Stocks for Li Auto continue to drop following the reintroduction of the i8 model
Li Auto, a Chinese electric vehicle manufacturer, has found itself in the midst of controversy following the relaunch of its first all-electric SUV, the Li i8. The vehicle was officially launched on July 29, but the company faced a stock decline due to a combination of factors.
Early Market Reception Falls Short
The Li i8's market reception was muted, particularly when compared to rivals such as Nio's Onvo L90. The L90, launched on July 31, offered a lower price and additional features like battery swapping, which seemed to attract more interest. As a result, Li Auto was forced to reduce the number of Li i8 trims from three to one and lower the price just one week after launch. This quick move was seen by investors as reactive rather than strategic, raising concerns about the company's product positioning.
Negative Social Media Backlash
The launch of the Li i8 was overshadowed by a wave of negative posts on social media platforms like Weibo and WeChat. These posts amplified concerns about the brand's appeal and product quality, further undermining investor confidence.
Legacy of Mega MPV Failure
Li Auto's first pure battery electric vehicle, the Mega MPV, had already failed to gain traction and was criticised for its styling and marketing. This prior failure compounded skepticism about the company's ability to execute successful battery electric vehicles (BEVs).
Perception of Lack of Strategic Foresight
Analysts and industry observers characterised the quick trim consolidation and discount as a disguised price cut, reflecting reactive rather than proactive management. This undermined investor confidence in Li Auto’s ability to compete strategically in China’s rapidly evolving EV market.
Despite the promising technical specs of the i8 and aggressive delivery targets, these factors combined to weaken investor trust and lead to a stock decline after the relaunch. The decline brings the cumulative drop since July 21 to 21.8 percent, leading the company to enter a technical bear market.
The Li i8 offers three variants: Pro, Max, and Ultra, with starting prices of RMB 321,800, RMB 349,800, and RMB 369,800, respectively. However, Li Auto announced the discontinuation of the Pro and Ultra variants, leaving only the Max variant available. The starting price of the Max variant has been reduced to RMB 339,800, a decrease of RMB 10,000 from the previous price. Consumers can now obtain vehicles with the same configuration as the Ultra variant through paid options, with the total cost amounting to RMB 349,800.
As of press time, Li Auto's share price is down 5.3 percent in Hong Kong trading. The company is now dealing with the aftermath of the controversial relaunch and the subsequent stock decline, and it remains to be seen how they will navigate this challenging period in their development.
- The Li i8, Li Auto's first all-electric SUV, encountered a lukewarm market reception compared to competitors like Nio's Onvo L90, which offered lower prices and additional features.
- Negative social media posts on platforms like Weibo and WeChat amplified concerns about Li Auto's brand appeal and product quality, further undermining investor confidence.
- Li Auto's prior failure with the Mega MPV, criticized for styling and marketing, compounded skepticism about the company's ability to execute successful battery electric vehicles (BEVs).
- Analysts characterized Li Auto's quick trim consolidation and price reduction as a disguised price cut, which undermined investor confidence in the company's strategic foresight in China's rapidly evolving EV market.
- Although the Li i8 offers promising technical specs and aggressive delivery targets, these factors combined to weaken investor trust, leading to a stock decline for Li Auto, particularly in the finance and technology sectors.
