An inside view of a Li Auto L8 car.
HECTOR RETAMAL/AFP via Getty Images
Li Auto
has a unique electric-vehicle strategy that is working. No auto company has picked up more Chinese market share in recent months than Li.
Citi analyst Jeff Chung on Thursday updated his EV database with data from the Chinese Passenger Car Association. There is some good news for worried EV investors along with some food for thought for electric-vehicle leader
Tesla
(ticker: TSLA).
New energy vehicle, or NEV, sales in October grew 31% year over year. That’s up from 23% growth in September and the highest year-over-year growth since May when companies were posting results that compared with 2022 Covid-19-related production declines.
NEV is how China tracks EV sales. It includes both battery-electric vehicles, like the ones
Tesla
makes, and plug-in hybrid vehicles.
Accelerating growth is good for everyone in the industry. EV stocks have been hammered in recent weeks over fears that growth has been slowing down. Through midday Friday, Tesla stock has declined about 14% over the past three months. The
S&P 500
has traded flat and the
Nasdaq Composite
has fallen off about 2% over the same span.
BYD
(1211.Hong Kong) stock was down about 7%, despite posting growth of about 38% year over year. BYD has, essentially, caught Tesla by offering lower-priced EVs. BYD sells several EVs in China that start below $30,000, well below the price of a Tesla Model 3.
Li Auto
(ticker: LI) shares have fallen about 14% over the past three months, despite the company posting better-than-expected earnings Thursday and despite market share gains. No auto maker has picked up more NEV market share in China over the past 12 months than Li.
Li captured 4.5% of the market in October, up from 1.5% a year ago. Tesla’s market share slipped to 8.2% from 10.6%. Tesla’s market share in China can be a tough metric to use to evaluate the health of its business. Tesla serves both the European and Chinese markets from its plant in Shanghai. Tesla has exported about 40% of its Chinese production over the past three months.
Li sales grew an amazing 300% year over year in October. One thing to note about Li: It doesn’t make battery-electric vehicles, and it doesn’t make plug-in hybrids either.
Li calls its platform range-extended electric vehicles. There is a gasoline-powered generator on board to recharge the battery if it gets too low. That sounds similar to a plug-in hybrid, but there is no gas engine driving the vehicle and no traditional transmission—only an electric motor.
It’s Li’s way to overcome range anxiety, or the fear or running out of juice with nowhere to charge, without adding too much extra cost to vehicles.
It’s hard to call the strategy anything but a success.
Stellantis
(STLA) is going to try it too. The 2025 Dodge Ram 1500 EV truck will come with a generator. The bottom line is 690 miles of range on one charge with the generator gas tank full.
Li Auto plans to offer battery-only EVs too. That will be easier for the company to do without redesigning a plug-in hybrid model.
Someday, as batteries get better and cheaper and as charging infrastructure and technology improve, a generator might not be needed. For now, adding it has been a winner for Li.
Write to Al Root at [email protected]
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