Morgan Stanley: LI AUTO-W (02015) New i6 Expected to Be a Clear Sales Catalyst; Maintains "Overweight" Rating and HK$68.5 Target Price

Morgan Stanley issued a research report maintaining its "Overweight" rating and HK$68.5 target price on LI AUTO-W (02015). The company has launched a refreshed i6, keeping the starting price unchanged at RMB249,800 and offering a RMB10,000 launch incentive, while equipping it with a number of significant upgrades. The bank believes these upgrades will help drive i6 monthly sales back up to 15,000 to 20,000 units, compared with about 7,000 units in September. However, the pace of sales recovery will depend on battery and chip supply, as well as order conversion. The bank also noted that although gross margin may be lower initially, replacing NVIDIA chips with its self-developed MACH M100 helps reduce costs, and given i6's significant contribution to overall sales volume, the higher chip usage can also drive economies of scale. However, with the selling price unchanged, the larger battery and additional features may offset some of the cost savings initially. i6's gross margin and sales mix in the fourth quarter will be key to assessing LI AUTO's long-term target of 15% vehicle gross margin.