Li Auto (LI) Q4 2024 Earnings Call Transcript

Li Auto (LI -3.03%)
Q4 2024 Earnings Call
Mar 14, 2025, 8:00 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 2024 earnings conference call. At this time, all participants are in listen-only mode. Today’s conference call is being recorded.

I will now turn the call over to your host, Ms. Janet Chang, investor relations director of Li Auto. Please go ahead, Janet.

Janet Chang — Director, Investor Relations

Thank you. Good evening, and good morning, everyone. Welcome to Li Auto’s fourth-quarter and full-year 2024 earnings conference call. The company’s financial and operating results were published in our press release earlier today and are 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 prepared remarks. Our president, Mr.

Donghui Ma; and our senior vice president, Mr. James Liangjun Zou, will join for the Q&A discussion. Before I 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 risks 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. Securities and Exchange Commission and the Stock Exchange of Hong Kong Limited.

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 discussions of unaudited U.S. GAAP financial information as well as unaudited non-GAAP financial measures. Please refer to Li Auto’s disclosure documents on the IR section of our website, which contain a reconciliation of the unaudited non-GAAP measures to comparable U.S.

GAAP measures. Our CEO will start his remarks in Chinese. There will be English translation after he finishes 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] Hi, everyone. Welcome to today’s conference call. China’s NEV market maintained rapid growth in 2024. According to insurance registration data from the China Automotive Technology and Research Center, China’s NEV penetration rate exceeded 50% for many consecutive months in 2024, reaching 45.9% for the full year, up 12 percentage points year over year.

Leveraging our outstanding product portfolio, organizational efficiency, and continuous breakthroughs in artificial intelligence, we further solidified our position as the sales champion among Chinese auto brands in the RMB 200,000 and above NEV market, taking our full-year market share to 15.3%. In the fourth quarter of 2024, we delivered over 158,000 vehicles, setting a new quarterly record. Our full-year deliveries exceeded 500,000 units, making us both the first emerging NEV brand and first Chinese premium auto brand to reach this milestone. In addition, each model in our Li L series, including the L6, L7, L8, and L9, have achieved cumulative deliveries of over 200,000 units, respectively, showcasing the strong user recognition of our products and our highly efficient and consistent delivery capability.

These achievements will not have impossible without the effort and dedication of every team member in Li Auto, the support of our partners, and the trust of our users. I would like to express my heartfelt gratitude to them and look forward to reaching new milestones in collaboration. As our business continues to expand, a number of our financial metrics have reached record highs for the quarter. In Q4 2024, total revenues reached RMB 44.3 billion, taking full-year total revenues to RMB 144.5 billion.

As of the end of 2024, our cash on hand has reached RMB 112.8 billion. Our robust cash generation capabilities and substantial cash reserves provides solid support to our long-term investments in electrification and artificial intelligence, advancing our progress toward our long-term vision. Looking forward, we expect continued growth in 2024, aiming for 88,000 to 93,000 vehicle deliveries in Q1. There is no doubt that intelligence is the theme of the next phase of auto industry’s evolution.

We continue to invest in R&D and accelerate innovation. Our R&D investments exceeded RMB 11 billion in 2024, driving further breakthroughs and growth in our autonomous driving system. In terms of autonomous driving, we solidified our position as a top-tier player in the sector. Our industry pioneering dual system, autonomous driving solution, combining an end-to-end model with a vision language model sets in trend in the industry with industry-leading pace of iteration and performance.

In January, we rolled out AD Max V13, upgrading highway NOA to an end-to-end architecture, providing end-to-end capability across both urban and highway driving scenarios. In parallel, we introduced a first-of-its-kind AI reasoning visualization feature for autonomous driving, providing users with a better understanding of how the autonomous driving function works. In February, we rolled out our latest end-to-end and VLM model trained on 10 million video clips for all AD Max users, making us the first automaker in China to deploy large models train on 10 million video clips. Our autonomous driving system has been evolving at an industry-leading pace, taking only seven months to grow from 1 million to 10 million video clips.

In addition, our 10 million video clips AD Max V13 boast industry-leading performance, which was clearly demonstrated in our recent press reviews that evaluated top tier on autonomous driving systems from global and domestic auto brands. AD Max V13 secured first place in a number of these head-to-head reviews with a significant advantage in terms of number of interventions. Additionally, we have already initiated R&D for next-generation model base on the Vision Language Action or VLA architecture. We plan to launch it alongside our first battery electric SUV, Li L8, this year, delivering refreshed autonomous driving experience to our users.

