What happened

If there is slowing demand for electric vehicles (EVs) in China, Li Auto (LI -3.80%) isn't seeing it. Li released its first-quarter update today, and the stock is surging. As of 11:38 a.m. ET, Li's American depositary receipts were higher by 13.5% on the day.

So what

Li reported positive income from operations versus a loss in last year's first quarter. It also said net income grew sequentially from the fourth quarter of 2022. Net income was the equivalent of about $136 million. But that wasn't the only reason investors are pouring into the stock today. 

Deliveries in the first quarter surged 66% year over year to more than 52,500 units. Vehicle deliveries continued to grow in April totaling almost 26,000 in that month alone. Management also projects a huge jump for the full second quarter. 

Now what

Li expects to deliver between 76,000 and 81,000 vehicles in the second quarter. Even the low end of that range would represent an increase of 165% compared to the 2022 second quarter. 

Li chairman and CEO Xiang Li noted, "Facing an NEV [new energy vehicle] landscape with intensified competition, we claimed the third place in terms of sales among NEV brands priced over RMB200,000 [$29,000] in China in the first quarter of 2023." He added that the company is gaining orders and ramping up production of its flagship L7 midsize SUV. The L7 is Li's lowest-priced SUV with a suggested retail price of about $46,000. 

Li has growing profits, free cash flow, and nearly $10 billion in cash and equivalents on hand. Investors are especially confident now that the company also sees a significant increase in production in the second quarter. That helps explain why the stock popped today.