Li Auto Stands at the Peak of Hundred-Billion Revenue, Launches Scalding Pure-Electric Year
"Taking control of your own destiny and challenging the limits of growth" is a phrase often repeated by Li Auto CEO Xiang Li. With Li Auto's annual revenue reaching RMB 123.85 billion, this statement now carries even greater weight and resonance.
This means that despite being impacted by the price war that persisted throughout 2023, Li Auto has still found a stable order suited to its upward momentum amidst the chaos. As Xiang Li stated on Weibo:
"Learn product strategy from Apple, business model from Tesla, manufacturing from Toyota, organization from Huawei, and transformation from Microsoft. At our current scale, the most important thing is to study hard."
Now, standing at the crossroads of 2023 and 2024, Li Auto is officially leaving behind the single battlefield of extended-range electric vehicles (EREVs). Backed by the hundred-billion-revenue foundation built on EREVs, it will reinforce its position in the EREV market while simultaneously expanding into the pure-electric battlefield.
As the battlefield expands, the peak of RMB 100 billion in revenue is merely a place for Li Auto to rest briefly before gathering strength to continue climbing higher.
01Li Auto's Best Financial Performance Ever
2023 Q4 Earnings Report
Li Auto maintained its high-growth trajectory in the fourth quarter of 2023.
Key financial metrics include:
Vehicle sales revenue reached RMB 40.38 billion, up 133.8% year-over-year and 20.1% quarter-over-quarter;
The vehicle gross margin was 22.7%;
Total revenue amounted to RMB 41.73 billion, rising 136.4% year-over-year and 20.3% quarter-over-quarter;
The overall gross margin stood at 23.5%;
Net profit hit RMB 5.75 billion, surging 2,068.2% year-over-year and 104.5% quarter-over-quarter;
Free cash flow totaled RMB 14.64 billion, increasing 349.4% year-over-year and 10.7% quarter-over-quarter.
Based on the financial report, Li Auto achieved impressive growth in revenue, profit, and cash flow, driven by sales breakthroughs in the fourth quarter of 2023.
Notably, despite discounts in the fourth quarter lowering the average selling price, Li Auto’s gross margin remained robust. Vehicle gross margin increased by 1.5 percentage points compared to the third quarter, significantly outperforming Tesla’s results during the same period.
Additionally, the sales surge boosted other revenue streams for Li Auto. The report shows that increased sales drove growth in charging piles, accessories, and services, pushing other sales and service revenue to RMB 1.35 billion in the fourth quarter—a year-over-year increase of 254.6% and a quarter-over-quarter increase of 27.2%.
This indicates that as sales expand, Li Auto is increasingly reaping the benefits of economies of scale.
For the first quarter of this year, Li Auto provided the following performance guidance:
Delivery volume is expected to be between 100,000 and 103,000 units, representing a year-over-year increase of 90.2% to 95.9%;
Revenue is projected to be between RMB 31.25 billion and RMB 32.19 billion, reflecting a year-over-year increase of 66.3% to 71.3%.
As of now, Li Auto's January delivery volume was 31,165 units, and its February deliveries through February 18 stood at 10,100. This means that to meet this performance expectation, Li Auto needs to achieve approximately 59,000 deliveries in the remaining half of the first quarter — with the pressure largely falling on the MEGA launched in March and the facelifted L7/L8/L9.
2023 Full-Year Financial Report
2023 was Li Auto’s first fiscal year to achieve quarterly profitability across all four quarters, marking its best financial performance in history.
Key financial metrics include:
Vehicle sales revenue of RMB 120.29 billion, up 172.7% year-on-year;
Vehicle gross margin of 21.5%;
Total revenue of RMB 123.85 billion, up 173.5% year-on-year;
Overall gross margin of 22.2%;
Net profit reached RMB 11.81 billion, a year-on-year increase of 58,494.3%;
Free cash flow stood at RMB 44.19 billion, up 1,861.8% year on year.
It took Li Auto eight years to go from losses to full-year profitability since its founding in 2015.
Having completed that journey, Li Auto has pulled ahead of other new-vehicle startups by a significant margin — revenue broke through the RMB 100 billion mark, with cash flow at RMB 44.19 billion. Additionally, according to the financial report, as of the end of 2023, Li Auto’s cash reserves had increased to RMB 103.67 billion, providing ample capital; gross margin was 22.2%, reaching the level Xiang Li believes is appropriate for a technology company.
