reported gross margin of 22.0 percent in the third quarter, higher than 12.7 percent in the same period last year and 21.8 percent in the second quarter.

Li Auto (NASDAQ: LI) reported strong third-quarter earnings, as it saw record quarterly deliveries.

The company generated record revenue of RMB 34.68 billion ($4.75 billion) in the third quarter, beating market expectations of RMB 33.641 billion, according to its unaudited earnings report released today.

This represents a year-on-year increase of 271.2 percent and a 21.0 percent increase from the second quarter, exceeding the upper end of the previous guidance range of RMB 32.33 billion to RMB 33.30 billion.

Li Auto delivered a record 105,108 vehicles in the third quarter, the first time it has seen quarterly deliveries exceed 100,000 vehicles, up 296.28 percent year-on-year and up 21.47 percent from the second quarter.

The company's revenue from vehicle sales in the third quarter amounted to RMB 33.62 billion, an increase of 271.6 percent year-on-year and up 20.2 percent from the second quarter. The growth was mainly attributed to an increase in vehicle deliveries, Li Auto said.

Li Auto's third-quarter net income was RMB 2.81 billion, compared with a net loss of RMB 1.65 billion in the same period last year, an increase of 21.8 percent from the second quarter net income. This was Li Auto's fourth consecutive profitable quarter.

The company reported non-GAAP net income of RMB 3.47 billion in the third quarter, compared to a non-GAAP net loss of RMB 1.24 billion in the third quarter of 2022, an increase of 27.1 percent from non-GAAP net income in the second quarter.

It reported basic and diluted net income per ADS attributable to ordinary shareholders of RMB 2.86 and RMB 2.67 in the third quarter, respectively.

Li Auto's gross margin was 22.0 percent in the third quarter, up from 12.7 percent in the same period last year and 21.8 percent in the second quarter. The increase in gross margin was mainly attributed to the growth in vehicle margin, it said.

Li Auto's third-quarter vehicle margin was 21.2 percent, up from 12.0 percent a year ago and 21.0 percent in the second quarter.

Excluding the impact of the provision for inventory and the loss of purchase commitments related to Li One in the third quarter of 2022, vehicle margin remained stable compared to the same period last year, Li Auto said.

Li Auto's research and development expenses for the third quarter were RMB 2.82 billion, an increase of 56.1 percent year-on-year and up 16.1 percent from the second quarter.

The increase in R&D expenses was mainly due to an increase in employee compensation as a result of an increase in the number of employees, as well as an increase in expenses to support the expanding product portfolio and technologies, Li Auto said.

As of September 30, Li Auto's cash position was RMB 88.52 billion.

Li Auto expects fourth-quarter vehicle deliveries to be in the range of 125,000 to 128,000 units, implying year-on-year growth of 169.9 percent to 176.3 percent. The guidance is higher than Wall Street's estimate of 112,264 units.

Considering it delivered 40,422 vehicles in October, the guidance implies that Li Auto expects to deliver a total of 84,578 to 87,578 vehicles in November and December.

Li Auto expects fourth-quarter revenue to be in the range of RMB 38.46 billion to RMB 39.38 billion, representing year-on-year growth of 117.9 percent to 123.1 percent.

Li Auto targets annual sales of at least 3 million vehicles by 2028, report says