By George Glover and Al Root

Li Auto stock slid Friday after the Chinese electric vehicle maker predicted its first-quarter revenue would fall year over year. Its latest results are a reminder that the Chinese EV market remains brutally competitive.

Li's American depositary receipts fell 2.6% in Friday trading to $27.96, while the S&P 500 and Dow Jones Industrial Average were up 1.9% and 1.4%, respectively.

On Friday, Li said it delivered 158,696 vehicles over the final quarter of 2024, up 20.4% from a year ago. Its revenue climbed 6.1% from a year ago to 42.6 billion yuan ($5.8 billion), roughly in line with analysts' forecasts.

Vehicle profit margins were 19.7% in the fourth quarter of 2024, down from 22.7% in the 2023 fourth quarter, and down from 20.9% in the third quarter of 2024.

Falling profit margins and soft guidance do little to reassure investors who have been fretting about weak Chinese consumer spending and an intense price war between the country's EV makers.

For the current quarter, Li guided to sales between $3.2 billion and $3.4 billion. The midpoint of those figures is well below the $4.9 billion that analysts were forecasting, according to FactSet.

Some sales decline from the fourth quarter to the first quarter is expected, because the first quarter is typically the weakest period for new car sales in China and many global markets. For Li, first-quarter deliveries are expected to fall between 88,000 and 92,000 vehicles.

Li delivered 56,190 vehicles in January and February combined, so guidance implies March deliveries of about 34,000 vehicles, up about 18% year over year. That would bring the total quarter's deliveries up about 13% year over year.

Despite delivery growth, Li sees sales falling roughly 5% year over year in the first quarter. Different models and options selected by buyers can impact car pricing, but the decline is another sign that the Chinese EV market is very competitive, with companies cutting prices to maintain market share.

On Friday, Reuters reported that Tesla was trying to take 20% out of the cost of a Model Y to help maintain market share in China.

Tesla Model Y sales in China were down almost 50% year to date through February, according to data from Citi analyst Jeff Chung.

Some of the declines are related to Tesla changing over to the updated version of its Model Y, so sales should recover. The company's market share, however, has been trending lower in China, which is the world's largest market for new cars, and new EVs.

Write to George Glover at george.glover@dowjones.com and Al Root at allen.root@dowjones.com

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March 14, 2025 12:09 ET (16:09 GMT)

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