Does Li Auto Q1 delivery encounter bottleneck after a surprise Q4 result?

This article is a script from the Q&A session of Li Auto's earnings call on February 25. In order to facilitate reading, we have made appropriate cuts. If you want to know more details, you can click the link provided below to re-watch the earnings call.

Q: The first question is about the sequential decline of the first quarter volume guidance. Can management elaborate on the decline, what drives it on the demand or supply side?
A: We think that a modest month-over-month decline does not mean that our sales are encountering bottleneck. Deliveries in January 2021 were 5,379 and in December was 6,126, an average for these two months were 5,753. These numbers are in line with our prior growth expectations. We think that during the Chinese Spring festival in February and also the upcoming Chinese Lantern Festival, our sales will be affected by the seasonality for sure. In addition, considering the impact of COVID-19 in Northern China, we are putting out a relatively conservative delivery guidance for the first quarter of 2021. We are confident that with the expansion of our retail store and the effective control of the pandemic, our sales will gradually increase.

Q: We saw a lot of tech companies step into EV market, like Baidu, Apple, Xiaomi. So what kind of impact or disruption, do you think these new entrants could bring to the EV and the autonomous driving market? And what would be the implication to Li Auto?
A: We think, by 2024, we will have the three major competitive advantages compared to those newcomers. First is the market share and the user base. It will be nearly 0.5 million to one million. Second advantage we'll have is our sales and service channel. By then, we should already have more than 1,000 retail stores. And also our factory capacity, our supply chain capacity and also our charging infrastructure will all become a competitive advantage for us. Last and the most important -- by then, our product portfolio will be much bigger, and we'll have both EREV portfolio and high-voltage BEV portfolio. So we respect those who want to enter this industry very much, but the timing is on our side.

Q: How can you prove you can catch up or even better compare your key competitors such as Tesla, NIO and Xpeng?
A: Regarding the plan in 2021, we will spend more money on R&D. It is the year for preparation of our in-house brand new scalable and upgradeable system architecture, covering next-generation intelligent cockpit, autonomous driving, car computing platform and our own operating -- car operating system, which we'll be releasing in 2022. Of course, in meanwhile, similar features offered by our competitors, plus some brand-new features will be provided to our customers for sure. From engineering resource point of view, we will double size of our total R&D staff as we mentioned. So building Shanghai R&D center is part of this expansion. So regarding competition, we have confidence to prove ourselves efficiency again as we did financially last year. So we believe with fast expansion of our R&D, exciting news regarding our in-house technology like autonomous driving can be unveiled soon.