During the upcoming May Day holiday from May 1st to May 5th, LI AUTO is offering free charging for all of its car models at their supercharging stations.
This includes waiving fees for electricity and services during this period. LI AUTO's supercharging network, available in regions like Beijing-Tianjin-Hebei, the Yangtze River Delta, the Greater Bay Area, and the Chengdu-Chongqing area, covers more than 70% of national highway mainlines. This extensive coverage ensures accessibility to core cities and over 20 popular tourist routes.
Regarding recent developments, Morgan Stanley has shared insights on LI AUTO's decision to reduce prices for the L7/8/9 and Mega models. While this move was not unexpected, it could boost sales opportunities. However, potential risks to auto margin forecasts and overall profitability may impact the company's near-term stock performance.
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The price cuts could lead to a decline in gross margins by 4-6 percentage points unless offset by cost savings or scale advantages. This adjustment poses a challenge to LI AUTO's target automotive gross margin of over 20% and the consensus earnings estimate of RMB15 billion for this year.
While Morgan Stanley acknowledges LI AUTO's favorable vehicle cost structure, they emphasize the need for a significant increase in orders in the coming weeks to demonstrate the effectiveness of the pricing strategy. Investors are advised to monitor the company's battery electric vehicle (BEV) product pipeline in the second half of the year for further developments.
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