Li Auto (LI) Q4 2023 Earnings Call Transcript

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2024.02.27 10:46
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LI earnings call for the period ending December 31, 2023.Li Auto (LI 18.79%) Q4 2023 Earnings CallFeb 26, 2024, 7:00 a.m. ETContents:Prepared RemarksQuestions and AnswersCall ParticipantsPrepared Remarks: OperatorHello, ladies and gentlemen. Thank you for standing by for Li Auto's fourth-quarter and full-year 2023 earnings conference call. At this time, all participants are in listen-only mode. Today's call is being recorded.

LI earnings call for the period ending December 31, 2023.

Li Auto (LI 18.79%)
Q4 2023 Earnings Call
Feb 26, 2024, 7:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Operator

Hello, ladies and gentlemen. Thank you for standing by for Li Auto's fourth-quarter and full-year 2023 earnings conference call. At this time, all participants are in listen-only mode. Today's call is being recorded.

I will now turn the call over to your host, Kobe Wang, the head of capital markets of Li Auto. Please go ahead, Kobe.

Kobe Wang -- Head of Capital Markets

Thank you, operator. Good evening, and good morning, everyone. Welcome to the Li Auto's fourth-quarter and full-year 2023 earnings conference call. The company's financial and operating results were published in a press release earlier today and were posted on the company's IR website.

On today's call, we will have our chairman and CEO, Mr. Xiang Li; and our CFO, Mr. Johnny Tie Li, to begin with our prepared remarks. Our president, Mr.

Donghui Ma; and the senior VP, Mr. James Liangjun Zou, will join for the Q&A discussion. Before we continue, please be reminded that today's discussion will contain forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995.

Forward-looking statements involve inherent risk and uncertainties. As such, the company's actual results may be materially different from the views expressed today. Further information regarding risks and uncertainties is included in certain company filings with the U.S. SEC and the Hong Kong Stock Exchange.

The company does not assume any obligation to update any forward-looking statements except as required under applicable law. Please also note that Li Auto's earnings press release and this conference call include discussion of unaudited GAAP financial information as well as unaudited non-GAAP financial measures. Please refer to the Li Auto's disclosure document on our IR website with a contained reconciliation of unaudited non-GAAP measures to comparable GAAP measures. Our CEO will start his remarks in Chinese.

There will be English translation after he finished all his remarks. With that, I will now turn the call over to our CEO, Mr. Xiang Li. Please go ahead.

Xiang Li -- Founder, Chairman, and Chief Executive Officer

[Foreign language] Welcome to today's earnings conference call. 2023 was a year of accelerated growth for Li Auto. We delivered a total of 376,000 vehicles for the entire year, exceeding our target setting at the beginning -- set at the beginning of 2023 and also making us the first emerging new energy automaker in China to exceed the 300,000 annual deliveries mark. Our total deliveries for the fourth quarter reached 131,805 vehicles, an increase of 184.6% year over year.

In December, we reached another significant milestone of 50,000 monthly deliveries, setting a new record for Chinese premium car brands. According to China Automotive Technology and Research Centers insurance registration data, in China's NEV market of RMB 200,000 and higher, Li Auto's market share increased from 10.9% in Q1 2023 to 16% in Q4, making us a leading Chinese automotive brand by market share. The growth will continue in 2024. I would like to take this opportunity to express our sincere gratitude to all of our family users, business partners, and our team for your unwavering trust, support, and tireless efforts.

Moving on to our financial performance. Our scale expansion, effective cost control, and increasing operating efficiency have continuously improved our financial performance. Q4 total revenues reached RMB 41.73 billion, and annual revenues surpassed RMB 100 billion mark at RMB 123.85 billion. Additionally, we achieved full-year profitability for the first time in 2023, recording a healthy net income of RMB 11.81 billion.