Moving on to supercharging network. We’re accelerating its deployment in preparation for the launch of BEV models in 2025. In 2024, we built 1,420 supercharging stations at an industry-leading pace. We operate the largest highway supercharging network of any auto OEM in China.

As of now, we have over 1,900 supercharging stations, with over 10,000 charging stalls in operation. Our supercharging networks covers a wide range of regions, boasting rapid charging speed at high uptime rate. And even in winter, Li MEGA can charge up to 500 kilometers in 12 minutes with battery preconditioning. Even under the heavy load of Spring Festival holiday, our charging facilities reached an uptime rate of 99.9%.

The overall charging experience and efficiency are essential to BEV users. Looking forward, we will continue to accelerate the deployment of our supercharging network, aiming to have 2,500 supercharging stations by the time we launch Li i8, our first battery electric SUV. We plan to expand to 4,000 stations by the end of 2025. Moving on to a sales and service network.

In 2024, the overall quality and sales efficiency of our retail stores have improved substantially. By replacing lower-performing shopping mall stores with sales centers located in major auto parks, our proportion of sales centers has increased from 24% at the end of 2023 to 42% at the end of 2024. Total nationwide display spots increased from over 2,600 to over 3,700. In terms of same-store sales, taking the newly opened Changzhou High-Tech Zone sales center, as an example, its same-store sales has reached 175 units per month in just four months since opening.

This fully demonstrates the operating efficiency of our new sales centers. As of February 28th, 2025, we had 500 retail stores in 150 cities nationwide. Looking ahead to 2025, while we continue to strengthen our offline presence, we will continue to pursue high-quality expansion of our sales network at a reasonable pace, prioritizing operating efficiency. We’re also advancing our overseas expansion as planned.

In January 2025, we opened our R&D center in Munich, Germany. This is our first overseas R&D center, marking the first step in our globalization R&D strategy. Additionally, we have established directly operated servicing centers in three regions: Kazakhstan, Dubai, and Uzbekistan. In 2025, we plan to enhance our overseas expansion efforts with a continued focus on markets with high growth potential.

We believe that in the future, we will see an increasing number of Li Auto vehicles on the road in different countries. Looking forward to 2025, we will maintain our product competitiveness with a relentless focus on creating user value. We will further upgrade our existing models and ensure the smooth launch of our new BEV models. In addition, we will continue to embrace intelligent transformation by strengthening our R&D, technological innovation and cash generation capabilities to ensure sustainable, long-term development and breakthroughs in this artificial intelligence era.

I will now turn the call over to our CFO, Johnny, to walk you through our financial performance.

Johnny Tie Li — Chief Financial Officer

Thank you, Xiang. Hello, everyone. I will now walk you through some of our fourth-quarter 2024 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 revenue in the fourth quarter were RMB 44.3 billion or $6.1 billion, up 6.1% year over year and 3.3% quarter over quarter. This included RMB 42.6 billion or $5.8 billion from vehicle sales, up 5.6% year over year and 3.2% quarter over quarter. Both the year-over-year and the sequential increase were primarily attributable to the increase in vehicle delivery, partially offset by the lower average selling price. The year-over-year ASP decline was mainly due to different product mix, while the sequential ASP change was mainly due to the interest subsidies provided to customers.

Cost of sales in the fourth quarter was RMB 35.3 billion or $4.8 billion, up 10.5% year over year and 4.9% quarter over quarter. Gross profit in the fourth quarter was RMB 9 billion or $1.2 billion, down 8.3% year over year and 2.8% quarter over quarter. Vehicle margin in the fourth quarter was 19.7%, compared with 22.7% in the same period last year and 20.9% in the prior quarter. The year-over-year decrease was mainly due to different product mix.

The sequential decrease was mainly due to the loss on purchase commitments and lower average selling price due to interest subsidies provided to customers. Gross margin in the fourth quarter was 20.3% versus 23.5% in the same period last year and 21.5% in the prior quarter. Operating expenses in the fourth quarter were RMB 5.3 billion or $721.6 million, down 22% year over year, and 9.1% quarter over quarter. R&D expenses in the fourth quarter were RMB 2.4 billion or $329.9 million, down 31% year over year and 6.9% quarter over quarter.

The year-over-year decrease was primarily due to the decreased expenses related to product portfolios and technologies and decreased employee compensation. The sequential decrease was primarily due to the decreased employee compensation. SG&A expenses in the fourth quarter were RMB 3.1 billion or $421.5 million, down 5.9% year over year and 8.4% quarter over quarter. The year-over-year decrease was primarily due to decreased employee compensation and improved operating efficiency.

