Shanghai (ZXZC)- Li Auto Inc. ("Li Auto" or the "Company"), a prominent player in China's new electric vehicle market, released its unaudited financial results for the quarter and full year ending December 31, 2023. 

Regarding the financial highlights for the fourth quarter of 2023 (Q4 2023), its revenues amounted to 41.73 billion yuan (US$5.88 billion), marking a remarkable 136.4% year-on-year (YoY) surge and a notable 20.3% quarter-on-quarter (QoQ) increase.

The company's vehicle sales for Q4 2023 reached 40.38 billion yuan (US$5.69 billion), showcasing a substantial 133.8% YoY soar and a noteworthy 20.1% QoQ increase. The YoY surge in revenue from vehicle sales was primarily driven by heightened vehicle deliveries, partially mitigated by a lower average selling price attributed to a varied product mix between the two quarters. The QoQ increase in vehicle sales was predominantly due to an uptick in vehicle deliveries.

Li L7; photo credit: Li Auto

In Q4 2023, Li Auto's vehicle deliveries reached 131,805 vehicles, indicating a substantial YoY surge of 184.6%.

Income from operations for Q4 2023 stood at 3.04 billion yuan (US$427.7 million), marking a significant turnaround compared to the 133.6 million-yuan loss from operations in Q4 2022. This also represents a notable 29.8% increase from the 2.34 billion-yuan income from operations recorded in the third quarter of 2023 (Q3 2023).

In the same quarter, the company's net income reached 5.75 billion yuan (US$810.2 million), showcasing an extraordinary YoY surge of 2,068.2%, and also representing a 104.5% QoQ leap.

In Q4 2023, Li Auto's vehicle margin reached 22.7%, showing an improvement from 20.0% in Q4 2022 and 21.2% in Q3 2023. Excluding the impact of inventory provision related to the Li ONE in Q4 2022 and adjustments of the warranty reserve in Q4 2023 based on updated cost estimates for future claims, the vehicle margin demonstrated relative stability compared to Q4 2022, said the carmaker. The increase in vehicle margin from Q3 2023 was primarily attributed to the aforementioned adjustments in the warranty reserve for Q4 2023.

The company's gross margin for Q4 2023 stood at 23.5%, exhibiting growth from 20.2% in Q4 2022 and 22% in Q3 2023. The uptick in gross margin compared to Q4 2022 and Q3 2023 was primarily driven by the increased vehicle margin. 

Li Auto also announced its R&D expenses in Q4 2023 amounted to 3.49 billion yuan (US$491.7 million), reflecting a 68.6% YoY increase and a 23.9% QoQ growth. The YoY and QoQ surge in the quarterly R&D expenses was mainly driven by heightened expenditures to support the expansion of product portfolios and technologies, along with increased employee compensation due to the growing number of staff. 

As for the full-year financial results for 2023, Li Auto said its annual revenues amounted to 123.85 billion yuan (US$17.44 billion), marking a remarkable YoY spike of 173.5%. 

Its vehicle sales for the same period reached 120.29 billion yuan (US$16.94 billion), demonstrating a substantial YoY hike of 172.7%. The boost in revenue from vehicle sales can be primarily attributed to the increased number of vehicle deliveries. 

Li Auto delivered 376,030 vehicles through 2023, reflecting an impressive surge of 182.2% from the previous year. 

Li L8; photo credit: Li Auto

In 2023, Li Auto's vehicle margin stood at 21.5%, a notable improvement from the 19.1% recorded in 2022. The increase in vehicle margin can be largely attributed to the impact of inventory provision and losses on purchase commitments related to Li ONE in 2022, as well as true-up adjustments of warranty reserve in 2023 based on an updated estimate of costs of future claims. However, this improvement was partially offset by the lower average selling price in 2023. 

The gross margin for the same period was 22.2%, compared to 19.4% in 2022. The uptick in the annual gross margin was primarily driven by the increase in vehicle margin. 

Net income for the year 2023 amounted to 11.81 billion yuan (US$1.66 billion), a significant turnaround from the 2.03 billion yuan of net loss in 2022. The positive net income in 2023 was partly attributable to a non-cash tax benefit of 1.99 billion yuan (US$280.3 million) resulting from the release of the valuation allowance on certain deferred tax assets.

Free cash flow in 2023 reached 44.19 billion yuan (US$6.22 billion), marking a substantial YoY spike of 1,861.8%.

R&D expenses for the year 2023 were 10.59 billion yuan (US$1.49 billion), showcasing a 56.1% jump from a year earlier. This rise in yearly R&D expenses was primarily driven by increased employee compensation due to the growing number of staff and heightened expenses to support the expansion of product portfolios and technologies.