By the end of 2023, our cash position reached RMB 103.67 billion. In 2024, the virtuous cycle of our business growth will solidify our long-term profitability, cash generation -- generating capabilities, and capital base. This trajectory will further deepen our R&D efforts across products, platforms, and systems, ensuring consistent delivery of exceptional products and services to our users in the long run. 2024 will be an unprecedented year of new product launches for Li Auto, beginning in March with the launch of our high-tech flagship and family NPV, LI MEGA.

Developed on a pure BEV platform, Li MEGA integrates the latest technological advancements in 5C BEV technologies, smart space, and autonomous driving. We also plan to begin mass delivery of 2024 model year Li L7, L8, and L9 models starting in March. You're all welcome to tune into our Li Auto 2024 Spring product launch event this Friday, March 1st, where we'll be unveiling more exciting vehicles about Li MEGA and our 2024 model year L Series. Furthermore, we will introduce several new models over the course of the year, including Li L6, to broaden our product lineup even further.

By the end of 2024, we will have eight models on the market, featuring four EREVs and four BEV, forming a highly competitive product matrix and satisfying the diverse needs of our family users. New vehicle launches are only the starting point. Since the initial delivery of our L Series, we have released over 20 over-the-year updates, operating over 700 features. Notably, the official release of our OTA 5.0 upgrades in December last year, further enhanced product competitiveness of our vehicles.

Moving to autonomous driving. With the latest release of AD Max 3.0, full-scenario NOA now covers all highways and city ring roads nationwide, as well as urban roads across over 110 cities. We anticipate to offer City NOA independent of HD maps in all of China by the end of the second quarter this year, and it will be delivered to all AD Max vehicles by NOA. As of today, our users have accumulated around 560 million kilometers on NOA during the 10-day Chinese New Year holiday from February 8th to 17th.

Over 220,000 users enjoy the convenience NOA, covering close to 50 million kilometers on NOA. In terms of smart space, OTA 5.0 integrated Mind GPT into Li Xiang Tong Xue. Mind GPT is a full scenario multimodal large model with real-time connectivity. This development has significantly increased Li Xiang Tong Xue's understanding, generating, memorizing, and reasoning capabilities.

Since its release, there is a notable increase in user engagement in giving instructions and seeking text-based information and services through natural conversations. During the 10-day Chinese New Year holiday, the percentage of such natural conversations among all effective communications reached 7.2%, twice the level before OTA 5.0. Amidst our remarkable sales growth in 2023, we accelerated the expansion of our direct sales network. In Q4 2023, we opened 106 new retail stores, or over one store per day, creating the largest automobile direct sales network in China.

As of January 31st, 2024, we had 474 retail stores across 142 cities nationwide. In 2024, we aim to further expand our direct sales and service network, targeting 800 retail stores by year-end. While expanding our presence in first- and second-tier cities, we also plan to broaden our coverage in third- and fourth-tier cities. Turning over to our supercharging network.

To date, we have over 340 supercharging networks in operation. Starting from the Chinese New Year holiday, throughout the entire holiday, we provided family users with free access to Li Auto's supercharging services. We delivered 57,000 free charging sections to the Li Auto's users and over 120,000 sessions to all EV users, delivering over 2.81 million kilowatt hours of electricity. Facing the exceptionally high demand during the holiday season, our superchargers maintained an online rate of over 99.3%, providing uninterrupted access to high-quality and efficient charging experience to all users.

In 2024, we will continue to accelerate our supercharging network expansion across highways and cities nationwide, targeting 2,000 supercharging stations by year-end. On the production front, Li Auto's Beijing Green Intelligent Manufacturing base went into production toward the end of 2023, ready for volume production of Li MEGA and subsequent BEV models. With volume production delivery of Li MEGA and 2024 model year L7, L8, and L9, we expect our total vehicle deliveries for Q1 2024 to range between 100,000 units to 103,000 units with March delivery exceeding 50,000 units. In 2024, we'll continue to learn from the best enterprises, iterate ourselves, and surpass expectations as we create mobile homes and create happiness.

With that, we will turn it over to our CFO, Johnny, for a closer look at our financial performance.

