Li Auto (LI) also known as Li Xiang, is a Chinese electric vehicle manufacturer headquartered in Beijing, with manufacturing facilities in Changzhou. The company's share price dipped along with other growth stocks at the beginning of the year, but it's now trading at an all-time high.

What was holding the Li Auto share price back?

Li, like its Chinese peers, saw its share price fall from over 140 HKD at the end of last year, to less than 70 HKD in March. Investors lost confidence in the company's ability to continue delivering growth as China enacted a swift response to small outbreaks of COVID-19. Both commercial center Shanghai and capital, Beijing, were hit by new restrictions to prevent the spread of the virus.

Li Auto delivered 31,716 Li ONEs in Q1, representing a 152.1% year-over-year increase. This was consistent with the company's previous forecast of 30,000-32,000. However, due to COVID-19-induced lockdowns and disruption, deliveries for April 2022 fell. Only 4,176 Li ONEs were delivered in April, representing the lowest volume in recent months, and contributing to a negative year-over-year growth rate. Production recovered in May, with 11,496 Li ONEs delivered. The company lowered its guidance to 21,000-24,000 for the second quarter, although it seems likely that Li Auto will surpass that. The company was also forced to increase the price for its vehicles amid rising battery prices.

Production issues were felt across China's manufacturing sector. Peer NIO (NIO) even postponed the launch of a new vehicle amid suspended operations and a fall in sales.

Why has the Li Auto share price gained?

Li Auto's gains over the past month are pretty outstanding. The stock is now trading for over 150 HKD. So, how did this happen?

Investors' fears that Chinese manufacturing would be hampered for the foreseeable future have been alleviated. Despite new restrictions, Beijing appears to have taken a more business-friendly approach to managing COVID-19. 96.3% of industrial businesses in Shanghai have resumed operations, according to a recent update China's Ministry of Industry and Information Technology.

In early June, Li Auto said that, although its parts suppliers have resumed production, its own manufacturing facility wasn't running at full capacity. However, May's production data suggest that the firm is operating much closer to full capacity that it had done in April.

There has been more positive news for Li Auto too. The group saw strong trading volume on this week after Citigroup (C) raised their price target on the stock from US$26.8 to US$58.6. Other brokers, including Barclays have recently backed the EV maker too.

Li Auto also unveiled its L9 model earlier this week. It was well-received, and investors will be glad to see the firm diversifying its offering. The EV will sell for 459,800 yuan (US$68,654) and Li Auto has already started taking orders. The group is targeting production of 10,000 units per month.

The L9 is Li Auto's second model since its inception seven years ago. The L9, with an extended battery range, will be able to go as far as 1,315km on a single charge, according to the Beijing headquartered firm. “This is a full-size SUV with no match on the market,” Li Xiang, Li Auto's co-founder and CEO, told a virtual launch event.