The Chinese electric vehicle (EV) price war isn’t slowing down. Li Auto (NASDAQ:LI) recently announced that it will be lowering the prices for multiple EV models in an attempt to remain competitive within the sector. Consumers interested in purchasing an L7 Air or an Ideal L8 Air in the near future will be looking at some significant savings.
For investors, news of these price cuts has generated some excellent momentum. LI stock spent today making progress and looks primed to continue rising into the rest of the week.
There’s no telling for how long China’s EV price war will continue. But as it stands, Li is well-positioned to keep riding this wave and generate positive returns.
What’s Happening With LI Stock?
Today’s growth comes after a week of volatility for LI stock. Shares closed up by 9% on Tuesday. What’s more, it has been an overall excellent month for this EV stock, which has overcome negative momentum and managed to rise more than 32% over the period.
Li is trying to spur sales growth by making its popular vehicles more affordable. Now, the L7 Air will be priced at 301,800 yuan ($42,025), down from 319,800 yuan ($44,531). Likewise, the Ideal L8 Air will be lowered from a price of 339,800 yuan ($47,316) to 321,800 yuan ($44,809).
These price cuts aren’t the only reason for investors to bet on LI stock. Indeed, the company has recently displayed impressive growth and strong fundamentals, holding its own amid a difficult domestic market. As InvestorPlace contributor Joel Baglole reports:
“At the end of February, Li Auto reported fourth quarter 2023 earnings of 60 cents per share on revenue of $5.80 billion. Wall Street had forecast […] 44 cents and $5.50 billion in sales. A year earlier, the automaker posted earnings of only 4 cents on sales of $2.50 billion. Equally impressive was Li Auto’s Q4 operating margin of 7.3%, which was up from break-even results a year ago. Clearly, production, sales and profits are kicking into high gear at the company.”
Li Auto also received a slight bump today after consumer electronics maker Xiaomi (OTCMKTS:XIACY) announced the launch of its new EV. Still, Li’s price cuts are particularly significant, as is the way LI stock has responded. Investors should keep that in mind as they evaluate the best ways to play the Chinese EV market in 2024.
On the date of publication, Samuel O’Brient did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