Furthermore, the capital market has shown further recognition and confidence in Li Auto. The financial report shows that Li Auto has been included as a component stock in the Hengshengzhishu.
Regarding this financial performance, Xiang Li commented:
The significant growth in scale, continuous deepening of R&D, and continuously improving operational efficiency drove us to achieve our best-ever financial results in 2023, laying a solid foundation for Li Auto to enter 2024, a year with a richer product matrix and more diverse market demand.
02"I Don't Believe in Blindly Sprinting"
Li Auto's RMB 123.85 billion in revenue for 2023 is inseparable from its top-down, high-frequency self-improvement, iteration, and course correction.
As mentioned earlier, Xiang Li has learned from various predecessors across all aspects. At the same time, Li Auto has fully internalized and absorbed these lessons, ultimately integrating them into the company's core identity. As Xiang Li stated in a reply to netizens on Weibo:
Knowledge acquired must be thoroughly digested and validated through implementation to become capability. It only becomes true capability when it translates into revenue, profit, and talent growth. The combination of these elements constitutes one's authentic self. I do not believe in blindly sprinting; keeping your eyes open is the most important organ.
True to this philosophy, Li Auto remained vigilant and calm throughout 2023, maintaining steady rhythms and proceeding with caution.
In terms of products, Li Auto launched and delivered the L7 Air/Pro/Max, L8 Air, and L9 Pro in 2023, and the cumulative sales of the L7, L8, and L9 all exceeded 100,000 units in 2023.
Consequently, Li Auto successfully completed the full product transition from the Li ONE to the L series. It expanded its product portfolio downward from full-size six-seaters to five-seaters, covering the broad market segment from RMB 300,000 to RMB 500,000. This move further solidified its position as the preferred choice for premium family vehicle users.
Regarding channels, by January 31, Li Auto had established 474 retail centers, 360 after-sales service centers, and authorized body-and-paint centers nationwide. Notably, in December alone, Li Auto added more than 110 stores across its retail, delivery, and service networks.
This demonstrates that in 2023, with its direct-sales system as the core, Li Auto successfully refined its channel-building methodology through meticulous management. The company utilized resources efficiently, continuously optimized its teams and processes, avoided blindly chasing lead volume, and prioritized training to elevate sales staff quality, thereby using brand influence as a starting point to improve user conversion rates.
In terms of marketing, Xiang Li believes that "poor marketing is the greatest harm done to the R&D team." In 2023, Li Auto's marketing tactics were so intense that they left both industry insiders and outsiders stunned by the fierce competition.
On March 29, 2023, Li Auto released its first weekly sales ranking, sparking an internal competitive rhythm within the new energy vehicle industry centered on weekly sales figures. This move further fueled the marketing wars among brands, each desperate to add superlatives to their rankings.
Although the weekly sales list initially faced massive skepticism and criticism directed at Li Auto, over time it gained credibility and influence. Eventually, some brands began leveraging the list to enhance their own prestige.
With alignment between strategy and execution, Li Auto, unified from top to bottom, achieved a surge in sales in 2023: breaking 20,000 units in the first quarter, surpassing 30,000 in the second, and shattering the 40,000 and 50,000 unit barriers in the fourth quarter. For the full year, sales reached 376,030 units, standing out uniquely among new-vehicle startups.
The sales surge was followed by rolling revenue growth. This allowed Li Auto to mobilize ample resources to "control its own destiny and challenge the limits of growth," creating a positive feedback loop.
032024 How to Sell 800,000?
Tied to Pure Electric
Li Auto's sales target for this year is 800,000 units, which means doubling its sales volume from last year. So the question arises: how exactly will it sell 800,000 units this year? We can break down this 800,000 figure.
According to its plan, Li Auto’s product lineup this year includes facelifted L7, L8 and L9 models, the newly launched L6, the MEGA, and three pure electric models scheduled for the second half of the year. That totals eight vehicles, requiring an average monthly sales volume of approximately 8,000 units per model.
The numbers on paper do not appear overly challenging. Based on the sales performance of the L7, L8 and L9, these models alone should contribute at least half of the annual sales target.
Additionally, regarding the Li L6, Zou Liangjun, Senior Vice President of Sales and Service at Li Auto, previously stated that the sales target for the Li L6 is 30,000 units per month. If the Li L6, which launches in the second quarter, can achieve "delivery upon release, volume growth upon delivery," then optimistically, the Li L6 may contribute around 200,000 units to the annual sales volume this year.
