After becoming the first new energy car company in China to exceed 100 billion yuan in annual revenue, Ideal Auto has gained even more market attention.
On August 28th, Ideal Automotive (LI. NASDAQ) released its Q2 2024 results. During the period, the company achieved a revenue of 31.678 billion yuan, a year-on-year increase of 10.6%; The overall gross profit margin was 19.5%, a year-on-year decrease of 2.3 percentage points; After adjustment, the net profit was 1.503 billion yuan, achieving profitability for seven consecutive quarters.
In the first quarter, Ideal Automobile's revenue and adjusted net profit were 25.634 billion yuan and 1.276 billion yuan, respectively; Based on the data from the second quarter, the company's total revenue for the first half of the year reached 57.312 billion yuan, with an adjusted net profit of 2.78 billion yuan. From January to June, Ideal Automobile delivered a total of 189000 new cars, a year-on-year increase of 38.4%; Roughly calculated based on adjusted net profit/delivery volume, the net profit per vehicle during the period was approximately 14700 yuan.
After experiencing setbacks in the MEGA market performance and price adjustments across the entire range of products, Li Xiang, the chairman and CEO of Ideal Auto, who was once active on social media platforms, has clearly become much more low-key this year, rarely speaking out unless necessary.
At the Q2 earnings conference call, Li Xiang remained cautious in his words. When answering the question raised by investors about how to view the potential impact of Huawei's HarmonyOS new product on Ideal Auto's sales, he referred to Ideal Auto, which has been established for nine years, as a startup, and Huawei as a role model that Ideal needs to learn from. Hongmeng Zhixing is our strongest competitor in the market, and we believe that both sides will coexist healthily in the long run. From another perspective, our core attitude is to learn from Huawei's technology research and development system and business management system in the long run and continuously
As the production capacity of Ideal L6 tends to stabilize, Ideal Automotive expects that the delivery volume in the third quarter may reach 145000 to 155000 vehicles, a year-on-year increase of 38.0% -47.5%; The total revenue is expected to reach 39.4-42.2 billion yuan, a year-on-year increase of 13.7% -21.6%.
Li Tie, CFO of Ideal Automobile, confidently stated that on the premise of maintaining a healthy passenger car market in the second half of 2024, Ideal Automobile is confident in achieving the delivery of 500000 vehicles for the whole year.
Expected overall gross profit margin to return to the 20% level in the third quarter
Balancing the demand for "sales growth" and "maintaining profitability" in a fiercely competitive market environment is particularly difficult for car companies.
Ideal Automobile's Main Financial Data for Q2 2024 (Source: Screenshot of Announcement)
In the second quarter, the gross profit margin of Ideal Automobile's vehicles was 18.7%, a decrease of 2.3 percentage points compared to the second quarter of last year and a decrease of 0.6 percentage points compared to the first quarter of this year. Ideal Auto stated in its financial report that the year-on-year decrease in vehicle gross profit margin was mainly due to the decline in vehicle gross profit margin.
On April 18th, the Ideal L6 was officially launched. The new car has launched two versions, Pro and Max, with prices of 249800 yuan and 279800 yuan respectively, becoming the first model under Ideal Auto to be priced below 300000 yuan. The Ideal L6 comes standard with CDC sport suspension across the entire range, equipped with an extended range hybrid system consisting of a 1.5T range extender and front and rear dual motor intelligent four-wheel drive system. It accelerates from 0 to 100 kilometers per hour in 5.4 seconds, has a WLTC fuel consumption of 6.9 liters, and a CLTC comprehensive range of 1390 kilometers.
The new car has received good market feedback due to its high cost-effectiveness, and has delivered over 50000 units in three months since its launch. In other words, nearly half of the approximately 105900 new cars delivered by Ideal Motors in the second quarter were Ideal L6.
However, just before the launch of the Ideal L6, the car market was starting a new round of price reduction due to the strong entry of Xiaomi SU7. In addition to Wenjie, Jike, NIO, Geely, Wuling, Chery, Jiyue, Tesla, FAW Volkswagen and more than ten other brands have successively launched discount activities for their products. Some models that are not directly competitive with Xiaomi SU7 are actively or passively involved in a new round of "price wars" in exchange for more market opportunities.
On April 22nd, the official Weibo account of Ideal Automobile announced that the 2024 Ideal L7, Ideal L8, Ideal L9, and Ideal MEGA will adopt a new pricing system, and both new customers and customers who have already placed orders but have not yet delivered will enjoy the new prices.
The price list shows that the Ideal L9 series, as well as the Ultra and Max versions of L8 and L7, have been reduced by 20000 yuan; The Pro versions of L8 and L7 have been reduced by 18000 yuan; Ideal MEGA has reduced its price by 30000 yuan, lowering the starting price to 529800 yuan.
Affected by changes in product structure and lower vehicle prices, although Ideal Auto's profitability in the second quarter was indeed affected, the market performance also showed a significant rebound. After the price adjustment, the monthly delivery volume of Ideal Automobile continued to increase, reaching 51000 units in July, returning to the level of 50000 units.
Ideal Automobile Monthly Delivery Data (Source: Screenshot of Announcement)
Last quarter (Q2), we provided a vehicle gross profit margin guidance of 18%, but it actually reached 18.7%, with the increase coming from changes in product portfolio and an increase in delivery volume. "Li Tie said during the performance conference call that with the optimization of economies of scale and adjustments in sales policies, the ideal vehicle gross profit margin for the third quarter is expected to rebound to over 19%, and the overall gross profit margin is expected to return to over 20%.
Launch multiple 800V high-voltage pure electric models next year
On March 1st, the pure electric MPV model Ideal MEGA, which Li Xiang had invested a lot of effort into, sparked many doubts as soon as it was launched, including questions about its appearance, price, and sales volume.
20 days after the launch of the new car, Li Xiang released an internal letter reflecting on the series of doubts that Ideal MEGA has recently received. He bluntly stated that the company's failure to control the market pace of the Ideal MEGA and excessive focus on sales are the main reasons for the questioning of this model.
The most direct impact of MEGA's deep involvement in the public opinion vortex is that several new pure electric vehicle models originally planned to be launched by Ideal Automobile this year have been postponed to the first half of 2025, including a pure electric SUV.
At the Q2 performance conference call, Li Xiang personally answered two questions: one was about the competition between the company and Huawei HarmonyOS, and the other was about the appearance of pure electric models.
Li Xiang said that the Ideal MEGA has proven the strength of Ideal Automobile in terms of 800V high-voltage pure electric platform efficiency, charging experience, intelligent driving, and cabin. For pure electric SUVs, the ideal car only needs to solve two problems: first, the product's styling design, and second, being able to provide users with over 2000 seats of supercharging stations when delivering pure electric products. We still have great confidence in the competitiveness of pure electric SUVs, and we hope to enter the first tier of high-end pure electric products in about 2 years
Subsequently, Ma Donghui, President and Chief Engineer of Ideal Automobile, confirmed the news that Ideal Automobile will launch multiple 800V high-voltage pure electric vehicle models in 2025.
According to him, in terms of research and development, Ideal Automobile has completed multiple small-scale prototype production trials; According to the calibration and experimental verification plan, relevant tests and performance assessments related to high temperature and humidity, fatigue durability, etc. have been completed.
In terms of production capacity preparation, Ma Donghui revealed that the factory building for producing complete vehicles has been completed, and the production capacity planning for pure electric vehicle models can meet the sales demand. In addition, the self-developed core components of pure electric vehicles are undergoing performance testing, and the production capacity planning and development progress of external suppliers are also proceeding smoothly according to plan.