Li Auto Inc - ADR

Financial Performance: In Q3 2025, Li Auto reported total revenues of RMB 27.4 billion, representing a 36.2% year-over-year decline and a 9.5% sequential decline. Vehicle sales accounted for RMB 25.9 billion, down 37.4% year-over-year and 10.4% quarter-over-quarter, primarily due to lower vehicle deliveries. The gross profit was RMB 4.5 billion, down 51.6% year-over-year, reflecting increased costs related to a product recall and reduced production volume.

Product Launch Strategy: The company is focusing on its new BEV lineup, specifically the Li i6 and Li i8 models, to drive future sales. Starting in November, Li Auto will initiate a dual supplier strategy for batteries to alleviate supply bottlenecks, projecting an increase in production capacity to about 20,000 units monthly by early next year.

Future Outlook and Opportunities: For Q4 2025, Li Auto expects vehicle deliveries between 100,000 to 110,000 units, projecting revenues between RMB 26.5 billion and RMB 29.2 billion. Management remains optimistic about long-term NEV penetration rates reaching 55%-60% in 2026, indicating potential for significant growth despite immediate pressure from new regulatory changes that could impact sales.