The domestic new energy vehicle (NEV) industry is currently witnessing an unprecedented transformation. The rising penetration rate of NEVs is fueled by three primary forces: advancements in battery technology, the evolution of intelligent driving systems, and shifts in consumer demand.

In this race to redefine value, Li Auto stands out with its unique strategic positioning. As a rising star in the automotive sector, Li Auto, with its focus on "family users," has not only surpassed the milestone of 500,000 annual sales but has also demonstrated remarkable potential in profitability, market share, and ecological expansion.

As competition in the NEV market intensifies, Li Auto's 2024 financial report, as a significant player in the industry, naturally attracts substantial attention.

Joys and Concerns in the Financial Report

Following the release of Li Auto's 2024 fourth-quarter and full-year financial report, its revenue and delivery figures sparked heated discussions in the market. However, behind the robust growth lies the need to address the optimization potential and inherent risks within its financial structure.

Firstly, while revenue and deliveries hit new highs, growth rates have decelerated. The report revealed that Li Auto's fourth-quarter revenue was 44.3 billion yuan, up 6.6% year-on-year, and full-year revenue was 144.5 billion yuan, up 16.6% year-on-year, making it the only NEV company to surpass 100 billion yuan in annual revenue for two consecutive years. Nevertheless, compared to 2023, Li Auto's revenue growth rate has slowed. In terms of deliveries, Li Auto delivered 158,696 vehicles in the fourth quarter of 2024, up 20.4% year-on-year, and 500,508 vehicles for the full year, up 33.1% year-on-year.

Secondly, the gross margin remains around 20%, but cost pressures are looming. Among NEV brands, Li Auto's gross margin performance has consistently been impressive, surpassing that of competitors like NIO and XPeng. However, last year's gross margin, while still strong, declined compared to previous years. The report indicated that Li Auto's gross margin was 20.3% in the fourth quarter of 2024, down from 23.5% in the same period last year, and 20.5% for the full year of 2024, down from 22.2% in 2023. This year-on-year decline is attributed to changes in product mix.

Finally, despite abundant operating cash flow, R&D investment intensity is insufficient. Li Auto's annual operating cash flow in 2024 reached 15.9 billion yuan, and the company's cash reserves stood at 112.8 billion yuan by the end of 2024. This robust cash flow supports technological research and development as well as channel expansion. However, in terms of R&D investment, Li Auto's R&D expenses in 2024 were 11.1 billion yuan, up 4.6% year-on-year, with an R&D expense ratio of 7.7%, down 0.8 percentage points year-on-year. In an industry accelerating into high-level intelligent driving competition, this strategy may affect Li Auto's long-term competitiveness.

The Dual Logic of Product Strategy and Ecological Layout

Li Auto's success stems not only from its product positioning but also from its strategic choices. From transitioning from extended-range to pure electric vehicles and from family scenarios to all scenarios, every strategic move carries deep implications.

Li Auto's product strategy revolves around "family scenarios," with precise niche market positioning. These users have specific needs for spatial comfort and endurance, which aligns well with extended-range technology. The L series models, featuring an ultra-long wheelbase of 3050mm, offer 1026mm of legroom in the second row and create a mobile family living space through configurations such as a 21.4-inch rear entertainment screen, a car refrigerator, and vehicle-to-load discharging functions. This "space as a service" concept accurately addresses the dual needs of family users for comfort and practicality. Data shows that 37% of Li Auto owners come from second-child families, significantly higher than the industry average.

In terms of technology route selection, Li Auto embodies prudent pragmatism. While the industry enthusiastically pursues cutting-edge technologies like 800V high-voltage platforms and solid-state batteries, Li Auto's extended-range technology route balances pure electric endurance with comprehensive endurance through a range extender and dual motors. This "5 minutes charging for 200km endurance" solution alleviates users' endurance anxiety while avoiding the cost escalation associated with radical technology routes. In intelligent driving, although the AD Max 3.0 system does not adopt a full-stack self-research route, its city NOA function based on the BEV+Transformer architecture prioritizes deployment in high-tier cities. This "gradual penetration" strategy effectively manages R&D investment risks.

In terms of ecology, Li Auto is building a closed loop of "hardware + software + services." For instance, on the hardware front, Li Auto enhances user experience and premium pricing through configurations like car refrigerators and rear screens. On the software side, the AD Max 3.0 autonomous driving system aims for full city NOA coverage in 2024. On the service side, Li Auto has launched a family membership system integrating value-added services such as charging, insurance, and maintenance. According to Morgan Stanley's calculations, the proportion of software service revenue is expected to increase from 2.1% in 2023 to 8% in 2025, emerging as a new profit growth driver.

Clear and Hidden Dangers in the Long-Term Competition

2025 could mark a turning point for the NEV industry, with disputes over technology routes giving way to competition in commercialization capabilities, and the market landscape transitioning from "multiple strong players" to "top players dominating." At this critical juncture, Li Auto must navigate pressures from both new and traditional automakers while balancing technology investment and financial security, narrowing its strategic fault tolerance.

Firstly, market competition is fragmenting, reflected in overlapping price bands. The Wenjie M9, jointly developed by Huawei and Thalys, directly targets Li Auto's L9 with a starting price of 470,000 yuan, and its Huawei ADS 2.0 intelligent driving system poses a significant challenge in urban NCA scenarios. In the 200,000-300,000 yuan range, models like BYD's Tang N8 and Great Wall's Blue Mountain DHT-PHEV leverage economies of scale to bring plug-in hybrid prices below 250,000 yuan. This dual pressure is altering user decision-making patterns. According to Yiche Academy research, potential Li Auto customers' attention towards the BYD brand has increased by 23% year-on-year, indicating a weakening brand loyalty.

Secondly, the transition to pure electric vehicles entails complex technical risks and economic trade-offs. While Li Auto's 800V high-voltage platform achieves a 4C charging rate in lab settings, real-world charging efficiency may be compromised by factors like grid load and battery degradation. More critically, Li Auto's pure electric platform development lags behind NIO's NT3.0 and XPeng's SEPA 3.0 by at least 18 months, potentially exacerbating generational gaps in core areas like electronic and electrical architecture and wire-controlled chassis.

Finally, uncertainties stemming from geopolitics and policy adjustments are on the rise. Some domestic cities plan to eliminate subsidies for extended-range NEVs in 2025, directly threatening Li Auto's current main products. Regarding international expansion, Li Auto aims to enter the European market in 2024, but the EU's recent "Battery Regulation" requires automakers to bear the full lifecycle cost of battery recycling, adding pressure on Li Auto, which relies on external battery suppliers. The broader impact comes from the battle over technical standards. The global promotion of Tesla's North American charging standard may force Li Auto to abandon its self-built supercharging network in Europe and join a third-party charging alliance, weakening its strategic autonomy in infrastructure development.

Li Auto's financial report serves not just as a report card but also as a challenge letter. As the NEV industry shifts from "electrification" to "intelligentization," Li Auto must prove not only the sustainability of its financial data but also the evolutionary potential of its technology route. Amid the encirclement by Huawei's intelligent driving system, BYD's cost control, and Tesla's global ecosystem, Li Auto must find a new balance between its strengths in user insight and the unfamiliar technical challenges ahead.