Johnny Tie Li -- Chief Financial Officer

Thank you, Li Xiang. Hello, everyone. I will now walk you through some of our 2023 fourth-quarter financials. Due to time constraints, I will address financial highlights here and encourage you to refer to our earnings press release for further details.

Total revenues in the fourth quarter were RMB 41.73 billion, or $5.88 billion, up 136.4% year over year and 23% quarter over quarter. This included RMB 40.38 billion, or $5.69 billion, from vehicle sales, up 133.8% year over year and 20.1% quarter over quarter. The year-over-year increase was mainly attributable to the increase in vehicle deliveries, partially offset by the lower average selling price due to different product mix between the two quarters. The quarter-over-quarter increase was mainly attributable to the increase in vehicle deliveries.

Cost of sales in the fourth quarter was RMB 31.95 billion, or $4.5 billion, up 126.8% year over year and 18.2% quarter over quarter. Gross profit in the fourth quarter was RMB 9.79 billion, or $1.38 billion, up 174.4% year over year and 28% quarter over quarter. Vehicle margin in the fourth quarter was 22.7%, compared with 20% in the same period last year and 21.2% in the prior quarter. Excluding the impact of inventory provision related to Li ONE in the fourth quarter of last year and the true-up adjustments of warranty reserve in the fourth quarter of 2023 based on updated estimates of cost of further claims, the vehicle market remained relatively stable over the fourth quarter of 2022.

The increase in vehicle margin over the third quarter of 2023 was mainly due to the aforementioned true-up adjustments of warranty reserves in the fourth quarter. Gross margin in the fourth quarter was 23.5%, compared with 20.2% in the same period of last year and 22% in the third quarter. Operating expenses in the fourth quarter were RMB 6.75 billion, or $950.8 million, up 82.4% year over year and 27.2% quarter over quarter. R&D expenses in the fourth quarter were RMB 3.49 billion, or $491.7 million, up 68.6% year over year and 23.9% quarter over quarter, primarily driven by increased expense to support our expanding product portfolios and technologies as well as increased employee compensation as a result of our growing number of staff.

SG&A expenses in the fourth quarter were RMB 3.27 billion, or $450.5 million, up 100.6% year over year and 28.5% quarter over quarter, primarily driven by increased employee compensation as a result of our growing number of staff as well as increased rental expenses associated with the expansion of our sales and servicing network. Income from operations in the fourth quarter was RMB 3.04 billion, or $427.7 million, compared with RMB 133.6 million loss from operations in the same period last year and up 29.8% quarter over quarter. Operating margin in the fourth quarter was 7.3%, compared with negative 0.8% in the same period last year and 6.7% in the third quarter, attributable to the increase of income from operations and the recognition of noncash tax benefit for the release of valuation allowance on certain deferred tax assets. Net income in the fourth quarter was RMB 5.75 billion, or $810.2 million, representing an increase of 2,068.2% year over year and increasing by 104.5% quarter over quarter.

And diluted net earnings per ADS attributable to ordinary shareholders was RMB 5.32, or $0.75 in the fourth quarter, compared with RMB 0.25 in the same period last year and RMB 2.67 in the prior quarter. And turning to our balance sheet and cash flow. Our cash position remains strong and stood at RMB 103.67 billion, or $14.6 billion, as of December 31st, 2023. Net cash provided by operating activities in the fourth quarter was RMB 17.29 billion, or $2.44 billion, up 251.1% year over year and 19.2% quarter over quarter.

And free cash flow was RMB 14.64 billion, or $2.06 billion, in the fourth quarter, up 349.4% year over year and 10.7% quarter over quarter. As of December 31st, 2023, we had a total of 31,591 employees. For more information and details of our 2023 full-year financial results, please refer to our earnings press release. And now, for our business outlook.

