Shares of Chinese electric vehicle maker Li Auto surged 13.9% on Monday following bullish analyst reports on the firm’s robust sales figures reported in its first quarterly results since going public this summer.

Citigroup on Monday upgraded Li Auto to “buy” from “hold” and raised its target price by 68% to $45.6 after the EV maker posted higher-than-expected revenues and a gross margin of 19.8% from 13.7% in the second quarter.

China International Capital Corporation (CICC) also raised its price target to $40 from $21.5 on expectations of further margin upside next year. Li Auto is the first Chinese EV startup to report profits: it earned RMB 16 million ($2.4 million) in non-GAAP net income in Q3, thanks to a reduction in vehicle costs and higher-than-average operating efficiency, CICC analysts wrote in a report on Monday.

The company reported wider net losses of RMB 106.9 million, a 42% increase from the second quarter, attributable to share-based compensation expenses related to employee stock options.

The Chinese EV maker beat analyst expectations of its Q3 revenue, posting a 28.9% quarter-on-quarter increase in revenue of RMB 2.51 billion. Deliveries during the quarter rose sequentially by nearly a third to 8,660 vehicles.

Total deliveries reached 21,852 units for the first 10 months of this year. Its first model, the Li One, was China’s top-selling electric SUV in the past two months, according to data from state-backed China Automotive Technology and Research Center (CATARC).  

Li Auto boasts more efficient operations compared with its peers. CICC analysts said the company enjoyed a much higher efficiency with a monthly sales of 100 vehicles on average per store in September, compared with 29 for Nio and 19 units for Xpeng. The Beijing-based EV maker had 35 direct sales stores in 30 Chinese cities as of September, compared with 116 Xpeng stores and more than 160 Nio showrooms. CICC forecasted Li Auto’s net losses would narrow to RMB 190 million next year from RMB 480 million in 2020 as the company continues to ramp up production and control operating costs.

Some analysts said that the speed of Li Auto’s retail expansion would be a key factor in driving sales volume moving forward. However, the EV maker plans expand operations gradually, targeting 50 to 60 stores nationwide by end-year. Each store’s productivity should outperform competitors, as each retail location covers a bigger area including nearby towns, according to Chinese online brokerage Tiger Brokers.

“For some of our peers, their approaches are to quickly expand the number of retail stores to cover more cities, then try to slowly improve their sales efficiency at a later stage. We took a different approach. We implement gradual expansion of our sales network and try to maintain a high of sales efficiency per store,” Kevin Shen, president of Li Auto, said on Friday during the earnings call.

Jill Shen is Shanghai-based technology reporter. She covers Chinese mobility, autonomous vehicles, and electric cars. Connect with her via e-mail: or Twitter: @yushan_shen