By Greg Gao

(JW Insights) May 29 -- Chinese EV startup Li Auto(理想汽车) reversed its loss to profit for the first time in the first quarter of 2023. CEO Li Xiang gave credit to the extensive use of components from local Chinese suppliers by the company.

Li took to Chinese social media Weibo on May 25 and wrote, “If consumers are willing to buy cars manufactured by domestic automakers like Li Auto, we will boldly use components from local Chinese supply chain companies. Whether it’s Horizon Robotics(地平线机器人) and SemiDrive(芯驰) for domestically produced chips, CXMT(长鑫) for storage, Hesai(禾赛科技) for LiDAR, CATL(宁德时代) and Sunwoda Electronic(欣旺达) for batteries, KH Automotive Technologies(孔辉科技) and Baolong(保隆科技) for air suspensions, Bethel Automotive Safety Systems(伯特利) for braking systems, or FUTURUS(未来黑科技) for HUD, Li Auto has a multitude of local suppliers.”

Li Auto generated a revenue of RMB18.79 billion($2.65 billion) in the first quarter, a year-on-year growth of 96.5%. Its operating profit and net profit reached RMB890 million($125.7 million) and RMB1.41 billion($199 million), respectively, with a current gross profit margin of 20.4%, far exceeding most of the other EV companies in China.

With the boom in China’s domestic new energy vehicle industry(including pure electric vehicles and plug-in hybrid electric vehicles), the level of localization in the supply chain and components has been continuously improving. It dramatically benefits car manufacturers in supply chain security and cost control, commented a JW Insights analyst.