The sequential decrease was primarily due to decreased employee compensation associated with recognition of CEO’s performance-based awards in the third quarter of 2024, partially offset by the increased marketing and promotion activities. Income from operations in the fourth quarter was RMB 3.7 billion or $507.4 million, up 22% year over year and 7.9% quarter over quarter. Operating margin in the fourth quarter was 8.4%, improved from 7.3% in the same period last year and 8% in the prior quarter. Net income in the fourth quarter was RMB 3.5 billion or $484 million, down 38.6% year over year and up 25.3% quarter over quarter.

Diluted net earnings per share attributable to ordinary shares was RMB 3.31 or $0.45 in the fourth quarter versus RMB 5.32 in the same period last year and RMB 2.66 in the prior quarter. And now, turning to our balance sheet and cash flow. Our cash position remained strong and stood at RMB 112.8 billion or $15.5 billion as of December 31st, 2024. Net cash provided by operating activities in the fourth quarter was RMB 8.7 billion or $1.2 billion versus RMB 17.3 billion in the same period last year and RMB 11 billion in the prior quarter.

Free cash flow was RMB 6.1 billion or $830.1 million in the fourth quarter versus RMB 14.6 billion in the same period last year and RMB 9.1 billion in the prior quarter. As of December 31st, 2024, we had a total of 32,248 employees. For more information and details of our 2024 full-year financial results, please refer to our earnings press release. And now, for our business outlook.

For the first quarter of 2025, the company expects the delivery to be between 88,000 and 93,000 vehicles, representing a year-over-year increase of 9.5% to 15.7%. The company also expects the first-quarter total revenue to be between RMB 23.4 billion and RMB 24.7 billion or $3.2 billion and $3.4 billion, representing a year-over-year decrease of 8.7% to 3.5%. 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 and 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 Paul Gong with UBS.

Paul Gong — UBS — Analyst

[Foreign language] So, I will translate my questions. The first one is regarding the BEV launch. Can you remind us the overall — the latest launch timing of the new models and also the highlights of your BEV models you could share with us? The second is regarding the AI strategy. We noticed how management is spending more focus — is increasingly more focused on the AI.

And can you please share us with the latest development strategy? Thank you.

Xiang Li — Founder, Chairman, and Chief Executive Officer

[Foreign language] We’re planning to launch two pure electric SUVs this year. The first one being the Li i8, which will be launched in July. And the second one, Li i6, will also be launched in the second half of this year. The two cars will be launched — part of the reason we launched it in the second half of this year is partly to catch the sales momentum in typically the sales season of Q3 and Q4 and also partly to save enough orders to support deliveries for next Q1 and Q2.

We tend not to release too much information before an official product release because we think it is holistic — it needs to be considered holistically with users buying experience, delivery experience. So, please stay tuned for our official product release. [Foreign language] First of all, our overall view is that at this stage, the most important thing for our artificial intelligence is to grow capabilities, improve capabilities. And I’ll provide one example using autonomous driving.

Under rule-based system, it’s very analogous to teaching an insect or primitive creatures to drive. And later, when we move on to end-to-end VLM, it’s comparable to monkey learning drive with a human on side. It is an improvement versus previous rule-based system, but it’s still nothing comparable to a professional driver. And this is determined by the fundamental architecture of the models because VLM and end-to-end are two separate brain systems, and neither of them are strong enough.

So, the real question for us is how can we allow a big model to operate just like human being, like they could understand the physical world, understand the software world, which includes navigation, a bunch of other things, as well as the intentions of the passengers. So, we need to build a model that combines all three categories and build them into one foundational model, which includes understanding of physical space using 3D vision and understanding of the language space using LLM and understanding the physical world using end-to-end. Only if we combine these three into one model can we understand the world just like human beings and drive like human beings. And this is our overall understanding of breakthroughs in artificial intelligence.

And we don’t tend to make specific plans in this area.

Operator

Your next question comes from Tim Hsiao with Morgan Stanley.

Tim Hsiao — Morgan Stanley — Analyst

[Foreign language] So, my first question is about the sales growth. How should we think about the Li Auto’s solid sales growth this year against the backdrop of top competition? When would you expect Li Auto’s monthly sales to be returned to the previous peak level or even achieve record level, considering the new phase of L series and together with the BEV launches into second half? That’s my first question.

