(Yicai) March 17 -- Shares of Li Auto fell after the Chinese new energy vehicle startup said its net profit shrank 32 percent last year despite achieving record deliveries.

Li Auto [HKG: 2015] was trading down 5.9 percent at HKD106.50 (USD13.70) as of 11.25 a.m. in Hong Kong today. Its New York-listed stock [NASDAQ: LI] closed 4.4 percent down at USD27.46 on March 14.

Net profit totaled CNY8 billion (USD1.1 billion) in 2024, compared with CNY11.8 billion the year before, the Beijing-based company said in its latest financial statement on March 14. Revenue rose 17 percent to CNY144.5 billion (USD19.8 billion).

Li Auto's deliveries soared more than 33 percent to record 500,508 last year from 2023, with NEV sales climbing 15 percent to CNY138.5 billion. However, vehicle margin fell to 19.8 percent from 21.5 percent, and gross margin declined to 20.5 percent from 22.2 percent in the period.

Exceeding the 500,000 deliveries milestone first among premium automotive brands in China and maintaining a sales leadership position in the market segment of cars priced above CNY200,000 (USD27,640) "reflect our ability to drive innovation, efficiency, and value creation for users," Li Auto's Chairman and Chief Executive Li Xiang said.

In the fourth quarter of last year, Li Auto's net profit narrowed 39 percent to CNY3.5 billion, while revenue rose 6.1 percent to CNY44.3 billion (USD6.1 billion). Deliveries surged over 20 percent to 158,696 units in the period, with NEV sales up 5.6 percent to CNY42.6 billion.

For this year, Li Auto set a first-quarter delivery target of between 88,000 and 93,000 units, up 9.5 percent to 16 percent from a year earlier, the firm said in the earnings report. However, revenue is expected to decline 3.5 percent to 8.7 percent to between CNY23.4 billion and CNY24.7 billion.

Li Auto is ramping up investment in several key areas this year. It plans to expand its charging network to 4,000 stations by the end of December, up from 1,874 at the end of February, and hike research and development spending in artificial intelligence and autonomous driving technologies, Li said during the earnings call.

"Moving forward, we remain committed to expanding our business and driving technological innovation while striving for financial excellence," said Li Tie, chief financial officer of Li Auto. "By continuously enhancing our comprehensive capabilities, we aim to grow sustainably and steadily advance toward our long-term vision in this intelligent era, creating value for all our stakeholders."

International expansion remains another major focus for Li Auto in 2025, as it established its first overseas R&D center in Munich, Germany, in January. The company has created a dedicated overseas market development department, signaling its commitment to global growth despite rising trade barriers in various markets.

The decline in Li Auto's profits may also be related to broader challenges brought by the complex external environment that Chinese NEV manufacturers are now facing.

China-made NEVs and their industrial and supply chains are making a splash in the international market, so many foreign markets have increased entry barriers to protect their own automotive industries in recent years, Great Wall Securities said. As a result, the external environment now poses more challenges for Chinese NEV brands that expanded overseas.

"The automotive industry is capital-intensive, especially during this period of new energy transition and technological upgrading," said Pan Jun, investment manager at Cheese Fund. "Continuous iteration of battery, motor, and electronic control technologies, coupled with the early-stage development of advanced autonomous driving, require substantial human and financial resources."

Editor: Futura Costaglione