Li Auto, a Chinese automaker, has announced a delay in its plans to launch fully electric SUV models, pushing back the introduction until next year. The company cited obstacles such as an insufficient number of fast charging stations as the reason for the postponement. This news caused Li Auto’s shares to plummet by more than 17% on Tuesday.
The decision to postpone the electric SUV launch comes as Li Auto, which has built its profitability and success on four extended-range gasoline-electric hybrid models, has also faced a setback with its first fully electric model, the Mega. The Mega’s sales performance has fallen short of the company’s original expectations.
While Li Auto has achieved success with its hybrid offerings, the lack of a robust fast-charging infrastructure and the underwhelming sales of its first pure electric vehicle have prompted the company to delay the rollout of its planned electric SUV lineup until the following year.”Enough charging stations and enough incremental display spots (in our retail shops) are two critical and necessary conditions for selling our BEV SUV product,” chief executive Li Xiang told an earnings call late on Monday, referring to battery-powered EVs.
“The company has lowered its priority for 2024 profitability but has been focusing on laying a more solid foundation for BEV’s success after the wrong expectation on the Mega,” China Merchants Bank International analyst Shi Ji said in a note.
Li Auto had placed high hopes on its Mega MPV, touting its streamlined bullet-style design and aiming for it to outsell any model priced above 500,000 yuan (approximately $69,000) in China. However, the company only delivered over 3,000 units of the Mega in March, falling short of analysts’ expectations of 8,000 units in monthly sales.
This disappointment with the Mega’s performance contributed to Li Auto reporting a 37% decline in profit for the first quarter, which the company acknowledged was below its own expectations at the start of the year.
Analysts have raised concerns that the investments required for Li Auto to build out electric vehicle infrastructure, an area where competitors like Tesla and Nio have extensively invested, could weigh on the company’s profitability.
As of mid-May, Li Auto had installed more than 400 fast charging stations in China. In contrast, Tesla has nearly 2,000 Supercharging stations in the country, while Nio boasts over 2,200 fast charging stations and 2,415 battery swapping stations available for its electric vehicle users to rapidly recharge.