The more outstanding a student is, the more eager they are to submit their report card.As the leading force among domestic first-tier new energy vehicle manufacturers, LI AUTO-W was the first to announce its second-quarter performance on August 8th.In the second quarter, LI AUTO-W achieved operating revenue of 28.65 billion yuan, a year-on-year increase of 228.1% and a quarter-on-quarter increase of 52.5%. Net profit reached 2.31 billion yuan, maintaining positive figures for three consecutive quarters, compared to a loss of 618 million yuan in the same period last year. The automobile gross profit margin returned to over 20%, reaching 21%, an increase of 1.2 percentage points compared to the previous quarter. Operating cash flow reached 11.11 billion yuan, an increase of 8.8 times year-on-year. <img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/6f483fd9-8d08-4407-a673-c876f3ef5f20.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="Image" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/6f483fd9-8d08-4407-a673-c876f3ef5f20.png"/> Once competitors on the same stage, LI AUTO-W has now taken the lead in terms of sales and profitability.Facing the price war initiated by Tesla in the new energy vehicle market, LI AUTO-W, favored by the market due to its differentiated positioning and extended-range technology, chose not to reduce prices and withstand the pressure.In the second quarter, LI AUTO-W achieved record-high revenue, profit, and sales volume. In the first half of the year, LI AUTO-W's sales volume has been steadily increasing, and the level of net profit has also continued to grow.Clearly, in the fierce competition in the new energy vehicle market this year, LI AUTO-W has stood out.<h2>1. High sales volume not only brings confidence but also future prospects</h2>In the first half of this year, among domestic new energy vehicle companies that can maintain sales of over 10,000 vehicles and continue to achieve high year-on-year and quarter-on-quarter growth, apart from BYD, there is LI AUTO-W.Monthly sales volume has climbed from 15,000 vehicles in January to 34,000 vehicles in July, marking a remarkable achievement for LI AUTO-W. Especially in the second quarter, a total of 86,500 vehicles were sold, significantly exceeding LI AUTO-W's previous guidance of 76,000-81,000 vehicle deliveries for the second quarter.Li Xiang, the founder of LI AUTO-W, said on Weibo that the production capacity bottleneck is a problem that we cannot solve this quarter, which means that LI AUTO-W still has room for further sales growth. <img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/7ebbf6a8-fcd1-47be-9ae3-fa74a8e4f9c7.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="Image" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/7ebbf6a8-fcd1-47be-9ae3-fa74a8e4f9c7.png"/> According to LI AUTO-W's sales guidance for the third quarter of this year, the estimated delivery volume is 100,000 to 103,000 vehicles, a year-on-year increase of 277% to 288.3%. Considering that sales volume in July has already reached 34,000 vehicles, this means that LI AUTO-W's monthly sales volume in August and September will continue to be at least 30,000 vehicles or more.LI AUTO-W is steadily crossing the threshold of monthly sales exceeding 30,000 vehicles.LI AUTO-W's high sales volume not only brings confidence but also future prospects. LI AUTO-W's extended-range models L7, L8, and L9 have laid a solid foundation for LI AUTO-W, transitioning from rapid model growth to sales growth.However, LI AUTO-W's product lineup is not limited to extended-range vehicles.After establishing a solid foundation, LI AUTO-W has ventured into pure electric vehicle models, further enhancing the product structure of the LI AUTO-W brand. Currently, LI AUTO-W has launched an 800V ultra-fast charging pure electric solution, preparing for the energy supplementation of pure electric vehicles.In the fourth quarter of this year, LI AUTO-W will launch its first 5C pure electric flagship model, LI AUTO-W MEGA, opening up a second battlefield beyond extended-range products and creating a second growth curve.At that time, LI AUTO-W will truly compete head-on with other new energy vehicle companies.<h2>2. LI AUTO-W enters a profitable era</h2>In the fourth quarter of 2020, LI AUTO-W achieved positive net profit for the first time, reaching 108 million yuan. At that time, due to its lack of sustainability, it was uncertain whether LI AUTO-W had crossed the breakeven point.However, this year, LI AUTO-W's normalization of positive net profit is based on a solid foundation, which is the continuous breakthrough of monthly sales exceeding 30,000 units.Following the achievement of a net profit of 265 million yuan in the fourth quarter of last year, LI AUTO-W's net profit level has maintained rapid growth, reaching 2.31 billion yuan in the latest second quarter, a significant contrast to the -618 million yuan performance in the same period last year. Intuitively, LI AUTO-W's net profit level has grown in sync with sales, with per vehicle profit increasing from 5,700 yuan in the fourth quarter of last year to 17,700 yuan in the first quarter of this year and 26,700 yuan in the second quarter.From the perspective of gross profit margin, even though Tesla triggered a price war in the Chinese new energy vehicle market, LI AUTO-W's gross profit margin only declined for one quarter, with the second-quarter gross profit margin returning to 21%, an increase of 1.2 percentage points compared to the previous quarter.In addition, LI AUTO-W's cash flow has also maintained continuous high growth this year. In the second quarter, LI AUTO-W's operating cash flow reached 11.11 billion yuan, an 8.8-fold increase year-on-year and a 42.8% increase quarter-on-quarter.<h2>3. Expenses continue to grow, but not a major issue</h2>Previously, relying solely on the LI AUTO-W ONE model, LI AUTO-W had relatively lower overall R&amp;D investment compared to other new carmakers.But with the launch of extended-range new models, investment in the development of pure electric vehicle models, the development of intelligent driving systems, and the introduction of supercharging solutions, LI AUTO-W's research and development expenses have also shown a step-like increase.In the second quarter, LI AUTO-W's research and development expenses reached 2.43 billion yuan, a year-on-year increase of 58.4% and a quarter-on-quarter increase of 31%. The increase in research and development expenses matches the future product layout and existing sales volume.<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/792d915d-4878-44bb-9518-096d8a3e765e.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/792d915d-4878-44bb-9518-096d8a3e765e.png"/> Currently, LI AUTO-W still focuses on the domestic market. Therefore, in order to expand the coverage of products in domestic cities, enhance the channels of the sales network, and improve brand influence, LI AUTO-W's sales and management expenses have also increased significantly.As of the second quarter, LI AUTO-W's sales, general, and administrative expenses reached 2.31 billion yuan, a year-on-year increase of 74.3% and a quarter-on-quarter increase of 40.4%.<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/552b0478-13ad-4110-aa17-7ed7472bc78b.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/552b0478-13ad-4110-aa17-7ed7472bc78b.png"/> But the effect of the expenses is also significant. As of the end of July this year, LI AUTO-W has 337 retail centers nationwide, an increase of 36 compared to the first quarter, covering a total of 128 cities, an increase of 2; there are 323 after-sales service and authorized body spray centers, covering 222 cities.LI AUTO-W undoubtedly presents a satisfactory answer to the market. As the first company among the new forces in car manufacturing to step into the threshold of profitability, it has set a template for other companies.But LI AUTO-W's another challenge may have just begun.Whether LI AUTO-W can maintain its advantage in the pure electric vehicle market with the popularity and reputation accumulated in the extended-range electric vehicle products, the market is looking forward to the answer that LI AUTO-W's pure electric mega brand, to be launched in the fourth quarter, will bring us.

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Revenue, profit, and sales have all reached new highs, and what sets LI AUTO-W apart from other new forces is not just sales.

Crossing the threshold of monthly sales of 30,000 vehicles, the challenge for LI AUTO-W has just begun | Insight Research