For the first quarter of 2024, the company expects the delivery to be between 100,000 and 103,000 vehicles representing an increase of 90.2% to 95.9% from the first quarter of 2023. The company also expect first-quarter total revenues to be between RMB 31.25 billion and RMB 32.19 billion, or $4.4 billion and $4.53 billion, representing an increase of 66.3% to 71.3% from the first quarter of last year. This business outlook reflects the company's current and preliminary view on its business situation and market condition, which is subject to change. That concludes our prepared remarks.

I will now turn the call over to the operator to start our Q&A session. Thank you.

Questions & Answers:


Operator

Thank you. [Operator instructions] For the benefit of all participants on today's call, please limit yourself to two questions, and if you have additional questions, you can reenter the queue. If you are a mandarin speaker, please ask your questions in Chinese first then follow with English translation. Your first question comes from Ben Wang with Deutsche Bank.

Please go ahead.

Ben Wang -- Deutsche Bank -- Analyst

[Foreign language] Congratulations for the great results. I actually got two questions. Number one is that you previously mentioned you want to deliver 100,000 units month of September [Inaudible] this year and per unit for single products actually can't reach more than 30,000 units. Amid current [Inaudible] pricing condition, do you change your guidance? If not, when you're seeing monthly volume can reach this 100,000 units, and can you provide a breakdown of the 100,000 units by model? Second question is that the company previously guided Li to be the [Inaudible] tier in the self-driving technology in China.

Can I ask what's the difference or gap between the leading players in China such as Huawei and XPeng and when you see you can catch up and exceed on competition? Thank you.

James Liangjun Zou -- Senior Vice President, Sales and Service

OK. I will take the first question. This is James Zou Liangjun from Li Auto, SVP of the sales and service. So, a very good question, Mr.

Wang Ben. Our guidance remains unchanged. So, we are still talking to sell over 100,000 models by end of this year. So, starting from 2024 March, we will commence delivering of Li MEGA and also 2024 year model L9, L8, and L7 models, making our entrance into a brand-new product cycle.

With the launch and delivery of more competitive new products, we anticipate our monthly deliveries to exceed 50,000 vehicles in March, which is next month, and 70,000 in June. So, the first half year. So, when we hit the 70,000 monthly delivery milestone in June, the market will have a better understanding of all of our company's assumptions and dedication. We encourage you to watch our performance in the coming months.

So, I will hand over to Mr. Ma to answer your second question.

Donghui Ma -- President

[Foreign language] We released our OTA 5.0 around the end of 2023. And NOA -- full scenario NOA is now available in over 110 cities around China. And based on our statistics, two months after the release, the daily active usage for NOA has increased 50% compared to before the OTA, and we have accumulated over 100 million kilometers on NOA since the release. And NOA has helped our users with over 3 million parking maneuvers.

AD has avoided over 30,000 accidents for our users. All this data and all the positive feedback from users and media are great testaments to our product competitiveness. In the second quarter of '24, our AD Max models will be delivering mapless capability, city NOA, in all cities in China and it will not be constrained by a number of cities and will be delivered to all cars equipped with AD Max through OTA. In terms of AD Pro, cars equipped with AD Pro, we will also be deploying BEV, big large models, to upgrade highway NOA features, increasing the ramp experience and lane change experience.

So, we're very confident to say that 2024, in terms of our AD products and R&D capabilities, we're among the top in China.

Ben Wang -- Deutsche Bank -- Analyst

Thank you.

Operator

Your next question comes from Tim Hsiao with Morgan Stanley. Please go ahead.

Tim Hsiao -- Morgan Stanley -- Analyst

[Foreign language] So, my first question is about the production and potential bottleneck because Li Auto first-quarter volume guidance of 100,000 to 103,000 units implies a very significant ramp in March to 50,000 units or more. So, considering several new models are coming to the market at about the same time, including MEGA, L6, [Inaudible] for the whole L Series, would there be any risk of supply bottleneck into March and April? What has the company done so far to ensure this new production ramp deliveries while keeping the inventory lean? So, that's my first question.

