Li Auto (LI) stock sank Thursday after the Chinese EV maker fell short of Wall Street’s second-quarter earnings and revenue expectations. Shares dropped 4.7% premarket to $21.55, extending a rough year that has already seen the stock lose nearly 6%.
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The company reported adjusted net income of 1.5 billion yuan ($204.9 million), well below the $252 million analysts had expected. Revenue slid 4.5% year over year to 30.2 billion yuan ($4.2 billion), also missing consensus forecasts of $4.5 billion.
Price War Slams Vehicle Sales
The core problem is China’s bruising EV price war. Carmakers are slashing sticker prices to keep customers interested, but the cuts are taking a direct bite out of margins. Li delivered 111,074 vehicles in the quarter, a slight 2.3% rise from a year ago. Yet sales revenue fell 4.7% to $4 billion, highlighting the squeeze between higher output and shrinking profitability.
Wall Street had been looking for far more. Estimates called for 124,700 deliveries and $4.2 billion in vehicle sales. The shortfall underscores how price competition is forcing even market leaders to trade profitability for volume.
Competition Pressures Mount
China’s EV industry is the most crowded on the planet. Giants like BYD (BYDDY) and Tesla (TSLA) have cut prices repeatedly this year, sparking a chain reaction across the sector. Li Auto is being forced to follow suit, even as domestic demand shows signs of cooling.
The result is a market where growth no longer guarantees profits. Vehicle makers are trying to ride out the storm with new models and subsidies, but earnings results are showing just how painful this fight for survival has become.
Investors Question the Road Ahead
Li’s slump stands in stark contrast to the broader market. While the S&P 500 (SPX) has gained 10% in 2025, Li’s ADRs are sliding deeper into the red. Investors are beginning to worry that without a pause in the price war, profitability could keep eroding no matter how many cars roll off the assembly line.
For now, Li Auto’s challenge is to deliver stronger margins without losing ground in China’s brutal EV market.
Is Li Auto a Good Buy?
Wall Street analysts are divided on Li Auto (LI), with the stock currently rated a Hold based on 11 analyst reviews over the past three months. Out of those, four analysts call it a Buy, five recommend Hold, and two say Sell. The average 12-month price target sits at $29.66, which implies a potential 31.24% upside from the latest price of $22.60.
