Ideal is undergoing a transformation, as indicated in its latest financial report. A tech-savvy Ideal is emerging.
In its latest disclosed financial report, Ideal continues to maintain its growth momentum. In the first quarter, it delivered 80,400 vehicles, a 52.9% year-on-year increase; with a total revenue of 25.63 billion yuan, a 36.4% year-on-year increase. However, the most noteworthy aspect is that Ideal's R&D expenses in the first quarter reached 3 billion yuan, a 64.6% increase from the same period last year, five times the net profit for the quarter, setting a new record.
Earlier, the consensus from Ideal's annual strategic meeting was clear: spend money, transform into R&D investment to build intelligent technological competitiveness.
With 98.9 billion yuan in cash reserves, Ideal is accelerating towards a new phase of technology, intelligence, and growth.
How Ideal's Financial Report Looks
In the first quarter, Ideal delivered a total of 80,400 vehicles, a 52.9% year-on-year increase, equivalent to delivering 883 vehicles per day.
Among the top three leading new energy vehicle companies, NIO has the highest growth rate.
In contrast, automotive sales revenue also increased compared to the same period last year, reaching 24.25 billion yuan, a year-on-year growth of 32.3%.
The total revenue has also exceeded 20 billion. In the first quarter, the total revenue was 25.63 billion yuan, a year-on-year increase of 36.4%. It's almost 280 million yuan in revenue per day.
Among the top three leading new energy vehicle companies, Ideal's revenue growth rate still leads the way.
Furthermore, the ideal also maintains its consistent profit-making ability.
In the first quarter, the gross profit was 5.28 billion yuan, a year-on-year increase of 38%; the gross profit margin was 20.6%, an increase of 0.2 percentage points from the same period last year, reaching the standard of "healthy gross profit margin" as mentioned by Li Xiang.
Net profit is 590 million yuan. After deducting expenses such as equity incentives, the adjusted net profit is 1.28 billion yuan. It has been profitable for the sixth consecutive quarter and is the only new energy vehicle company among the new forces to maintain profitability.
And the ideal not only earns but also is willing to spend money, daring to spend it, and all of it is invested in the most crucial research and development expenses.
In the first quarter, Ideal invested a total of 3 billion yuan in R&D expenses, a sharp increase of 64.6% year-on-year. Nearly 1 billion yuan was invested every three days, reaching the highest level during the same period, and also marking the tenth consecutive month with the highest proportion in operating expenses.
R&D expenses are five times net profit, adjusted net profit is more than double.
It is well known that measuring a car company requires looking not only at current performance but also at future expectations. Investing heavily in research and development is the best way to increase future development space and strengthen competitive advantages.
After this wave of investment, Ideal still maintains sufficient and stable cash flow. As of the end of the first quarter, Ideal still had 98.9 billion yuan in cash, cash equivalents, and restricted cash, an increase of 52.2% from the same period last year.
What are Ideal's upcoming plans?
It is an undeniable fact that the market is becoming more competitive. Li Xiang admitted during a conference call that Ideal is facing multiple challenges from internal operations and external environmental changes.
So, what is Ideal's top priority next?
To recover product sales.
How will this be achieved? One of the methods is the new pricing system announced in April.
Li Xiang mentioned that this price adjustment has already had a positive impact on sales, with the weekly increase in new orders for the L series.
Furthermore, Ideal will continue to expand the number of retail stores and optimize the quality of retail outlets.
This year, Ideal has already opened 43 new retail stores, with over 50% of them having more than 9 display units, while also closing some smaller offline stores.
As of May 19th, Li Auto has 488 stores and 215 car showrooms nationwide. It has achieved 100% coverage in all first-tier, new first-tier, and second-tier cities, with a coverage rate of 89% in third-tier cities.
In the future, Li Auto will increase the number of car park stores to enhance the brand's visibility and influence.
In addition to product and sales, the company has recently undergone organizational adjustments.
Li Xiang stated that the core of this organizational adjustment is the establishment of a team dedicated to quality operations, focusing on making high-quality decisions, improving execution efficiency, and thereby enhancing organizational efficiency. This will help achieve business goals and contribute to an increase in gross profit margin.
The planned launch of three new electric vehicles in the second half of this year has been postponed to the first half of next year.
The delay is due to insufficient self-operated supercharging stations. Li Xiang believes that a scale similar to Tesla China's is needed before introducing new electric vehicle models. Additionally, there is a shortage of display space in existing stores. To achieve monthly sales of over ten thousand units for a new model, at least 500-600 fixed display spaces need to be added nationwide.
