What happened

Electric vehicle (EV) stock Li Auto (NASDAQ:LI) surged Monday morning, trading up 7.5% as of 11:30 a.m. ET after jumping as much as 11% soon after market open. Investors cheered the surprisingly strong third-quarter numbers and outlook from the Chinese EV maker.

So what

Revenue more than tripled to $1.2 billion, backed by a 190% year-over-year increase in deliveries for its only EV, the premium six-seater SUV Li One, in the third quarter. While the company still incurred a net loss of $3.3 million, it was down nearly 80% year over year.

The company continues to sees strong demand for the Li One. After delivering a record number of 25,116 vehicles in the third quarter, it delivered another 7,649 in the month of October, up 107% from the year-ago period.

A space shuttle drawn on a blackboard.

Image source: Getty Images.

As of the end of September, Li Auto had 162 retail stores across 86 cities, compared with only 97 stores in 64 cities as of June 30.

The most important takeaway from the earnings report, though, is its solid outlook. For the fourth quarter, the EV maker projects:

  • Li One deliveries of 30,000 to 32,000 units, up from 14,464 vehicles in the year-ago quarter.
  • Revenue between $1.37 billion and $1.46 billion, up from only $635.5 million a year earlier.

Those are really strong numbers, and Li Auto is pushing itself hard to meet rising demand for its SUV. In October, for instance, it started building its second factory in Beijing with completion set for 2023. In November, it acquired a company that had leased its land-use rights and factories to Li Auto at its Changzhou manufacturing base to gain full control over the base.

Now what

October deliveries are almost 9% higher sequentially, which could signal an easing of the severe semiconductor shortage in the automotive industry.

While that's good news for the entire EV industry, Li Auto is preparing itself for the next phase of growth by investing in battery-electric and extended-range EVs, and advanced driver-assist systems, while expanding its manufacturing capacity.

Since it is also among the EV manufacturers that are already free-cash-flow positive, it's not surprising to see the market bidding the stock higher today.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.