Li Auto (NASDAQ: LI) reported net income of RMB 3.5 billion ($484 million) in the fourth quarter, down 38.6 percent from RMB 5.8 billion in the fourth quarter of 2023 while up 25.3 percent from RMB 2.8 billion in the third quarter of 2024.

Li Auto shares tumbled 5% after posting financial results.

Its gross margin was 20.3 percent in the fourth quarter, compared with 23.5 percent in the fourth quarter of 2023 and 21.5 percent in the third quarter of 2024.

Previously released data showed that Li Auto delivered 158,696 vehicles in the fourth quarter, below the lower end of its guidance range of 160,000 to 170,000 units.

Deliveries for the quarter were up 20.40 percent year-on-year and up 3.84 percent from the third quarter.

The company guided fourth-quarter revenue to be in the range of RMB 43.2 billion to RMB 45.9 billion, up 3.5 percent to 10.0 percent year-on-year, when it announced its third-quarter 2024 financial results on October 31 last year.

Li Auto expects its vehicle deliveries in the first quarter of 2025 to be in the range of 88,000 to 93,000 units, up 9.5 percent to 15.7 percent year-on-year.

It is guiding first-quarter total revenue to be in the range of 23.4 billion yuan ($3.2 billion) to 24.7 billion yuan ($3.4 billion), down 8.7 percent to 3.5 percent year-on-year.

Financial Results for the Fourth Quarter of 2024

Revenues

Total revenues were RMB44.3 billion (US$6.1 billion) in the fourth quarter of 2024, representing an increase of 6.1% from RMB41.7 billion in the fourth quarter of 2023 and an increase of 3.3% from RMB42.9 billion in the third quarter of 2024.

Vehicle sales were RMB42.6 billion (US$5.8 billion) in the fourth quarter of 2024, representing an increase of 5.6% from RMB40.4 billion in the fourth quarter of 2023 and an increase of 3.2% from RMB41.3 billion in the third quarter of 2024. The increase in revenue from vehicle sales over the fourth quarter of 2023 was primarily attributable to the increase in vehicle deliveries, partially offset by the lower average selling price mainly due to different product mix. The increase in revenue from vehicle sales over the third quarter of 2024 was primarily attributable to the increase in vehicle deliveries, partially offset by the lower average selling price due to interest subsidies provided to customers.

Other sales and services were RMB1.6 billion (US$223.4 million) in the fourth quarter of 2024, representing an increase of 20.5% from RMB1.4 billion in the fourth quarter of 2023 and an increase of 5.2% from RMB1.6 billion in the third quarter of 2024. The increase in revenue from other sales and services over the fourth quarter of 2023 was mainly attributable to the increased provision of services and sales of accessories, which is in line with higher accumulated vehicle sales. The revenue from other sales and services remained relatively stable over the third quarter of 2024.
Cost of Sales and Gross Margin

Cost of sales was RMB35.3 billion (US$4.8 billion) in the fourth quarter of 2024, representing an increase of 10.5% from RMB31.9 billion in the fourth quarter of 2023 and an increase of 4.9% from RMB33.6 billion in the third quarter of 2024. The increase in cost of sales over the fourth quarter of 2023 was primarily attributable to increase in vehicle deliveries, partially offset by the lower average cost of sales due to different product mix. The increase in cost of sales over the third quarter of 2024 was primarily attributable to increase in vehicle deliveries.

Gross profit was RMB9.0 billion (US$1.2 billion) in the fourth quarter of 2024, representing a decrease of 8.3% from RMB9.8 billion in the fourth quarter of 2023 and a decrease of 2.8% from RMB9.2 billion in the third quarter of 2024.

Vehicle margin was 19.7% in the fourth quarter of 2024, compared with 22.7% in the fourth quarter of 2023 and 20.9% in the third quarter of 2024. The decrease in vehicle margin over the fourth quarter of 2023 was mainly due to different product mix. The decrease in vehicle margin over the third quarter of 2024 was mainly due to losses on purchase commitment and lower average selling price due to interest subsidies provided to customers.

Gross margin was 20.3% in the fourth quarter of 2024, compared with 23.5% in the fourth quarter of 2023 and 21.5% in the third quarter of 2024. The decrease in gross margin over the fourth quarter of 2023 and third quarter of 2024 was mainly due to the decrease in vehicle margin.
Operating Expenses

Operating expenses were RMB5.3 billion (US$721.6 million) in the fourth quarter of 2024, representing a decrease of 22.0% from RMB6.8 billion in the fourth quarter of 2023 and a decrease of 9.1% from RMB5.8 billion in the third quarter of 2024.

