Li Auto's Performance "Crashes" with 94,000 Fewer Vehicles Sold, Net Profit Plummets 6.9 Billion, Cash Reserves Exceed 100 Billion, R&D Investment of 11.3 Billion Half Directed to AI

Changjiang Business Daily News ● Changjiang Business Reporter Shen Yourong

Once the leading new car-making force, Li Auto (02015.HK, LI.US), is struggling with poor performance.

On the evening of March 12, Li Auto released its unaudited financial results for 2025. In 2025, Li Auto achieved revenue of 112.3 billion yuan, a decrease of about 22% year-over-year; net profit was approximately 1.1 billion yuan, down about 6.9 billion yuan from the previous year, an 86% decline.

The decline in revenue was mainly due to reduced vehicle sales income. In 2025, vehicle sales revenue was 106.7 billion yuan, down 23% year-over-year.

Li Auto’s vehicle sales in 2025 fell short of expectations. The company delivered 406,300 new vehicles throughout the year, a decrease of about 94,200 units from 2024.

Despite the sharp profit decline, Li Auto’s fundamentals remain intact. As of the end of 2025, the company’s cash reserves reached 101.2 billion yuan. The company plans to launch a new pure electric flagship SUV, the Li Auto i9, in the second half of 2026. Its sales target for 2026 is approximately 490,000 units.

In 2025, R&D investment was 11.3 billion yuan, with 50% allocated to AI-related projects. In 2026, Li Auto plans to invest around 12 billion yuan in R&D.

In addition to expanding in the extended-range and pure electric markets, Li Auto is also focusing on humanoid robots in an attempt to turn around its fortunes.

Net profit has declined significantly for two consecutive years

In 2025, Li Auto’s operating performance can be described as a “car crash.”

According to the announcement, in 2025, Li Auto achieved revenue of 112.3 billion yuan, down 22.25% year-over-year; net profit was about 1.1 billion yuan, a decrease of 6.9 billion yuan from the previous year, an 86% drop.

Li Auto went public on the Hong Kong Stock Exchange in August 2021, with an offering price of HKD 118 per share.

2023 was a historic year for Li Auto. That year, the company achieved revenue of 123.85 billion yuan, a 173.48% increase; net profit was 11.7 billion yuan, successfully turning a profit. Li Auto thus became China’s first new car-making startup to be profitable annually.

In 2023, Li Auto’s sales reached 376,000 units, a year-over-year increase of about 182%.

In 2024, the company achieved revenue of 144.46 billion yuan, up 16.64% year-over-year; net profit was about 8 billion yuan, a 31.37% decline.

That year, vehicle sales exceeded 500,000 units, reaching 505,000, a 33.1% increase, with cumulative deliveries surpassing 1 million. Li Auto thus became the “big brother” among new car-making startups.

In summary, in 2024 and 2025, Li Auto’s net profit declined sharply for two consecutive years.

In 2025, net profit fell by as much as 86%, exceeding market expectations.

Looking at individual quarters, in 2025, Li Auto’s revenue for Q1, Q2, Q3, and Q4 was 25.93 billion yuan, 30.25 billion yuan, 27.37 billion yuan, and 28.78 billion yuan, respectively, with changes of +1.14%, -4.52%, -36.17%, and -35.01% year-over-year; net profits were 650 million yuan, 1.093 billion yuan, -625 million yuan, and 70 million yuan, with Q3 showing a loss and Q4 barely profitable.

The significant drop in net profit is related to declining vehicle sales.

In 2025, Li Auto delivered 406,300 vehicles, down 94,200 units or 18.8% year-over-year, far below the initial target of 700,000 units.

Pure electric models dragged down Li Auto’s performance. The flagship MPV MEGA was only delivered 18,500 units throughout the year, less than 30% of the annual target. The Li Auto i6 and i8 faced multiple challenges, including first-sale policies, capacity ramp-up issues, and tax subsidy reductions, resulting in deliveries below market expectations.

If only sales volume decreased by nearly 20%, it wouldn’t fully explain an 86% net profit plunge. The profit decline is also related to intensified market competition.

To cope with market competition, Li Auto increased terminal discounts in 2025, which led to a decrease in gross margin.

In 2025, Li Auto’s overall gross margin was 18.68%, down 1.85 percentage points from 2024.

Li Auto explained that the decline in gross margin was mainly due to lower vehicle gross margins, which stood at 17.9%, down 1.9 percentage points from 2024.

Regarding the decline in vehicle gross margin, Li Auto attributed it to product mix differences.

Annual target of 490,000 units still faces challenges

2025 was a transition year for Li Auto. The company’s sales target for 2026 is a 20% increase.

Based on the 2025 delivery volume of 406,300 units, the 2026 target is approximately 487,600 units.

In January and February 2026, Li Auto’s deliveries were 27,700 and 26,400 units, respectively, with year-over-year changes of -7.55% and +0.6%.

During the earnings conference on the evening of March 12, Li Auto Chairman and CEO Li Xiang revealed that a new pure electric flagship SUV, the Li Auto i9, will be launched in the second half of 2026. He believes that the new Li Auto L9 will build core technological barriers.

Along with the Li Auto i6, i8, and MEGA, Li Auto will focus on pure electric vehicles in 2026.

Recently, there were rumors that Li Auto would close 100 stores. President Ma Donghui responded at the earnings conference that this was not true, stating that closing some stores is part of normal operational optimization, addressing issues such as poor site selection and declining foot traffic in certain commercial areas.

Li Auto has a “store owner wealth creation” plan. Its “Store Partner Program” involves store managers participating fully in site evaluation, with responsibilities and profits linked to individuals, aiming to improve store management quality from the source. Stores are designated as basic operational units, giving excellent managers real decision-making power and profit-sharing rights.

Li Xiang said that, given the current automotive sales system is generally unprofitable, Li Auto aims to cultivate a large number of store managers earning over one million yuan annually, with top performers earning two to three times the industry average.

Another path for Li Auto’s performance breakthrough is to develop humanoid robots.

Li Xiang stated that, in response to increasing competition in the new energy vehicle market, Li Auto will focus on strengthening its technological moat and transitioning from smart electric vehicles to embodied intelligent enterprises to establish a competitive advantage in the next stage. The company will initiate this as a startup, exploring AI glasses, robot projects, and other fields.

Market interpretation suggests that Li Auto is undertaking a second entrepreneurial phase.

In the vertical integration of embodied intelligence technology, Li Auto will commit 100%. Embodied intelligence involves systemic technologies such as edge inference chips, different models and operating systems, as well as data and training systems behind them.

Li Auto’s confidence in this second startup phase is supported by ample funds. As of the end of 2025, the company’s cash reserves totaled 101.2 billion yuan.

Li Auto continues to ramp up R&D. In 2025, R&D investment was 11.3 billion yuan, with 50% allocated to AI projects.

In 2026, R&D investment is planned to be around 12 billion yuan, with about 50% still dedicated to AI, including self-developed chips, computing power infrastructure, and ongoing AI products like assisted driving and Li Xue.

Whether Li Auto can truly turn the tide in 2026 remains to be seen.

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Editor: ZB