Li Auto Cut to Hold From Buy by HSBC

Li Auto's earnings will likely remain under pressure next year, given its sluggish fourth-quarter revenue and sales guidance, says Morningstar analyst Vincent Sun in a note. The vehicle recall of its MEGA model, which Morningstar estimates lowered gross profit by around CNY1 billion, resulted in an operating loss for 3Q, he notes. The company's management expects volume growth to resume next year with the resolution of the battery supply bottleneck and new generation plug-in hybrid model launches, he says. However, competition will likely pressure Li Auto's sales volume growth while the contribution from battery models remains low, he says. Morningstar cut Li Auto's vehicle sales volume forecast by 15% to 17% between 2025 to 2029. (jiahui.huang@wsj.com; @ivy_jiahuihuang)

Li Auto has yet to bottom out in terms of quarterly performance amid further challenges ahead, Nomura analysts write in a note. Li Auto faces fierce competition from peers to its L series full-electric vehicles, as well as a bottleneck in i6 battery capacity. The company is also dealing with fallout from a recall of its MEGA model, while facing a seasonal softer sales period, Nomura says. Looking ahead to 2026, Li Auto may face more pressure on margin and shipments in 1Q compared with 4Q 2025, due to weaker demand and the upcoming reduction in China's EV purchase tax exemption, it adds. The brokerage maintains a neutral rating on Li Auto with a target price of $31.00. The ADRs last closed at $18.43. (jiahui.huang@wsj.com; @ivy_jiahuihuang)

Q3 2025 saw revenue and profit declines due to lower deliveries and recall costs, but a strong cash position was maintained. Strategic focus shifts to embodied AI vehicles, major product upgrades, and supply chain improvements, with guidance for Q4 showing cautious optimism.

Based on Li Auto, Inc. Class A [2015] Q3 2025 Audio Transcript — Nov. 26 2025

Q3 revenue and profit declined sharply year-over-year due to lower deliveries and recall costs, but the company maintains a strong cash position and is pivoting to an entrepreneurial model. Major product and technology upgrades, including in-house AI chips and BEV/EREV expansion, are planned for 2026.

Based on Li Auto, Inc. Class A [2015] Q3 2025 Audio Transcript — Nov. 26 2025

By Jiahui Huang

Li Auto reported its first quarterly net loss in three years amid slowing demand and significant sales pressure, in a reversal of fortune for the plug-in hybrid specialist once considered one of the more successful Chinese automakers.

The company swung to a third-quarter net loss of 625.0 million yuan, equivalent to $88.2 million, from net profit of 2.81 billion yuan a year earlier. That missed the 439.8 million yuan profit consensus estimate in a Visible Alpha poll by a wide margin.

Revenue also undershot expectations, dropping 36% to 27.36 billion yuan. It was the company's worst top-line decline since it listed in New York in 2020.

Before Wednesday's results, Li Auto was one of the few profitable electric-vehicle makers in China, recording its first annual profit in 2023.

The Beijing-based company's disappointing performance emphasizes the need for brands to differentiate themselves in a crowded field. It also highlights the highly competitive Chinese auto market, where new EV models are launched almost every month, and carmakers constantly roll out the latest technology to attract customers.

Li Auto faced weaker sales this year as demand for hybrid cars moderated. A spate of new model launches by rivals has also squeezed its market share. It delivered 93,211 vehicles in the third quarter, down 39% from the previous year, with sales falling further last month.

Additionally, the company's foray into the full-EV space hasn't gone as well as it had hoped. Its MEGA multipurpose vehicle and i8 sport-utility vehicle have experienced subdued sales. Meanwhile, the i6--another battery SUV--has received strong orders and was expected to become a major sales driver, but has faced some production-capacity challenges, analysts said.

The Chinese automaker's margin fell to 16.3% in the July-September period, compared with 21.5% a year ago and 20.1% in the second quarter. Its vehicle margin declined to 15.5%, weighed by estimated recall-related costs for the Li MEGA and higher unit manufacturing costs due to lower production volume, the company said. Li Auto recalled more than 11,000 MEGA 2024 EVs over a battery safety risk.

For the fourth quarter, Li Auto expects to deliver between 100,000 and 110,000 vehicles, a decline of about one-third from a year earlier. It projected revenue of 26.5 billion yuan to 29.2 billion yuan, down 34%-40%.

The soft guidance comes as the market remains cautious about the carmaker's prospects in the battery EV market. Li Auto, once a top-selling hybrid-car brand, is trying to find its edge in the full-EV segment--a feat made more difficult by rivals like XPeng and Xiaomi, which are seeing solid momentum for their electric cars.

Li Auto's shares in Hong Kong have shed more than 20% of their value so far this year, compared with the Hang Seng Index's nearly 30% gain. Its American depositary receipts were recently about 1.6% lower in premarket trading after the results.

Write to Jiahui Huang at jiahui.huang@wsj.com

Al Root and George Glover

Li Auto stock was sliding Thursday after the Chinese electric-vehicle maker reported mixed third-quarter results.

The company posted an adjusted net loss of 359.7 million Chinese yuan ($50.5 million), as total sales dropped 36% from a year ago to $3.8 billion. Wall Street was looking for adjusted net income of $115.7 million on sales of $3.7 billion.

In August, Li guided for third-quarter sales of between $3.5 billion and $3.7 billion.

Li's American depositary receipts were down 1.8% at $18 in premarket trading, while S&P 500 and Dow Jones Industrial Average futures were 0.3% and 0.2% higher, respectively.

Coming into Wednesday trading, Li stock was down 24% so far this year. Falling sales and earnings have weighed on investor sentiment.

A year ago, in the third quarter of 2024, Li reported earning per share of 26 cents from sales of $6.1 billion. The company sold about 153,000 cars in the third quarter of 2024. It sold 93,211 cars in the third quarter of 2025.

For the fourth quarter, Li expects to deliver between 100,000 and 110,000 vehicles, and total revenue of between $3.7 billion and $4.1 billion. Wall Street had been forecasting $5.1 billion in revenue.

Write to Al Root at allen.root@dowjones.com and George Glover at george.glover@dowjones.com

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