Xiang Li — Founder, Chairman, and Chief Executive Officer

[Foreign language] Our overall strategy for sales growth for this year consists of several aspects. One is product upgrade, expansion of sales network, as well as reinforce marketing practices and expansion overseas. First of all, on the product front, we’ll be launching the AD — upgraded version of L series and MEGA series this year as well as our new — completely new BEV electric SUV model. The new pure electric SUV will help us tap into a bigger market.

In the meantime, our upgraded autonomous driving system, V13, trained on 10 million video clips, has also improved its capability significantly, which also forms a solid foundation for our sales growth. On the sales network front, we currently operate 502 retail stores. And on top of that, we have started to work with after-sales partners to increase coverage in Tier 4 and Tier 5 cities. Apart from the official stores, we have — apart from these permanent stores, we have also opened over 200 retail stores and pop-up stores, 60 pop-up stores, in the shopping malls to open up our customer acquisition channel.

On the marketing front, we have introduced professional live streaming sales representatives to help us open up our customer acquisition channel. In the meantime, with our dedicated DCC call center personnel, we can also increase conversion rate of these increased new customers acquired through those above channels. On the overseas front, our overseas expansion plan is proceeding as planned, and we have made significant progress in Middle Asia, in Asia Pacific, and various other markets. We will continue to increase our investments in Latin America, Middle East, and European markets.

We have also made progress in working with authorized dealers overseas. And through a group of high-quality and experienced authorized dealers, we are confident to achieve a major growth overseas this year. And with — overall with sales improvement — with technology improvements and nimble marketing strategies as well as expansion of sales networks, I’m pretty confident about overall sales growth this year.

Tim Hsiao — Morgan Stanley — Analyst

[Foreign language] So, my next question is also related to AI because Li Auto been investing in AI aggressively over the past two quarters. Whatever be the scale of Li Auto’s AI-related investment in the following years? And in addition to two key applications, one is Mind GPT into Li Xiang Tong Xue. And the other one is autonomous driving. Will there be any new applications for or beyond vehicles in the following quarters? That’s my second question.

Thank you.

Xiang Li — Founder, Chairman, and Chief Executive Officer

[Foreign language] Overall, the investments in AI-related initiatives will see substantial growth in the next few years, but it will mainly be funded by our cash from operations. [Foreign language] So, when we think about this overall positioning, what we need to do in the AI period, I think the first fundamental question is our positioning because different position requires different types of capability and provide different types of user value. So, let’s take an example of — after 1975 in the PC world, the emerge of Mac — Apple making Macintosh and there was a Windows making DOS — sorry, there was Microsoft making DOS and Windows, and there were also device manufacturing. And similarly, in the mobile age, there was iPhone and there was Android offering device, OS and open platform, etc.

Each one of these companies achieved great market success, but they chose different positioning, and they used different models, and they have to make different trade-offs. For example, Apple chose a less open approach and provided better user experience, whereas Android had a more open approach and — but the user experience may not be perfect at all times. So, coming back to Li Auto, which one of these positioning should we choose? First of all, we think in the AGI world, our positioning is to become a hardware or device manufacturing — manufacturer. But different from PC or mobile world, device manufacturer for AGI world requires a different set of capabilities and experience.

So, in general, the device we make in the AGI world or the overall AGI device is, broadly speaking, a robot. Therefore, it needs to have the cognitive, the execution, the feedback, the reasoning and decision-making capabilities. And that, of course, includes software, AI functionalities, OS on the software side. And on the hardware side, it includes not only the physical movement pieces, but also the computing power.

And on top of that, it also requires operation. We need a robust system to operate these devices in the AGI world. We can’t simply rely on an IT software. Probably we need to use something more like a world model.

So, how do we manage the silicon-based devices is also going to change. And at the same time, how we manage carbon-based human beings are also going to change, and they’re going to be managed differently. So, in the AGI world, to sum up, we want to become a device maker providing with the above capabilities. The second thing we need to think about is user scenario.

And from this point, I can see three types of robots in general. The first is more closely, L4 vehicle, or we call space robotics and navigate itself in open space with its own cognition and decision-making and execution power. The second type is the type of robot that enhances human capabilities. And the third one, which I think is the most difficult one, operates indoors.

It has the shape of a human being, and it can navigate itself. So, these are the three different robots that I see in the AGI world, and they combine pretty much cover all aspects of human life. And we want to be a maker of all these devices, so we can provide services to our users in different scenarios. It is comparable, for example, to Apple, which provides the Macintosh, the iPhone, the iPad, and iWatch, which covers different aspects of users’ life.