Research and development expenses were RMB2.4 billion (US$329.9 million) in the fourth quarter of 2024, representing a decrease of 31.0% from RMB3.5 billion in the fourth quarter of 2023 and a decrease of 6.9% from RMB2.6 billion in the third quarter of 2024. The decrease in research and development expenses over the fourth quarter of 2023 was mainly attributable to decreased expenses related to product portfolios and technologies, and decreased employee compensation. The decrease in research and development expenses over the third quarter of 2024 was primarily due to decreased employee compensation.

Selling, general and administrative expenses were RMB3.1 billion (US$421.5 million) in the fourth quarter of 2024, representing a decrease of 5.9% from RMB3.3 billion in the fourth quarter of 2023 and a decrease of 8.4% from RMB3.4 billion in the third quarter of 2024. The decrease in selling, general and administrative expenses over the fourth quarter of 2023 was primarily due to decreased employee compensation and improved operational efficiency. The decrease in selling, general and administrative expenses over the third quarter of 2024 was primarily due to decreased employee compensation associated with the recognition of the chief executive officer's performance-based awards in the third quarter of 2024, partially offset by the increased marketing and promotional activities.
Income from Operations

Income from operations was RMB3.7 billion (US$507.4 million) in the fourth quarter of 2024, representing an increase of 22.0% from RMB3.0 billion in the fourth quarter of 2023 and an increase of 7.9% from RMB3.4 billion in the third quarter of 2024. Operating margin was 8.4% in the fourth quarter of 2024, compared with 7.3% in the fourth quarter of 2023 and 8.0% in the third quarter of 2024. Non-GAAP income from operations was RMB4.2 billion (US$577.6 million) in the fourth quarter of 2024, representing an increase of 9.1% from RMB3.9 billion in the fourth quarter of 2023 and a decrease of 5.5% from RMB4.5 billion in the third quarter of 2024.

Net Income and Net Earnings Per Share

Net income was RMB3.5 billion (US$484.0 million) in the fourth quarter of 2024, representing a decrease of 38.6% from RMB5.8 billion in the fourth quarter of 2023 and an increase of 25.3% from RMB2.8 billion in the third quarter of 2024. Non-GAAP net income was RMB4.0 billion (US$553.4 million) in the fourth quarter of 2024, representing a decrease of 12.0% from RMB4.6 billion in the fourth quarter of 2023 and an increase of 4.9% from RMB3.9 billion in the third quarter of 2024.

Basic and diluted net earnings per ADS attributable to ordinary shareholders were RMB3.52 (US$0.48) and RMB3.31 (US$0.45) in the fourth quarter of 2024, respectively, compared with RMB5.72 and RMB5.32 in the fourth quarter of 2023, respectively, and RMB2.82 and RMB2.66 in the third quarter of 2024, respectively. Non-GAAP basic and diluted net earnings per ADS attributable to ordinary shareholders were RMB4.03 (US$0.55) and RMB3.79 (US$0.52) in the fourth quarter of 2024, respectively, compared with RMB4.54 and RMB4.23 in the fourth quarter of 2023, respectively, and RMB3.85 and RMB3.63 in the third quarter of 2024, respectively.
Cash Position, Operating Cash Flow and Free Cash Flow

Cash position7 was RMB112.8 billion (US$15.5 billion) as of December 31, 2024.

Net cash provided by operating activities was RMB8.7 billion (US$1.2 billion) in the fourth quarter of 2024, representing a decrease of 49.8% from RMB17.3 billion in the fourth quarter of 2023 and a decrease of 21.3% from RMB11.0 billion in the third quarter of 2024. The change in net cash provided by operating activities over the fourth quarter of 2023 and the third quarter of 2024 was mainly due to increased payment related to inventory purchase, partially offset by the increase in cash received from customers.

Free cash flow was RMB6.1 billion (US$830.1 million) in the fourth quarter of 2024, representing a decrease of 58.6% from RMB14.6 billion in the fourth quarter of 2023 and a decrease of 33.1% from RMB9.1 billion in the third quarter of 2024.

Business Outlook

For the first quarter of 2025, the Company expects:

Deliveries of vehicles to be between 88,000 and 93,000 vehicles, representing a year-over-year increase of 9.5% to 15.7%.

Total revenues to be between RMB23.4 billion (US$3.2 billion) and RMB24.7 billion (US$3.4 billion), representing a year-over-year decrease of 8.7% to 3.5%.
This business outlook reflects the Company's current and preliminary views on its business situation and market conditions, which are subject to change.