Li Auto Inc. reported third‑quarter 2025 revenue of RMB 27.4 billion (US$3.8 billion) and 93,211 vehicle deliveries, a 39.0% year‑over‑year decline in units. The company posted a net loss of RMB 624.4 million, translating to an earnings‑per‑share loss of $0.05, a miss against the consensus estimate of $0.04. Gross margin for the quarter fell to 16.3%, down from 21.5% in Q3 2024, and to 20.4% when one‑time Li MEGA MPV recall costs are excluded.
The revenue mix shifted as demand for the company’s extended‑range electric vehicle (EREV) platform weakened, while its battery‑electric vehicle (BEV) lineup—Li i6 and Li i8—continued to gain traction. Orders for the two BEV models exceeded 100,000 units, but the overall decline in EREV sales, combined with a 1.1 billion‑RMB recall liability for the Li MEGA MPV, eroded profitability. The recall cost, a one‑time charge, reduced gross margin and contributed to the net loss, while lower production volumes increased per‑unit manufacturing costs.
Margin compression was driven by a mix of pricing pressure and cost inflation. Competitive pricing in the premium NEV segment forced the company to lower vehicle prices, while raw‑material and labor costs rose. The recall expense added a significant one‑time hit, and the lower volume of EREV production reduced economies of scale. Together, these factors pushed gross margin from 21.5% in the same quarter last year to 16.3% this quarter.
Management guidance for Q4 2025 signals continued headwinds. Li Auto forecasts vehicle deliveries between 100,000 and 110,000 units, a 37.0% to 30.7% year‑over‑year decline, and revenue between RMB 26.5 billion and RMB 29.2 billion, a 40.1% to 34.2% drop. The company remains cautious about near‑term demand, citing intensified competition, supply‑chain bottlenecks, and the ongoing impact of the Li MEGA recall. Despite these challenges, Li Auto is investing heavily in its AI platform, with CEO Li Xiang highlighting the upcoming M100 chip and the company’s ambition to transform vehicles into proactive service providers.
CEO Li Xiang emphasized that the company’s “embodied intelligence” strategy will drive long‑term growth, noting that the M100 AI inference chip will be available by 2026 and will underpin a new autonomous‑driving platform. CFO Tie Li acknowledged the quarter’s headwinds, stating that supply‑chain bottlenecks and recall costs weighed on operating cash flow, but the company is working closely with partners to meet demand for the Li i6 and Li i8. CTO Xie Yan added that the M100 chip’s performance‑to‑cost ratio is expected to exceed that of current high‑end chips by more than three times, positioning Li Auto for future profitability.
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