Li Auto’s January Deliveries Soar: Is LI a Good EV Stock To Buy?
Source: Li Auto

Li Auto’s January Deliveries Soar: Is LI a Good EV Stock To Buy?

Ruchi Gupta - Author

Feb. 2 2021, Updated 9:14 a.m. ET

Li Auto’s January deliveries show that sales at the Chinese EV (electric vehicle) company have continued to soar. Li Auto, whose stock trades under the ticker symbol of “LI” on the Nasdaq, went public in July 2020 in a transaction that raised $1.1 billion. It currently has one car model on the market, the Li ONE.

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Li Auto’s January deliveries of the Li ONE surged 356 percent to 5,379 units but fell from 6,126 units in Dec. 2020. Li has delivered a total of 38,976 cars since it began mass production in Nov. 2019. The company sells through its own outlets and currently operates 60 retail locations in 47 cities across China. It also operates more than 120 service centers. 

Li Auto sets up research center in Shanghai

The Chinese EV company also announced that it's setting up a new research center in Shanghai. The center will focus on developing rapid charging and autonomous driving technologies. It currently takes hours to fully charge an EV, compared with five minutes to refuel at a gas station. Several companies, including Tesla, Li Auto, and StoreDot, are working on reducing charging time to encourage more people to adopt EVs. 

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Li Auto’s January Deliveries Soar: Is It a Good EV Stock To Buy?
Source: Facebook / NIO

How Li Auto’s January deliveries compare with Xpeng's and NIO's

Xpeng shipped 6,015 cars in January, marking an increase of 470 percent—faster growth than Li Auto. Alibaba-backed Xpeng has two car models on the market, the P7 and the G3. Its January sales consisted of 3,710 P7s and 2,305 G3s. 

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Meanwhile, NIO’s January deliveries increased 352 percent to 7,225 cars. Although that growth was slower than Li Auto’s 356 percent, NIO made another monthly delivery record. It has shipped a total of 82,866 cars since it began mass production in 2018. NIO has three car models on the market, with a fourth coming by March 2022. 

Is Li Auto stock a good buy?

Li Auto stock would appeal to investors seeking exposure to the lucrative EV industry. The global market is on course to reach $803 billion in 2027 from $162 billion in 2019. As a domestic brand, Li Auto is well positioned to capitalize on China’s massive auto market. Additionally, the Chinese government has been supportive of the domestic EV industry, offering subsidies and friendly regulations.

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Li Auto’s January Deliveries Soar: Is It a Good EV Stock To Buy?
Source: koyfin

Which is the best Chinese EV stock: Li Auto, Xpeng, or NIO?

The chart above shows the performance of Li Auto, Xpeng, and NIO stocks. Li Auto stock has gained 11 percent in 2021. It trades at 33 times its sales for the past 12 months, making it less expensive than NIO and Xpeng, which trade at 47 and 99 times their sales, respectively. 

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Additionally, only 3.3 percent of Li Auto shares are in the hands of short-sellers, investors betting the stock will fall. Meanwhile, NIO and Xpeng stocks have short floats of more than 6 percent.

Whereas Li Auto stock may have a better valuation than NIO, it takes the backseat when it comes to sales. NIO continues to lead with deliveries, and many investors believe it stands the best chance to replicate Tesla’s success—which explains NIO's stock price. 


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