J.P. Morgan downgraded Li Auto (LI) stock to Hold from Buy and lowered the stock price target for the Chinese electric vehicle (EV) maker to $28 from $33, noting “more conservative volume” assumptions for the second half of 2025 and beyond amid a competitive landscape. Notably, J.P. Morgan expects China’s passenger vehicle (PV) demand to decelerate or even decline in 2026, as government subsidies expire by the end of this year. In fact, J.P. Morgan’s analysis indicates that a slowdown might occur earlier following the strong 13% year-over-year growth in July.
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J.P. Morgan Moves to the Sidelines on LI Stock
J.P. Morgan analyst Nick Lai reduced his estimates for Li Auto’s 2025 and 2026 volume and earnings by about 10% to 20%, mainly to reflect intensifying competitive dynamics that the company’s BEV (battery electric vehicle) business is facing. The analyst now expects Li Auto’s sales volume to be about 480,000 units this year. That said, Lai expects sales volume to rebound by 35% to 640,000 units in 2026.
The analyst explained that in February 2025, he had upgraded Li Auto stock on expectations that the Chinese EV maker’s attempt to re-enter the BEV market would be successful, driving both volume and share price upside in H2 2025-2026, following the dismal reaction to the Mega MPV (multi-purpose vehicle) in Q2 2024. He noted that the company recently launched the i8 6-seater SUV at about RMB 349,000 and revised down the price a week after initial launch based on customer feedback. In comparison, competing models, mainly Nio’s (NIO) ONVO L90 SUV, have attracted notable traffic and orders, as reflected in J.P. Morgan’s recent visits to both Li Auto and Nio stores in Shanghai and Shenzhen.
Lai expects Li Auto to launch a volume BEV SUV, i6 (5-seater), with a price tag likely starting around RMB 240,000 to 250,000. He believes that potential competitors targeting a similar price point or segment as Li’s i8 or i6 SUV include Nio ONVO’s L80, scheduled to launch either in Q4 2025 or early 2026. He also expects Leapmotor’s (HK:9863) D-series large SUV to be a competitive model for Li’s i8 in terms of size, but at a similar or lower price as the i6.
Is Li Auto a Good Stock to Buy?
Wall Street has a Moderate Buy consensus rating on Li Auto stock based on six Buys and four Holds. The average Li Auto stock price target of $32.83 indicates 32% upside potential. LI stock has risen 4% year-to-date.
