- Li Auto is facing increased short interest as concerns grow over its limited new model pipeline and competition from rivals.
- With short interest rising to 30%, the stock is under pressure despite some analysts maintaining a buy rating.
OUR TAKE
Li Auto is facing some tough challenges at the moment, with short sellers turning their attention to the company amid growing concerns about its limited pipeline of new electric vehicle (EV) models for 2024. Short interest in the company’s US-listed shares has shot up to around 30%, which shows that investors are pretty sceptical about its ability to compete in China’s super competitive EV market. With competitors like BYD and XPeng planning multiple new model launches, Li Auto’s decision to delay its new releases until 2025 makes people wonder about its market position. While some Wall Street analysts are still optimistic, the stock’s recent volatility suggests that investor confidence is shaky.
–Heidi Luo, BTW reporter
What happened
Li Auto has seen a significant increase in short selling activity, with short interest in its US-listed depositary receipts reaching around 30% as of 23 September. The spike comes after the company announced plans to delay new vehicle launches until 2025, raising concerns about its competitiveness in China’s crowded EV market.
Analysts have noted that the lack of new models could hinder Li Auto’s ability to maintain market share against rivals that are actively launching new vehicles.
The company’s latest model, the Mega, which was launched earlier this year, received a lukewarm response from consumers, leading to further concerns about its sales prospects.
Despite these concerns, Li Auto’s CEO, Li Xiang, remains optimistic about the company’s electric SUVs and has forecast total vehicle deliveries of between 145,000 and 155,000 units for the third quarter. However, the company’s share price has been volatile.
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Why it’s important
The growing short interest in Li Auto highlights significant investor scepticism about the company’s future, especially as it prepares to navigate a highly competitive landscape.
Major competitors such as BYD are planning to launch five new models by the end of the year, while XPeng is set to introduce a new electric sedan. These developments are putting additional pressure on Li Auto, which risks losing market share unless it can come up with compelling new products.
Market analysts, including Morningstar’s Vincent Sun, stress the urgency for Li Auto to introduce new models to restore investor confidence. The company’s second all-electric vehicle, expected in the first half of 2025, will be critical to its long-term viability.
The reaction to this upcoming launch will determine whether the Mega’s subdued performance was an isolated incident or indicative of deeper issues within the company. As trading sentiment for smaller EV players hinges on their product launches, Li Auto’s ability to compete will be closely watched in the coming months.
