On Wednesday, a prominent EV player, Li Auto (LI  ), issued better-than-expected the second quarter report. However, even though the price war Tesla Inc initiated a while is eating up margins, Li Auto and BYD (BYDDY  ) remain the only profitable Chinese EV makers. Also, Li Auto regained its leading position in Chinese new energy SUV sales, having surpassed Tesla (TSLA  ) in July when it comes to unit sales.

Despite Thinned Margins, Li Auto and BYD are Still Profitable

BYD, the world's largest EV maker, reported earnings of 9.1 billion yuan, which is about $1.28 billion, for its second quarter that ended in June. In other words, BYD reported its earnings almost doubled from the prior, fiscal first, quarter and rose 32.8% compared to last year's comparable quarter, while delivering a record 986,720 pure electric and plug-in hybrid cars across the globe.

Li Auto's Second Quarter Highlights

For the quarter ended on June 30, Li Auto reported vehicle deliveries grew 25.5% YoY.

Net income experienced a significant year-over-year decline of 52.3% as it halved to 1.10 billion yuan, which is about $154.4 million. On the other hand, sales only grew about 10% YoY to about $4.4 billion but still surpassing Wall Street's estimate of $4.31 billion. But operating expenses increased by 23.9% YoY and gross margin, slipped to 19.5%, down from 21.8% reported during last year's comparable quarter.

Solid Guidance Despite a Persistently Challenging EV Environment

For the third quarter, Li Auto guided for deliveries in the range between 45,000 and 155,000 vehicles, which would represent a YoY increase between 38.0% and 47.5% with sales coming in between $5.4 billion and $5.8 billion, representing YoY growth from 13.7% to 21.6%.

Despite intense competition from BYD, Tesla and others, Li Auto turned the setbacks into a comeback.

Li Auto's second-quarter earnings call painted a picture of a company that is not only navigating the competitive electric vehicle market successfully with BYD's dominance taking a toll on smaller EV rivals, but is also making strategic moves to ensure its continued growth as well as leadership when it comes to the higher-end NEV market. Therefore, Li Auto did more than just demonstrate its resilience, standing proudly next to BYD and Tesla. Second quarter profit did slump with slower sales growth and thinned margins, but Li Auto remains among the handful of profitable EV makers.