Beijing (ZXZC)- Li Auto delivered 2,300 vehicles in February, a year-on-year increase of 755%, the company announced on Tuesday. Its total deliveries of the first two months were 7,679 units, surging 430% compared with the same period of last year. Last week, the company said that it expects its deliveries in the first quarter of this year are to be between 10,500 and 11,500 units.

“Our February deliveries were affected by seasonal factors related to the Chinese New Year holiday, as well as the localized COVID-19 outbreaks in northern China,” said Yanan Shen, co-founder and president of Li Auto. “With the continuous expansion of our direct sales and servicing network, and the effective control of the pandemic in China, we are confident of our growth momentum going forward.”

By the end of February, 2021, Li Auto had 60 retail stores in 47 cities, and 125 servicing centers and Li Auto-authorized body and paint shops in 90 cities. In order to meet increasing demands, and in preparation for new models in 2022 and beyond, the startup plans to accelerate the expansion of its direct sales and servicing network in the future.

Last week, the company reported its fourth quarter results. During the last quarter of 2020, Li Auto delivered 14,464 vehicles, representing a 67% increase over the previous quarter. Revenues totaled RMB4.15 billion (US$635.5 million) in the fourth quarter of 2020, jumping 65.2% compared with the third quarter of 2020. Its quarterly net income turned positive year on year from negative RMB106.9 million to positive RMB107.5 million. Besides, its operating cash flow was RMB1.82 billion (US$279.1 million) during the three months ended December, 2020.

This was the first time for the automaker to post quarterly net income. Li Tie, CFO of the automaker, attributed the profit to the earnings brought by the company’s investment in short-term wealth management products. According to the CFO’s forecast, Li Auto’s gross margin will be from 19% to 20%, thanks to the expected production increase, BOM and manufacturing cost reduction. 

Currently, the company has only one model for sale. As the industry competition becomes increasingly intense, the company needs more products to support its sustainable development. Li Auto plans to release at least 2 new models every year from 2022 on with a price range from RMB150,000 to RMB500,000. Specifically, its first battery electric vehicle will be launched in 2023. Currently, it is retooling its Changzhou plant for the production a new SUV model, which is scheduled to hit the market in 2022.

As an innovator in China's NEV market, Li Auto initially takes a different roadmap from other players. That is extended-range electric vehicles, or EREV, which it thinks is the most efficient solution to address current challenges facing domestic market. One of the reasons why the company accelerate the development of battery electric vehicles is that ultra-fast charging technologies has become more and more mature, according to Yanan Shen. In the future, the company will build its own charging infrastructure.

According to a new policy issued by Shanghai government, consumers of plug-in hybrid electric vehicles (including extended range electric vehicles) will not be eligible for free special license plates from January 1, 2023. The policy change is said to be another driver for Li Auto’s efforts in battery electric vehicle segment.

But the president expected the company will face only limited impact from the change. Among all deliveries of 2020, Shanghai only account for 5% and the company expects other cities which have no limits on license plates will contribute 55% of the total deliveries by 2022. 

Instead, under new rules, more and more consumers may choose to buy plug-in hybrid electric vehicles and extended-range electric vehicles before 2023. “So we expect to see delivery increase in 2022,” the president said.