Therefore, Li Xiang has decided to lay a solid foundation before introducing the new electric vehicle models.
Furthermore, in the realm of intelligent driving where car companies are aggressively promoting, Ideal Car announced that in the third quarter of this year, it will push the No-Map City NOA feature to all AD Max users, completely eliminating the reliance on high-precision maps. As long as there is navigation, the feature can be used.
In addition, the feature has been open for initial public testing since May. Ideal Cars stated that in the initial test data, the NOA mileage accounts for over 65% of the available mileage, which is sufficient to prove the level of user acceptance.
In short, Ideal will focus on increasing sales of existing products, improving gross profit margins, with a core focus on upgrading autonomous driving capabilities. As for new electric products, they will be released once the preliminary preparations are ready.
Ideal's foundation remains solid.
To be fair, Ideal did indeed face many challenges in the first quarter. Li Xiang also issued a company-wide letter admitting that MEGA's debut was not successful and quick adjustments were needed.
However, based on Ideal Cars' first-quarter financial performance, it is evident that Ideal did not get stuck in the mud.
Ideal Cars' base of family users remains strong, with a market share of over 30% in the new energy market above 300,000, holding the crown of luxury new energy vehicle sales for 18 consecutive months.
In addition, the sales volume in the first quarter increased by 52.9%, while the overall increase in sales of new energy vehicles exceeding 200,000 units during the same period was 24.9%. The growth momentum of Ideal is leading the market.
Moreover, the market response to the launch of Ideal L6 has been positive, with a cumulative order volume exceeding 41,000 units during the initial sales period. This success has also led to a record high order volume for the entire Ideal product line during the May Day holiday.
Following the success of Ideal's sales in the range of over 300,000 units in levels 7, 8, and 9, they have now introduced another popular model in the 200,000 to 300,000 range.
Ideal's pure electric product line is also seeking a more robust strategy. While Ideal has relied on the L series to become a leading new force in the industry, achieving a breakthrough from 0 to 1 and becoming the first new force with a revenue of over 100 billion.
However, when it comes to building and managing the pure electric product line, Ideal is just beginning to explore the transition from 0 to 1 stage.
The establishment of new business products, sales, and after-sales channels, as well as the most important condition for pure electric products, is the right to supplementary power for users, which is different from the original extended-range models.
Furthermore, a crucial point is that Ideal has not given up on research and development investment, with intelligence remaining a key focus in the future.
Ideal has already achieved the self-developed large model Mind GPT onboard and passed national certification; at the same time, intelligent driving has ushered in the OTA 5.2 version update, with the NOA capability of the AD Max 3.0 platform in internal testing, and the high-speed NOA of the AD Pro 3.0 platform reaching a level of zero takeovers for thousands of kilometers, showing an overall improvement in capabilities compared to last year.
And from an ideal perspective, there is still a gap between the current pace of smart driving development and the expectations of users and the market: NOA in mapless cities is set to achieve full-scale push to AD Max platform users this year, while the city NOA feature on the AD Pro platform is also gearing up.
In reality, the potential of smart driving on Ideal cars is very high.
Firstly, the cash flow is robust, with no shortage of funds, boasting a cash reserve of 98.9 billion yuan, even surpassing BYD's cash reserve level during the same period, providing ample resources to invest in the research and development of technology and forward-looking product experiences.
Secondly, it is widely recognized for its product capabilities, especially in product definition and planning. The main selling product, the L series, was the first to clearly define two hardware solutions, AD Pro and AD Max, followed by standard software systems. The iteration path of AI was thought out early on, even being seen as "nesting dolls making cars" designed for AI system containers. This standardized paradigm undoubtedly plays a significant role in the end-to-end iteration of data in the smart driving iteration process.
Lastly, Ideal cars first introduced the strategy of free use, allowing all car owners to participate in the iteration mechanism of the AI system without discrimination.
In summary: the products are competitive, decision-making is more robust, there is no lack of funds on the books, and the potential for intelligence is very high. With increased investment in research and development starting now, Ideal cars are even more worth paying attention to.
As the saying goes, the most frightening thing in the world is someone who is better than you and works harder than you.
Ideal has been leading the industry since last year, while also betting on long-term growth capabilities. The technology flywheel is spinning in all directions, forming even greater advantages. Looking ahead to the second quarter, Ideal expects deliveries to exceed 100,000 vehicles, with revenue ranging between 29.9 billion yuan and 31.4 billion yuan, still maintaining the top position among new carmakers.
