Li Auto Reports Significant Q4 Earnings Decline

Written by Emily J. Thompson, Senior Investment Analyst

Source: Benzinga

Updated: 1 hour ago

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Should l Buy LI?

Source: Benzinga

Revenue and Delivery Decline: Li Auto's Q4 2025 revenue fell 35% year-over-year to 28.8 billion yuan ($4.11 billion), missing the analyst consensus of 42.8 billion yuan, reflecting dual pressures from reduced deliveries and weak market demand.
Margin Compression: Due to recall costs, vehicle gross margin contracted from 19.7% to 16.8%, with an adjusted operating loss of 188.4 million yuan ($26.9 million) contrasting sharply with a profit of 4.2 billion yuan in the prior year, indicating a significant deterioration in profitability.
Cash Flow Situation: The company reported free cash flow of 2.5 billion yuan ($352.9 million) in Q4, a substantial drop from 6.1 billion yuan a year earlier, and a negative 8.9 billion yuan in Q3, highlighting challenges in cash management and operational efficiency.
Future Outlook: Li Auto expects Q1 2026 revenue between 20.4 billion and 21.6 billion yuan, representing a year-over-year decline of 21.3% to 16.7%, with vehicle deliveries projected at 85,000 to 90,000 units, indicating a challenging market environment in the coming months.

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Analyst Views on LI

Wall Street analysts forecast LI stock price to rise

12 Analyst Rating

2 Buy

9 Hold

1 Sell

Hold

Current: 17.760

Low

15.00

Averages

20.51

High

32.00

Current: 17.760

Low

15.00

Averages

20.51

High

32.00

Piper Sandler

Neutral

maintain

$95

2026-03-02

Reason

Piper Sandler

Price Target

$95

AI Analysis

2026-03-02

maintain

Neutral

Reason

Piper Sandler noted that, over the weekend, several Chinese automakers published delivery results for last month, and after reviewing the results, he believes investors should conclude that 2026 sales estimates require downward revisions. Year-to-date sales are likely tracking lower by at least 15% or "probably more," and absent a sharp rebound, the firm's current forecast of a 3% year-over-year decline is looking "too optimistic," the analyst tells investors in a research note. The firm added that, as expected, most companies reported year-over-year declines in February, due in part to the timing of Chinese New Year. Piper Sandler has a Neutral ratting and $95 price target on BYD (BYDDF), an Overweight rating and $49 price target on Xiaomi (XIACY), an Overweight rating and $61 price target on Zhejiang Leapmotor (ZJLMF), and Neutral rating and $19 price target on Li Auto (LI).

JPMorgan

Neutral -> Underweight

downgrade

$18 -> $14

2026-02-08

Reason

JPMorgan

Price Target

$18 -> $14

2026-02-08

downgrade

Neutral -> Underweight

Reason

JPMorgan downgraded Li Auto to Underweight from Neutral with a price target of $14, down from $18. The firm sees China's auto industry underperforming in 2026 year as underlying passenger vehicle growth slips to negative territory. JPMorgan cut Li's earnings forecast to loss this year citing falling sales volumes and weaker margins. The company's lack of new models is a concern, the analyst tells investors in a research note.

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About LI

Li Auto Inc is a holding company primarily engaged in the design, development, manufacturing, and sales of smart electric vehicles. The Company’s main products include the Li L9, Li L8, Li L7, Li L6, and Li MEGA, encompassing six-seat sport utility vehicles (SUVs), five-seat SUVs, and multi-purpose vehicles (MPVs). The Company is also engaged in research and development activities relating to intelligent vehicle technologies, the design, development and manufacturing of various components and systems for new energy vehicles, and the provision of value-added services such as charging, vehicle maintenance and repair. The Company mainly conducts its businesses within domestic market.

About the author

Emily J. Thompson

Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.

Li Auto to Announce Q4 Earnings on March 12

15 hours agoseekingalpha

Earnings Announcement: Li Auto is set to release its Q4 earnings on March 12 before the market opens, with consensus EPS estimate at $0.03, reflecting a 94.2% year-over-year decline, and revenue estimate at $4.21 billion, down 31.0% year-over-year, indicating significant profitability challenges ahead.
Performance Forecast: Over the past two years, Li Auto has beaten EPS estimates 63% of the time and revenue estimates 50% of the time; however, with no upward revisions and two downward revisions in EPS estimates recently, market confidence appears to be waning.
Delivery Data Review: In February, Li Auto's deliveries slightly increased year-over-year to 26,421 units, bringing the cumulative total to 1.59 million units, but the lack of new models and rebates could lead to erosion in sales and profitability.
Market Competition Risks: J.P. Morgan highlights that Li Auto faces risks of declining sales and profitability due to the absence of new models and promotional measures, which could impact its position in a highly competitive market.