Jefferies: Maintains "Hold" Rating on LI AUTO-W (02015), Target Price HK$51.1; Power Day Reflects Mastery of Technological Definition Power

Jefferies issued a research report maintaining its "Hold" rating on LI AUTO-W (02015) and a target price of HK$51.1. The bank noted that the company recently held its Power Day electric technology launch event, officially unveiling the new "Lianshan" electric technology system. This is not merely a display of battery specifications, but reflects that the company is gaining mastery over the definition of electric technology and shifting the differentiated competition of battery electric vehicles from the complete vehicle to the full powertrain system. The bank noted that the "Lianshan" system integrates the battery, electric drive, ultra-fast charging hardware and its own charging network, developed as one with 5C charging, voltage, safety and cycle life. The company also offers a lifetime warranty against spontaneous combustion and collision-related fires. Jefferies believes that although Li Auto continues not to produce battery cells in-house, it controls design and data, allowing it to define cell chemistry, materials, electrodes and battery pack architecture, and to obtain production data from supplier factories. The bank expects CALB (03931) to join as a partner alongside Sunwoda Electronic (300207.SZ). The bank stated that the "Lianshan" system should lower battery costs in the long run, but in the short term requires annual R&D investment of more than RMB200 million, and together with investments in silicon carbide, electric drive and charging infrastructure, all require battery electric vehicle sales to amortize. The lifetime warranty also means Li Auto will need to bear more battery responsibility. The bank expects a more noticeable improvement in gross margin only next year.