is poised to drive significant sales growth for Li Auto this year, despite facing formidable competition in a price-sensitive market.
In a research note, analyst Edison Yu’s team highlighted the strategic importance of the Li L6 in boosting Li Auto’s sales volume. This launch follows the performance of the Li Mega, which had underwhelming results but is expected to benefit from the Li L6’s lower starting price, potentially leading to a strong order backlog.
However, Deutsche Bank noted that the market segment is fiercely competitive due to declining price ranges across the industry. The Li L6 is anticipated to compete directly with models like Huawei-backed Aito’s M7 SUV, although recent reports suggest a decline in Aito’s order book.
Despite optimistic prospects, Deutsche Bank cautioned that achieving the target delivery rate of 20,000 units per month for the Li L6 may require additional promotional efforts.
Deutsche Bank’s analysis suggests that Li Auto’s overall 2024 deliveries may trend toward the lower end of the 560,000 to 640,000 guidance range, with an estimated contribution of approximately 130,000 units from the Li L6 alone.
The Li L6, available in Pro and Max trims priced at RMB 249,800 ($34,500) and RMB 279,800 respectively, marks the most affordable entry in Li Auto’s lineup, positioned below the Li L7 priced at RMB 319,800.
Looking ahead, Li Auto has hinted at the potential release of a more budget-friendly model, the Li L6 Air, reflecting the company’s naming strategy based on ascending price tiers.
Following its recent launch, Li Auto has begun accepting orders for the Li L6, offering limited-time benefits to early customers. Initial deliveries are set to commence next week, with larger volumes expected in May.
Despite aiming for a monthly sales target of 30,000 units with the Li L6, Li Auto acknowledges the fierce competition within the RMB 200,000 to RMB 300,000 price range, which represents a significantly larger market than higher-priced segments.
Li Auto remains optimistic about its sales targets for 2024, although adjustments were made after the Li Mega’s debut fell short of expectations. The company now forecasts sales between 560,000 and 640,000 units for the year.
With Tesla’s Model Y achieving robust monthly sales in China, Li Auto recognizes the challenges ahead but remains focused on capitalizing on the growing demand for affordable electric vehicles in the market.
