Li Auto, Inc. ((LI)) has held its Q2 earnings call. Read on for the main highlights of the call.
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The recent earnings call for Li Auto, Inc. reflected a balanced sentiment, highlighting both the company’s achievements and challenges. On the positive side, the company reported strong vehicle deliveries, successful product launches, and significant investments in artificial intelligence. However, these were countered by concerns over a year-over-year revenue decline, adjustments in the sales system impacting performance, and negative free cash flow. This mix of positive and negative developments paints a complex picture of the company’s current standing.
Strong Vehicle Deliveries and Revenue
Li Auto delivered an impressive 110,000 vehicles in the second quarter of 2025, generating total revenues of RMB 30.2 billion. This achievement secured a 13.4% market share in the RMB 200,000 and above NEV market in China, underscoring the company’s strong presence in the competitive automotive landscape.
Li MEGA and Li i8 Success
The Li MEGA model emerged as the best-selling MPV priced above RMB 500,000, while the Li i8 received overwhelmingly positive feedback, with a test drive satisfaction rate exceeding 97%. The company expects cumulative deliveries of the Li i8 to surpass 8,000 units by the end of September, highlighting the model’s growing popularity.
Expansion of Charging Network
Li Auto is aggressively expanding its charging infrastructure, currently operating over 3,100 charging stations with more than 17,000 stalls. The company aims to increase this number to 4,000 stations by the end of the year, enhancing support for its ultra-fast charging capabilities.
AI and R&D Investments
The company is heavily investing in artificial intelligence, with expected expenditures exceeding RMB 6 billion. These investments focus on infrastructure, product, and technology development, including the rollout of the proprietary VLA large model driver and the Li Xiang Tong Xue Agent.
Financial Performance Improvement
Li Auto reported a net income of RMB 1.1 billion for the second quarter, marking a 69.6% increase quarter-over-quarter. Operating income also saw a significant rise, up 76.7% year-over-year, reflecting improved financial performance despite broader challenges.
Decline in Revenue Year-over-Year
Despite strong deliveries, Li Auto experienced a 4.5% decline in total revenue year-over-year, with vehicle sales revenue down 4.7%. This decline was attributed to a lower average selling price and increased sales incentives.
Sales System Adjustments Impact
Adjustments in the sales and service systems, along with other market factors, led to fluctuations in sales for the Li L series, impacting short-term performance. These adjustments are part of the company’s strategy to streamline operations and enhance customer experience.
Negative Free Cash Flow
The company reported a negative free cash flow of RMB 3.8 billion in the second quarter, with cash used in operating activities amounting to RMB 3 billion. This indicates financial strain, although the company maintains a strong cash position overall.
Projected Decrease in Q3 Deliveries and Revenue
Looking ahead, Li Auto anticipates a decrease in third-quarter deliveries, projecting between 90,000 and 95,000 vehicles, with expected revenues ranging from RMB 24.8 billion to RMB 26.2 billion. This forecast reflects a cautious outlook amid ongoing market challenges.
Forward-Looking Guidance
Li Auto’s forward-looking guidance remains robust, with plans to deliver over 110,000 vehicles and generate RMB 30.2 billion in total revenues. The company aims to maintain its leading position in the NEV market, driven by the success of models like the Li MEGA and Li i8. The expansion of the charging network and significant AI investments further underscore the company’s commitment to innovation and growth.
In conclusion, Li Auto’s earnings call highlighted a mix of achievements and challenges. While strong vehicle deliveries and successful product launches are promising, the company faces hurdles such as revenue decline and negative cash flow. Nevertheless, Li Auto’s strategic investments and forward-looking plans position it well for future growth, making it a company to watch in the evolving automotive market.