This means Li Auto’s pure electric models, including the Li MEGA and the three upcoming pure electric vehicles, must sell at least 200,000 units this year. Furthermore, Li Auto has not yet specified whether all three of those new pure electric models will be delivered within the current year. Consequently, most of the uncertainty surrounding the achievement of the 800,000-unit annual sales target hinges on its pure electric products.
In fact, Li Auto’s entry into the pure electric segment was not late. As early as 2018, Li Auto had already initiated research into supercharging battery technology. However, it was not until 2023 that Li Auto took concrete steps toward pure electric implementation — following the principle that logistics must precede military movement, the company began laying out its network of supercharging stations.
Since launching its first supercharging station on April 20, 2023, Li Auto has built and put into operation more than 330 supercharging stations.
This year, Li Auto plans to build 2,000 supercharging stations, aiming to cover eighteen major highway corridors nationwide and reach 60% of the core urban areas in tier-3 cities and above.
Although the construction pace is not slow, there remains a significant gap in scale compared to competitors. In the area of supercharging infrastructure, Li Auto needs to accelerate its pace and increase investment.
Another key move by Li Auto in the pure-electric segment in 2023 was the official unveiling of the Li MEGA. The Li MEGA breaks away from traditional MPV design conventions in its exterior styling, while continuing the family-oriented interior space design that has been a hallmark of Li Auto’s success.
At present, whether measured by discussion volume, attention, or the achievement of over 10,000 orders within one hour and forty-two minutes, the performance of the Li MEGA appears to meet Li Auto’s expectations. After its official market release, it remains to be seen whether its actual sales can break the high-end MPV sales dilemma.
With the rollout of supercharging stations and the technological accumulation in pure-electric products through the development of Li MEGA, the product competitiveness of the three pure-electric models that Li Auto will launch in the second half of the year is bound to be formidable.
Notably, although the pricing and positioning of the three upcoming pure-electric models remain unclear, it is anticipated that XPENG, NIO, and Li Auto—previously focused on their respective niche markets—will now compete directly in the pure-electric vehicle market this year.
How Li Auto will execute its pure-electric strategy this year and what results it will achieve is a key storyline to watch.
Nationwide Capability: Let the Cash Burn Continue
Intelligent driving performance is a critical factor supporting Li Auto’s annual sales target of 800,000 units.
Li Auto’s overall intelligent driving performance in 2023 was not particularly impressive. In April 2023, Li Auto released AD Max 3.0, but it was not officially pushed via OTA 5.0 until December, during which time the company faced public criticism over its city-navigation rollout delays.
What heightened Li Auto’s sense of crisis in intelligent driving was Huawei. Also in April 2023, Huawei released ADS 2.0. By September, the launch of the new AITO M7 triggered a breakthrough for the technology, making intelligent driving mainstream and significantly accelerating user demand.
Compared with the appeal of features like refrigerators, large screens, and comfortable sofas, Li Auto’s voice in intelligent driving has indeed seemed awkward.
Fortunately, events such as the city-navigation rollout setbacks and Huawei’s intelligent driving breakthrough helped Li Auto gain a clear understanding that its capabilities were still at the 'Peak of Inflated Expectations.' Consequently, at its autumn strategy meeting in 2023, Li Auto elevated the importance of intelligent driving to an unprecedented level.
In fact, Li Auto has been ramping up its investment in intelligent driving since the second half of last year.
On the talent front, by the end of 2023, Li Auto’s intelligent driving team had reached a scale of 1,000 people. It will expand to 2,000 this year and reach 2,500 by 2025.
Regarding funding, Li Auto’s R&D expenses have grown quarter over quarter since 2023: RMB 1.85 billion in Q1, RMB 2.43 billion in Q2, RMB 2.82 billion in Q3, and RMB 3.49 billion in Q4.
Entering 2024, for the first tier of intelligent driving providers, whether they use map-based solutions is no longer the main discussion point; the key to competition is how many cities are covered.
Currently, Huawei has announced that its high-level intelligent driving is available nationwide, while XPENG’s urban intelligent driving fully covers 243 cities. Li Auto’s current city rollout progress still lags significantly behind these two competitors.
However, with ample cash reserves, a fleet size exceeding 660,000 vehicles, and efficient organizational capabilities, Li Auto can concentrate resources on a large-scale, "hundred-regiment battle" style investment to efficiently convert them into market competitiveness and make up for its shortcomings in intelligent driving.
