Nomura believes that Li Auto's solution not only reduces mileage anxiety, but also allows the company to unlock markets in regions where charging infrastructure is scarce.
(Photo source: Li Auto)
Despite the chip shortage hitting Li Auto's deliveries hard in September, that didn't stop analysts from being bullish on its prospects.
Nomura initiated coverage of Li Auto in a research note sent to investors Thursday, with analyst Martin Heung giving the company a Buy rating and a $43.4 price target.
Li Auto rose 2.65 percent to $29.45 on Thursday, and the target price implies 47 percent upside.
Heung said Li Auto is one of the renowned domestic electric vehicle startups in China, along with NIO and XPeng Motors.
He believes Li Auto has managed to differentiate itself from other brands with its unique EVs using extended-range technology, allowing more skeptical car buyers to dip their toes in the EV world without worrying too much about charging.
Heung believes that Li Auto's solution not only reduces common problems faced by pure EV users, such as mileage anxiety and long charging wait times, but also allows OEMs like the company to unlock regional markets where charging infrastructure is scarce.
(Li ONE supports external discharge.)
It's worth noting that car companies are transitioning to all-electric models, driven by Chinese policy, and Li Auto is no exception.
According to the company's filing to the Hong Kong Stock Exchange in late July, it will launch its X platform next year and build a full-size luxury electric SUV based on it, which will use extended-range technology like the Li ONE.
Starting in 2023, Li Auto will launch two new platforms, Whale and Shark, and plans to launch at least two premium all-electric vehicles per year by then.
Starting in 2023, its X platform will also be used to produce all-electric vehicles. The Whale and Shark are pure electric vehicle platforms.
Li Auto said it is investing heavily in high-voltage pure electric vehicle technology. "We are focused on developing pure electric vehicles with ultra-fast charging capability, or high-voltage pure electric vehicles, which we believe will deliver a superior charging experience," the company said in July.
Under the company's planned high-power charging network, charging will be faster, cheaper and more accessible, Li Auto said.
In a recent presentation, Sun Guangmin, Li Auto's vice president and head of charging networks, described the company's vision for charging, including slow charging solutions for home and office scenarios, medium-speed charging solutions for destination scenarios, and high-voltage fast charging solutions.
Li Auto will in the future offer a total solution involving charging piles as well as vehicle charging capabilities to meet the demand for 400KW super-fast charging, Sun said.
Li Auto delivered 7,094 Li ONEs - the company's only model - in September, up 102 percent year-on-year and down about 25 percent from August.
"Li Auto saw a drop in deliveries in September, impacted by the continued shortage of chip supply," said Yannan Shen, co-founder and president of the company.
According to a report by yicai.com earlier this month, Li Auto recently acquired thousands of electronic parking (EPB) chips from the black market, and while their normal unit price is about RMB 6 yuan, the company's purchase price came to about RMB 5,000, exceeding the normal price by 800 times.
The report highlights that when they sought confirmation of this from Li Auto, the company denied it.
Due to increased pressure on chip supply, Li Auto has opened a new delivery model - it will deliver Li ONEs missing two radars, to be retrofitted in the future when that accessory arrives, according to what a large number of users of the company's app have shared.
Li Auto is currently selling the 2021 Li ONE, which was released on May 25, with five millimeter-wave radars for assisted driving functions, up from one previously.
Covid-19 in Malaysia has led to a serious hindrance in the production of a dedicated chip for Li Auto's millimeter-wave radar supplier, which in turn has affected the company's access to the accessory.
Li Auto reportedly bought chips from black market at 800 times the cost of normal prices