Li Auto Inc. January 2026 Delivery Update

Chinese automakers with EU exposure will likely benefit the most from recent progress in advanced talks between China and the EU on price commitments for full electric vehicles, DBS analysts say in a note. The two sides aim to address subsidy concerns without relying solely on tariffs, DBS adds. Reduced tariff risks can enhance export competitiveness, improve profit margins and support international growth strategies amid softening domestic demand, DBS says. Companies including SAIC, BYD, XPeng, Leapmotor and Geely will likely benefit the most given their higher EU exposure. In contrast, domestically focused players like Li Auto and NIO may see milder effects, they add. DBS's top picks are Geely and XPeng, given their higher volume growth and broad mass-market product portfolio, the analysts say. (jiahui.huang@wsj.com; @ivy_jiahuihuang)

By Sherry Qin

Chinese auto company BYD's sales growth slowed significantly in 2025 amid intensified competition at home, but it was still set to top Tesla as the world's biggest electric vehicle company.

The Chinese EV maker said late Thursday that it sold 420,398 units in December, down 18% on year and marking its fourth consecutive month of sales decline. Its 2025 annual sales rose 7.7% to 4.60 million units, significantly lower than 2024's 41% jump.

Tesla likely delivered 422,850 units in the fourth quarter, taking its annual sales to 1.64 million vehicles, according to the market consensus compiled by the U.S. company.

BYD has faced increasing competition from peers like Geely and Leapmotor in the domestic market in the budget segment. Geely delivered 3.02 million units in 2025, up 38.5%. Leapmotor, once a smaller player in China's EV industry, hit its 500,000-unit target for 2025 ahead of schedule and raised the target to more than 600,000 units while setting an ambitious goal of 1 million cars for 2026.

NIO and Li Auto outperformed peers in December sales, delivering 48,135 and 44,246 vehicles, respectively. Nomura auto analyst Joel Ying reckons that their strong sales are likely mainly due to their final push on the delivery of their order backlog.

Chinese auto makers could face more pressure in 2026 as China has scaled back trade-in subsidies for mid-to-lower-priced vehicles in the new year to promote technology innovation and improve the auto sector's product mix, analysts said.

China's retail passenger vehicle sales could decline 5% in 2026 due to the reduction of favorable government policies, Deutsche Bank analyst Bin Wang said in a note.

"With such policy environment, we think market environment likely to be challenging, at least during the beginning stage of 2026," Nomura's Ying said.

However, BYD could regain momentum in 2026 in both domestic and overseas markets, Ying said, adding that BYD will likely reveal its 2026 business strategy and model upgrade after the Lunar New Year.

Write to Sherry Qin at sherry.qin@wsj.com

(12:24 GMT) Li Auto Price Target Cut to $18.60/Share From $30.30 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