The Beijing-based company reported an annual net income of 11.8 billion Chinese renminbi ($1.7 billion), making it the first of China’s three EV startups to record an annual profit. (The other two major startups are Xpeng and Nio, both of which have yet to reveal full-year results).

The carmaker also delivered 376,030 vehicles last year, almost three times more than the 133,246 delivered in 2022. It also expanded its vehicle margin to 21.5%, up from 19.1% in 2022.

Investors welcomed the news in Tuesday trading in Hong Kong, sending shares up by over 25%, adding over $9 billion to the company’s market value. Shares are close to the peak recorded last August.

Li Auto is riding a surge of interest in EVs in China, the world’s largest electric car market. Li Auto’s cars are closer to Tesla’s in terms of pricing, targeting a premium consumer instead of selling the more affordable models provided by market leader BYD.

BYD, which is backed by Warren Buffett’s Berkshire Hathaway, also had record sales last year, delivering 3.02 million vehicles. The company even overtook Tesla as the world’s largest seller of battery electric vehicles. In a late January stock filing, BYD said it expected a 2023 profit of 29 billion to 31 billion yuan ($4 billion to $4.3 billion), which would be as much as an 86% year-on-year increase.

But Li Auto gave a bearish outlook for the current quarter, saying it expected to deliver around 100,000 to 103,000 EVs, which would be the lowest delivery figure since the second quarter of last year.

There are signs that China’s EV market is slowing, amid a patchy economic recovery which has weighed on consumer sentiment. Competition between EV players in China is also fierce, with companies like BYD and U.S. carmaker Tesla engaging in a price war to capture market share.

An ‘iPhone moment’

On Monday, Li Auto president Donghui Ma said the company has no plans to launch a vehicle below 200,000 yuan ($27,800) in price. Tesla’s base model 3 in China currently costs 245,000 yuan ($34,000) by comparison.

Ma dismissed the idea of targeting a lower price range, and said the company would focus exclusive on households willing to spend over 200,000 yuan.

“If we were able to take one-third of that market in China, our total sales will already be more than RMB 1 trillion ($139 billion).”

Ma then set his sights even higher. “If you consider overseas by 2030, this market will create a business close to the revenue of all iPhones sold worldwide combined,” he said.

The iPhone, in fact, featured heavily in Li Auto’s earnings call. When an analyst asked when autonomous driving might have its “iPhone moment,” Ma said he believed that self-driving cars could be ready for that level of mass acceptance in just a few years. He continued that Li Auto would make autonomous driving standard in its vehicles.