While intelligent driving capabilities can indeed be bolstered by resource investments on the scale of a "hundred-regiment battle," Huawei and XPENG have already seized the mental high ground among users regarding autonomous driving. How Li Auto can reverse user perceptions of its autonomous driving capabilities through an uphill battle presents an even more difficult challenge.
According to Li Auto’s plan, the map-free version of Urban NOA will be pushed to all AD Max-equipped vehicles nationwide by the second quarter of this year. Donghui Ma, President of Li Auto, stated at the earnings call that Li Auto’s intelligent driving products and R&D capabilities will definitely rank among the top in China this year.
What does Li Auto’s top-tier intelligent driving actually look like? Hold that thought; let Li Auto burn through more capital first.
04Final Thoughts
After achieving its first quarterly profit in the fourth quarter of 2022, Li Auto officially escaped the quagmire of losses and realized profits in every quarter of 2023, becoming the youngest company on the 2023 Hurunshijie 500 Qiang list, transforming from a startup into a growth-oriented enterprise.
This means Li Auto’s past strategies regarding corporate direction and products have been validated in commercial practice. It has successfully internalized lessons learned from companies like Apple, Tesla, Toyota, Huawei, and Microsoft. As sales continued to rise, it built up a substantial financial buffer.
It is worth emphasizing again that Li Auto’s product lineup will expand to eight models this year. The Li L7, L8, and L9 are expected to anchor a sales base of 400,000 units.
In other words, rooted in solid business capabilities, Li Auto is positioned to both advance strategically and defend its ground this year. Facing expensive battles such as urban autonomous driving and the integration of large language models into vehicles, Li Auto can afford to be more aggressive yet measured.
However, caution is needed. As its brand influence continues to grow, Li Auto—which has always been outspoken and defiant in its marketing—is becoming an increasingly frequent target for imitation or criticism by other enterprises. For Li Auto in 2024 and beyond, relying on its own two fists may be necessary to counter the four hands of its competitors.
Despite being outspoken and defiant in its marketing, it is undeniable that Li Auto remains pragmatic and humble in action. This echoes Xiang Li’s comment at the beginning of the article: 'At our current scale, learning is the most important thing.'
On March 1, the Li MEGA and three facelifted models from the L series were officially launched. The drumbeats of urgency are already ringing loud, and Li Auto’s 2024 performance review—centered on the theme of "studying hard"—is about to begin in earnest.
Below is a summary of key points from Li Auto’s management team during the earnings call, edited for clarity without altering the original meaning.
Q: What is the gap between Li Auto and Huawei and XPENG in terms of intelligent driving capabilities, and when do you expect to surpass them?
A: Li Auto will roll out mapless urban NOA (Navigation on Autopilot) available nationwide to AD Max-equipped vehicles in Q2, while Pro models will also receive an upgrade to their BEV (Bird's Eye View) perception model. In short, Li Auto’s intelligent driving products and R&D capabilities will undoubtedly rank among the top in China this year.
Q: How does Li Auto plan to ensure production ramp-up and product deliveries this year?
A: Li Auto has accumulated replicable experience through the production ramp-up and delivery processes of its previous models.
Currently, the progress of Li Auto’s new models aligns with development plans, and manufacturing preparations—including factory planning and worker training—are complete. Li Auto is confident in ensuring timely product deliveries this year.
Q: Does Li Auto have any plans to lower vehicle prices in the future?
A: Looking ahead five years, Li Auto will not launch any models priced below RMB 200,000. By 2030, Li Auto could approach the global revenue performance of the iPhone by focusing solely on the family-user market.
Q: What is Li Auto’s plan for pure-electric vehicles in 2024?
A: We will release three additional pure-electric SUVs in the second half of the year. All will feature standard 5C charging and possess strong product capabilities, making them the top choice for family users at their price point.
Q: How does Li Auto view industry competition?
A: Li Auto maintains its consistent view that future competition will increasingly concentrate among the leading players.
Q: What is Li Auto’s strategy in the price war in 2024?
A: This year is a major product year for Li Auto. The company will continue to increase investment in products, steadily converting product capabilities into user value. All teams within the company are now fully prepared.
Q: When will the 'iPhone moment' for autonomous driving arrive?
A: It may arrive within the next two to three years. As L2 and L3 autonomous driving systems achieve mass production, data accumulation drives quantitative growth, and AI technology advances, autonomous driving will undergo a qualitative leap.
Additionally, Li Auto will continue to make intelligent driving a standard feature across its lineup, with no current plans for additional fees.
Written by: Isaiah Edited by: 308