Market Adjustments for Li Auto’s New SUV
Li Auto, a prominent hybrid vehicle manufacturer, has seen a recent adjustment in its market outlook by Citi, which lowered the price target for its stock due to tepid demand for its newly launched SUV, the L6. Citi has also expressed concerns about the impact of Tesla’s recent price reduction strategy in China on the overall market sentiment. This comes as the automotive sector faces shifting dynamics due to aggressive pricing tactics by leading competitors.
Financial Revisions and Market Reactions
On Monday, Citi revised Li Auto’s price target from $48.50 to $43.60 while maintaining a ‘Buy’ rating, despite the initial order of 10,000 units for the L6 within the first 72 hours post-launch. This order volume was considered modest compared to previous models, such as the L7 and L9, which had garnered 21,000 and 50,000 orders, respectively, in the same timeframe. The nature of these orders, potentially refundable, has led to some skepticism about the solidity of the demand figures reported.
Strategic Moves and Future Prospects
Following the market feedback, Li Auto responded by reducing prices by about 5% across four of its five models, a strategy mirrored by Tesla and BYD to maintain competitiveness. The price adjustments, which range from 18,000 to 30,000 yuan, reflect a broader industry trend towards more aggressive pricing to attract consumers. Furthermore, Li Auto is preparing to launch three new pure electric SUV models in the second half of the year, boasting advanced 5C charging capabilities and all-wheel drive, which the company’s leadership has touted as highly competitive.
These strategic adjustments by Li Auto aim to strengthen its position in a rapidly evolving automotive market, highlighting the company’s proactive approach to adapting to consumer needs and market pressures.