Here’s our latest thinking for the next three to five years and probably even longer and we’ll iterate over time.

Tim Hsiao — Morgan Stanley — Analyst

Thank you.

Operator

Your next question comes from Tina Hou with Goldman Sachs.

Tina Hou — Goldman Sachs — Analyst

[Foreign language] So, my first question is in terms of the 2026 outlook, in terms of the, I think, overall auto industry NEV industry, your volume outlook as well as the competition intensity. And then also this year, the competition is mainly focused on autopilot. So, next year, do you see a continuation or change in that? And then the second question is regarding autonomous driving itself. So, in the future, in the world of L3 and L4 becoming more like prevalent, does management think there is a monetization method for these autonomous driving software? Thank you.

Xiang Li — Founder, Chairman, and Chief Executive Officer

[Foreign language] First of all, on industry and competition, we believe that the penetration rate of NEV will continue to increase in 2026. The market competition will transition from competing for growth to competing for market share. Brand will play a very important role in users’ purchase decisions, and users tend to choose brands that are well known and have good word of mouth. In different price segments, the top brands are going to increase market share through their advantages in product, technology, brand, and overall service experience.

In other words, the market concentration is going to continue to increase. Another trend that we see is many car brands will continue to improve and accelerate their development of advanced autonomous driving. The competition here is going to be more intense. On the technology front, technologies like drive by wire, which includes ride and handling experience, technologies like AI cockpit, which includes user interaction experience will also become a focus of competition in 2026 and beyond.

And for Li Auto, our strategy is to continue to complete our product portfolio with many cars — several cars launching in 2026. We will complete our full coverage of the range extended and pure electric product matrix, covering different price ranges and different segments and to cater to more users — as many users as possible. In the meantime, we’ll increase our investments in autonomous driving and other artificial intelligence technologies to maintain our lead in product — in overall product experience. We will also expand our expansion of our supercharging network and increase coverage as well as service experience and to fully eradicate range anxiety for our users.

Apart from the domestic market, we will work with different types of partners through different methods to accelerate our growth in overseas sales and service networks. Thank you. [Foreign language] On L3 and L4, so coming back to the current stage, including L2 and L3, they are essentially machines assisting humans to drive. They’re really tools.

There may be different approaches to L2 and L3, but the main difference is in the range of usage, the coverage of usage, and also the availability of different features. But fundamentally, it’s really still the human driver taking control of the car. There’s no fundamental change in the relationship between human and the car. But as we evolve to L4, this car will become an agent or we call a driver agent.

So, there’s going to be a fundamental change between the human and car relationship. The autonomous driving system will evolve from just being a tool to become an actual agent that can replace human beings in driving. It’s comparable to hiring a professional driver. In this scenario, we believe that users will be willing to pay for this kind of service.

And on top of that, when users are relieved from the burden of driving, cars will become a robot, or we call space robots, that can navigate the physical world in the AI age. And in this era, the in-car information — an in-car software and experience and services will have greater value and may lead to new business models, which gives us more room for imagination. So, with the huge potential of L4 era, our team is already very actively exploring, and our goal is to capture this very big opportunity when the time of L4 comes. Thank you.

Operator

Your next question comes from Bin Wang with Deutsche Bank.

Bin Wang — Deutsche Bank — Analyst

[Foreign language] My first question is about the first-quarter gross margin guidance. We have been noticing some of the positive side from the components pricing reduction. We also noticed that you provide from some cash discount. So, can you provide the first-quarter gross margin guidance? Thank you.

Johnny Tie Li — Chief Financial Officer

Hi, good morning. This is Li Tie. And at the first quarter is a low season due to Chinese New Year. And also, we have some sales promotion after Chinese New Year.

So, all that conclude together, we expect our Q1 vehicle gross margin to be around 19%. Thank you.

Bin Wang — Deutsche Bank — Analyst

Great. Great. Second question. [Foreign language] My second question is about the media reports that the chairman actually will no longer take off the auto business and the focus were shifting to the AI R&D.

Can I — my question is that what’s the change in the management allocation and how to balance the vehicle business in the upcoming AI business? Thank you.

Unknown speaker — — Analyst

[Foreign language] Mr. Li is still the CEO of the company, and he still oversees the different departments related to the car business, including vehicle lines, including product department, branding, and strategy department. This remains unchanged from 2024. And we have allocated new responsibility under our VLM and [Inaudible] framework, assigned new person in charge.