Donghui Ma -- President

[Foreign language] First of all, we have a lot of great experience in new product launches and ramp up to achieve volume shortly after product launch. In the first calendar month after the launch of L7 and L9, respectively, we have been able to successfully produce and deliver over 10,000 units for each model. And we have collected all these best practices and lessons learned and put them into our system. So, whether it's new factories or new employees, they're all able to very easily replicate the success in the past.

In terms of new models, on the R&D front, all the new vehicle lines are being developed on schedule. And in terms of production, we have already completed the construction of our factories ahead of time. And recruited and trained the relevant blue collar workers. On the supply front, we have already built the supply capabilities and completed the risk analysis and have created plans and strategies based on the risks identified.

And on the planning front, using our new integrated planning system, we have connected supply and demand end to end and have locked down all of the necessary requirements from end to end. 2024 will be a big year for our -- in terms of new product launches, and we're very confident to maintain the consistency and timeliness of our supply.

Tim Hsiao -- Morgan Stanley -- Analyst

[Foreign language] The second question is about product planning. After the auto's launch of L6 in April, the group's model portfolio with a comprehensively cover segment about RMB 250,000 or around $35,000. So, -- well, Li Auto considered to take into the $35,000 market; any time soon that presents a more sizable market for EV conversion. And separately, is there any tech constraint or disadvantage likely preventing Li Auto from building compact or low-priced SUV remodel to compete with the local peers.

So, that's my second question.

Donghui Ma -- President

[Foreign language] If we look five years down the road, we have no plans to launch any vehicles below the RMB 200,000 price point. Because if we think about long term up to 2030, if we only focus -- even if we only focus on the market over RMB 200,000 just family users, if we were able to take one-third of that market in China, our total sales will already be more than RMB 1 trillion. And if you consider overseas by 2030, this market will create a business close to the revenue of all iPhones sold worldwide combined. So, this is a huge gold mine that we think we've only mined a very, very small portion.

So, there is no need to distract ourselves at this point, but rather, we would like to focus exclusively on over RMB 200,000 family markets globally. And our strategy is to continue to dive deep into this market, create a brand, and expand our market share.

Tim Hsiao -- Morgan Stanley -- Analyst

Thanks for sharing all the great color. And congratulations on the great result again. Thank you.

Operator

Your next question comes from Yingbo Xu with CITIC Securities. Please go ahead.

Yingbo Xu -- CITIC Group -- Analyst

[Foreign language] I have two questions. The first question is about the pricing and volume balance and how we see the profitability and the volume increase by adjustment of pricing in different periods. And my question -- second question is about the following EV models. How we plan after the MEGA model? Could you please give us more color? Thank you.

Johnny Tie Li -- Chief Financial Officer

This is Johnny. For the first question, I think for -- when we set up the full-year sales target, we have already considered about the competition and also the pace we launched our product. So, when we consider that, we still -- what we want to say as before, we will maintain a healthy gross profit margin over 20% always. And based on the market competition, the gross margin will fluctuate between 20% to 25% in different quarters.

And just like last quarter, I think everyone was worried about the competition in the fourth quarter, there will be some promotion, but for every quarter, there will be some other come out from the supply side and also from like the material price size. So, net-net, if you can see from our fourth quarter, even we have some promotion in the fourth quarter, but we have more good news from [Inaudible] So, even though our gross margin increased comparing with the third quarter. OK.

Donghui Ma -- President

[Foreign language] For the first half of the year, we will be releasing in our March 1st spring event, Li MEGA as well as 2024 model year Li L7, L8, and L9. And in -- also in first half, we'll be releasing the L6. In the second half of the year, as we've communicated before, we will be releasing yet another three pure electric SUV models, all standard -- come standard with 5C charging and all-wheel drive. And I would like to emphasize those cars are very, very competitive.

And they will become the top choice for family users in their respective price segments. 2024 will be an unprecedented product year for Li Auto. By the end of the year, we will have four range-extended models and four very competitive electric BEV models. Each products are all very competitive, and they will together serve the needs of our family users.

Operator

Your next question comes from Tina Hou with Goldman Sachs.

