By Jiahui Huang

Chinese plug-in hybrid specialist Li Auto reported lower net profit for the fourth quarter despite record revenue as a brutal price war hurt its bottom line.

The Beijing-based carmaker said Friday that its net profit fell 38% to 3.52 billion yuan, equivalent to $485.9 million. That beat the 3.22 billion yuan estimate of analysts in a Visible Alpha poll.

Its adjusted net profit, a metric closely watched by analysts, was 4.03 billion yuan, down 10% from a year earlier. CCB International analyst Qu Ke said the result was a slight disappointment as it didn't significantly exceed market consensus of 4.0 billion yuan.

Revenue for the quarter rose 6.1% to a record 44.27 billion yuan, topping analysts' estimate of 43.26 billion yuan. The EV maker sold 158,696 vehicles during the period, up from the previous quarter but slightly missing its guidance.

Li Auto's vehicle deliveries rose 20% in the fourth quarter, but revenue growth was less than a third of that, reflecting the intense pressure the company faced from price cuts.

Its gross margin fell to 20.3% from 23.5% a year ago and was lower than 21.5% in the third quarter. The company said the year-over-year margin weakness was due to product-mix changes. It attributed the sequential drop to losses on purchase commitment and lower selling prices.

The Chinese automaker's American depositary receipts fell about 6% in premarket trading.

Qu of CCB International said the current quarter could be quite challenging for the carmaker, citing the company's sales outlook. For the first quarter, Li Auto said it expects to deliver between 88,000 and 93,000 vehicles and post revenue of 23.4 billion yuan to 24.7 billion yuan, down 3.5%-8.7% from a year earlier.

Despite the mixed results, the company, known for its premium plug-in hybrids, remains among a handful of profitable Chinese EV makers. For 2024, its net profit fell 31% to 8.03 billion yuan and gross margin fell to 20.5%. That compared with U.S. rival Tesla's 17.9% margin for the year. Year to date, Nasdaq-listed Li Auto has climbed 20%, while Tesla's stock has slumped 40%.

The Chinese automaker in December said it aimed to become a leading artificial-intelligence company by 2030. Last month, the company incorporated Chinese AI startup DeepSeek's large language model into its smart assistant.

Analysts are optimistic about the company's prospects in the medium term. Li Auto is positioned for continued growth thanks to its strengthening market leadership in autonomous-driving and AI technologies, Deutsche Bank analyst Bin Wang wrote in a recent note.

Competition is heating up in the country over AI-powered driving technology after local champion BYD introduced a new system for its mass-market models in February, offering advanced driving-assistance functions in cheaper cars.

Tesla last month released an update to its driving-assistance software in China, moving closer toward offering its "full self-driving" tech in the world's largest EV market.

Write to Jiahui Huang at jiahui.huang@wsj.com

(END) Dow Jones Newswires

March 14, 2025 07:30 ET (11:30 GMT)

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