And we remain devoted to relying on efficient collaboration across the company to support our success in the long-term.

Operator

Your next question comes from Yingbo Xu with CITIC Securities.

Yingbo Xu — CITIC Securities — Analyst

[Foreign language] So, I have two questions. The first one is how we see MEGA’s market performance and what’s our expectation or plan for MEGA in future? And the second question is, what’s our long-term plan for internal — internationalization? Thank you.

Xiang Li — Founder, Chairman, and Chief Executive Officer

[Foreign language] Li MEGA is a luxury pure electric MPV priced at over 500,000 RMB, and it has been the No. 2 in sales in this segment for many consecutive months, only second to the Toyota Alphard. This year, we hope that Li MEGA will remain Top 3 in this segment, and we have expected annual sales between 10,000 and 15,000. On top of that, Li MEGA is one of the cars with the highest Net Promoter Score among our product portfolio.

In periods like the Chinese Spring Festival, Li MEGA has been widely praised for its chassis, seat comfort, NVH, smart cockpit, autonomous driving, and highway 5C charging experience and has significantly exceeded our user expectation, which further led to an increase in MEGA NPS after the Spring Festival, which speaks to user satisfaction with the product and services and their willingness to recommend the car to people around them. In the meantime, we are — a number of our directly operated 5C charging stations has exceeded 1,900. So, MEGA users, whether they’re driving on highways or driving in cities, they have easy access to 5C charging experience, which eliminates any anxiety with charging on long road trips. In the meantime, we’re also accelerating our rollout of more 5C supercharging stations.

And as planned, we will have over 2,000 stations by the end of the first quarter, connecting the five transverse — the nine transverse and nine longitudinal highway routes in China. By the time we launched Li i8 this year, we expect to have over 2,500 stations of supercharging stations. And in April this year, we plan to cover the entire distance of the G318, a well-known Chinese roadway, so that our MEGA users can drive their cars on G318. And we also have plans to open up 50 travel routes or road trip routes to provide easy charging experience for our users.

By the end of this year, we will be — our charging stations will be covering over 67,000 kilometers of highway and over 10,000 of inter-province highways, totaling over 77,000 kilometers. And we have already built 483 charging stations across the four major economic zones in China, with an average interval of 99 kilometers. By the end of this year, we will be covering all of our four economic zones with highway supercharging stations. As we continue to build out our supercharging stations and as we roll out Li i8 and other pure electric models with the scale — economy of scale, we are very confident in the sales volume of Li MEGA.

[Foreign language] In 2025, we are very aligned that overseas expansion is going to be one of the core strategies of this company. So, we will be devoted to expanding the overseas market and building capabilities across branding, marketing, channel, and aftersales as well as organization and recruiting. At the beginning of this year, we had already established an independent overseas expansion department and have moved many experienced personnel from the company. On the market front, we will be building on this luxury brand image that we have already established in Middle Asia and other markets to expand our market share.

In the meantime, in the past year, we have already built service centers and after-sales centers in Kazakhstan, Uzbekistan, and UAE. At the same time, we’ll also provide original spare parts and tech support to qualified after-sales partners so that our overseas customers can enjoy the same level of service that we provide to our domestic customers. In the meantime, we also expand our market in Middle East, Latin America, and Asia Pacific. We’ve been working with high-quality local partners to expand our overseas market.

We’ll also be picking a small number of dealers as our local partners to expand the market together. We’ll also expand our marketing and building out a very complete after-sales market — after-sales network. 2025 is our first year officially launching into the overall overseas market, and we will be building on capabilities that we have built in the domestic market. And we’re confident to have made significant progress in the overseas market this year.

Operator

As we are reaching the end of our conference call now, I’d like to turn the call back over to the company for closing remarks. Ms. Janet Chang, please go ahead.

Janet Chang — Director, Investor Relations

Thank you once again for joining us today. If you have further questions, please feel free to contact Li Auto’s investor relations team. That’s all for today. Thank you, and have a nice weekend.

Duration: 0 minutes

Call participants:

Janet Chang — Director, Investor Relations

Xiang Li — Founder, Chairman, and Chief Executive Officer

Johnny Tie Li — Chief Financial Officer

Paul Gong — UBS — Analyst

Tim Hsiao — Morgan Stanley — Analyst

Tina Hou — Goldman Sachs — Analyst

Bin Wang — Deutsche Bank — Analyst

Unknown speaker — — Analyst

Yingbo Xu — CITIC Securities — Analyst

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