Tina Hou -- Goldman Sachs -- Analyst

[Foreign language] Thanks, management, for taking my questions. And congrats on the very strong results. So, I have two questions. The first one is in terms of the BEV -- three BEV models in the second half of the year.

So, considering the battery price as well as 5C charging capability and an initially smaller volume versus your EREV models, what kind of like margin difference should we expect for the BEV models? And then the second question is in terms of the overseas expansion, what is the management's latest thought for overseas sales volume target over the next three to five years? Thank you.

Johnny Tie Li -- Chief Financial Officer

Tina, this is Johnny. And for the gross margin, as we mentioned in the previous calls, both for the BEV and the EREV series, the overall blended gross margin will be 25% for both series. So, when we start from MEGA and then the 9 series, the gross margin will start from higher to lower. And also, we want still to emphasize the product gross margin established when you define your product.

It's -- our products are designed to ensure a healthy gross margin and also balance the customers demand for the car -- for each car. And also from the material side like the battery material, I think it's -- since the second half of last year, I think it's -- for us, it's a good timing for -- to launch our BEV models starting from this year. Thank you.

James Liangjun Zou -- Senior Vice President, Sales and Service

OK, Tina. James. I will take your second question. So, first of all, the overseas market is very important to Li Auto, and we are aiming to start to explore the overseas market, and we are accelerating it.

So, regarding our plan for overseas exports, we remain committed to our direct sales model in overseas markets, focusing on building a robust sales network and comprehensive after-sales service offerings and infrastructure. With Li Auto's growing popularity globally, we are accelerating the development of after-sales service network and the spare parts supply chains to ensure outstanding service experience for our international customers. And by the way, we have successfully set up operations in Middle East and initiated the recruitment of local sales and service teams in Dubai. And in the first half year this year, we plan to establish dedicated after-sales service network in Central Asia and Middle East.

By the first quarter of this year, we will commence overseas delivery starting with the introduction of L9 and L7 models in local regions which -- by the way, which is also customized for the local environment and political and the policies -- local policies. Thank you.

Operator

Your next question comes from Ming-Hsun Lee with Bank of America. Please go ahead.

Ming-Hsun Lee -- Bank of America Merrill Lynch -- Analyst

[Foreign language] So, my first question is still related to gross margin trend in first quarter and the second quarter. In second quarter, because you are selling the 2023 version of L7, L8, and L9, so your gross margin slightly lower than 4Q. But in the second quarter, since you have a full-quarter contribution from MEGA, so do you expect the gross margin to recover? And also, how is the L6 to overall margin? [Foreign language]

Johnny Tie Li -- Chief Financial Officer

Hi. This is Johnny. I think all the factors you mentioned is, yes, it's clear for the gross margin. And the company will maintain a healthy gross margin of about 20% for the first quarter.

And as we mentioned earlier, the company will also maintain a healthy gross margin, which means almost about 20% throughout the full year. And for the MEGA and the 2024 model of L series, it will be a positive factor for the gross margin starting from March. And L6 will be negative if we want to say to be for the over 20% gross margin. And with our volume growth, it will be a positive factor for the gross margin, yes.

And it's for every quarter, there are some positive and negative. So, I wish it is helpful.

Ming-Hsun Lee -- Bank of America Merrill Lynch -- Analyst

[Foreign language] Li Auto plans to expand the charging station to 2,000 by the end of this year. How do we expect the total capex? Previously, James had mentioned the charging station could be a profitable investment project. So, when do you expect your charging station can reach breakeven or cash flow breakeven? Thank you.

James Liangjun Zou -- Senior Vice President, Sales and Service

OK. I will take this question. James. So, by the end of 2024 and the company plans to build a total of 2,000 charging stations as you just mentioned.

And by the end of this year, we will have built more than 700 highway supercharging stations covering 70% of the highways in China as well as 90% of the highways in the four major economic zones. With the successive launches of BEV models this year, we have also begun to simultaneously accelerate the expansion of charging stations in cities. We anticipate that by the end of this year, the number of charging stations in cities will exceed 1,300, so totally 2,000. The company's cash reserves are ample, and we have allocated sufficient capital for the construction of charging stations.

The company has detailed operating models for the evaluation of each charging station. And by the way, personally, I'm looking after each and every charging station investment, and each station has its own profitability and ROI target. From a long-term perspective, we are very confident in our charging station's profitability prospect. Thank you.

Operator

Your next question comes from Yuqian Ding with HSBC.

Yuqian Ding -- HSBC -- Analyst

[Foreign language] Two questions. The first, we noticed the industry is going through a painful consolidation. While Li Auto booked a record high earnings, many are struggling. How to look at the inflection point of the industry consolidation against the weak car demand and a continuous pricing war, including Li Auto, which is Li Auto's -- what is Li Auto's strategy priority list this year? And second question, management do talk about OTA, NOA, more cities and scenarios.

When would be the iPhone moment for the autonomous driving development from a management perspective? And how to read, despite of the technology progress, the current autonomous driving market offering might be running homogenous and lack of revenue model in the near term?

Donghui Ma -- President

[Foreign language] So, as we have always maintained before, we believe in the smart EV industry, there will be a very clear Matthew effect as we develop and we'll see in the very few -- very near future. Here, I'll make a prediction. By Q4 this year in the market of RMB 200,000 and above, the top three brands will command around close to 70% of market share, where [Inaudible] will reach close to 70%, and we can test this hypothesis by the end of this year. And in order to prevail in this competitive environment, we will continue to focus on user value creation, which will convert into our competitive advantage.

So, on the product front, we will continue to focus on making all details perfect and delivering the full product experience to our users. And on the R&D front, we will invest in our autonomous driving, smart space, and high voltage and range-extended EV platforms and convert all these investments into user value. With that, our goal continues to be selling 800,000 units this year in 2024 and becoming the top one premium brand in China. And the team is all lined up to be ready to achieve this goal this year.

[Foreign language] Personally, I believe the iPhone 4 moment for autonomous driving will come in two to three years. iPhone 4 completely change people's perception of smartphones. The first -- the iPhone 4 itself may not be perfect, but it encompasses all of the important factors for its success, including industrial design, user interaction, hardware, software, and business model. And compare that to autonomous driving with L2 and L3 reaching scale and being delivered in volume and data continues to accumulate, as well as the deployment of AI large models, I believe that autonomous driving will reach an inflection point, reaching an iPhone 4 moment.

And maybe all of a sudden, overnight, all of the cars equipped with a hardware, maybe hundred thousands of or even over a million, will achieve autonomous driving. So, for Li Auto, we continue to invest in making autonomous driving hardware standard for all of our vehicles. And we have no plans for a subscription of -- or extra charge at the moment. Making autonomous driving a standard will bring us as many users as possible, collect as much data as possible, and help us to increase and improve our algorithms and improve the experience for our users.

And that creates a very positive cycle.

Operator

As we are reaching the end of our conference call now, I'd like to turn the call back over to Kobe Wang for any additional or closing comments.

Kobe Wang -- Head of Capital Markets

Thank you once again for joining us today. If you have any more questions, please feel free to contact Li Auto's IR team. That concludes this conference call. You may now disconnect your lines.

Thank you. Bye.

Duration: 0 minutes

Call participants:

Kobe Wang -- Head of Capital Markets

Xiang Li -- Founder, Chairman, and Chief Executive Officer

Johnny Tie Li -- Chief Financial Officer

Ben Wang -- Deutsche Bank -- Analyst

James Liangjun Zou -- Senior Vice President, Sales and Service

Donghui Ma -- President

Tim Hsiao -- Morgan Stanley -- Analyst

Yingbo Xu -- CITIC Group -- Analyst

Tina Hou -- Goldman Sachs -- Analyst

Ming-Hsun Lee -- Bank of America Merrill Lynch -- Analyst

Yuqian Ding -- HSBC -- Analyst