Key Points

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• Li Auto swung to a second-quarter loss as revenue fell 15.1% year over year to RMB25.7 billion and vehicle margins dropped to 9.4% from 19.4%, although both revenue and margins improved sequentially.

• The company is investing in growth through new battery-electric models, including the Li MEGA and flagship Li L9, expanded charging infrastructure, proprietary chips and driver-assistance software. It also plans overseas launches and European sales later this year.

• Li Auto forecast third-quarter deliveries of 95,000–100,000 vehicles and revenue of RMB26.6 billion–RMB28 billion, while noting that full-year positive cash flow will depend heavily on fourth-quarter deliveries.

Li Auto (NASDAQ:LI) reported a second-quarter net loss as revenue and vehicle margins declined from a year earlier, while management outlined plans for new battery-electric vehicle launches, continued investment in proprietary technology and expansion into overseas markets.

Total revenue for the second quarter was RMB25.7 billion, down 15.1% from a year earlier but up 11.7% sequentially. Vehicle sales revenue was RMB24.1 billion, falling 15.7% year over year and rising 11.8% from the first quarter. Chief Financial Officer Johnny Tie Li said the annual decline reflected lower vehicle deliveries and a lower average selling price resulting from product mix, while the sequential improvement was driven by higher deliveries and a more favorable mix.

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The company recorded a net loss of RMB1.7 billion, compared with net income of RMB1.1 billion in the prior-year period and a RMB2.3 billion loss in the first quarter. Loss from operations was RMB2.3 billion, compared with operating income of RMB827 million a year earlier. Diluted net loss per ADS was RMB1.69, versus earnings of RMB1.03 per ADS in the second quarter of 2025.

Margins Recover Sequentially but Remain Below Prior Year

Li Auto’s vehicle margin was 9.4%, down from 19.4% a year earlier but up from 6.1% in the first quarter. Overall gross margin was 11%, compared with 20.1% a year earlier and 7.9% in the preceding quarter. Gross profit totaled RMB2.8 billion, down 53.3% year over year and up 56.9% sequentially.

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President Ma Donghui said cyclical increases in costs for raw materials and components, including chips, printed circuit boards, memory products and batteries, had created temporary pressure on the company and the broader industry. He said Li Auto had reduced some exposure through advance volume commitments and long-term procurement agreements.

Chairman and CEO Xiang Li said the company does not plan to pass higher costs directly to customers. Instead, it intends to pursue cost control, integrated vehicle design, supply-chain management and broader deployment of internally developed technologies. He said that, over the long term, Li Auto views a gross margin of 15% to 20% as healthy, with raw-material costs serving as a major determinant.

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Research and development expense was RMB2.8 billion, down 1.2% from a year earlier, while selling, general and administrative expense was RMB2.3 billion, down 16.2% year over year. The company ended the quarter with RMB87.5 billion in cash. Operating cash flow was positive RMB15 million, while free cash flow was negative RMB1.3 billion.

Li said the company has repurchased 91.7 million Class A ordinary shares, including 23.7 million ADSs, for approximately $631.5 million.

New Models and Charging Network Expansion

Management said Li Auto completed a refresh of its L Series range-extended lineup, incorporating the company’s Mach M100 chip, 5C range-extender technology and drive-by-wire chassis features. Ma said the Li L9 version accounted for more than 85% of sales of the model since its launch, while the refreshed L6 had been well received. He said the company hopes the L6 can sustain demand of approximately 10,000 units per month.

The company is scheduled to launch the new-generation Li MEGA on Sept. 2 and the all-new flagship battery-electric Li L9 in mid-September. Management said the L9 will be positioned as a flagship six-seat SUV for large families and will include an 800-volt, 5C charging platform, internally developed electric motors, Mach M100 driver-assistance chips and Qualcomm cabin chips.

Li said battery-electric models and extended-range electric vehicles each represented roughly 50% of total sales, and the company expects the battery-electric share to increase as additional models launch. He said Li Auto aims to maintain a top-three position among all brands in China’s passenger-vehicle market above RMB200,000 as new products ramp during the second half.

As of the end of July, Li Auto operated 4,141 charging stations and more than 22,800 charging stalls. Ma said the network covered 18 national-level highways and more than 300 cities.

Technology Roadmap and International Plans

Li Auto said it had shipped more than 50,000 Mach M100 chips since beginning deliveries of its full-stack advanced driver-assistance solution in May. The company’s OTA 9.1 update, released in late July, improved Mach VLA performance by 20%, according to management, while urban driver-assistance mileage penetration nearly doubled versus the prior computing platform.

Chief Technology Officer Yan Xie said the company plans further software updates during the second half, including a 3D vision transformer architecture and expanded perception and decision-making capabilities. Li Auto also plans to deploy Mach VLA 2.0 for NVIDIA Orin and Thor platforms in early September.

Internationally, Ma said the company launched the all-new Li L9 in Kazakhstan and Uzbekistan in July and plans to begin sales in Dubai in September. Li Auto has also formed a partnership with Kazakhstan-based automotive group Allur for local vehicle assembly. In Europe, the company plans to introduce the Li L6 at the Paris Motor Show in October and begin European sales in the fourth quarter. It also expects to launch the Li MEGA in Hong Kong and Singapore by year-end.

For the third quarter, Li Auto forecast deliveries of 95,000 to 100,000 vehicles and total revenue of RMB26.6 billion to RMB28 billion. The company expects to maintain stable quarterly operating cash flow from the third quarter, though Li said full-year positive operating and free cash flow will depend largely on fourth-quarter deliveries.

About Li Auto (NASDAQ:LI)

Li Auto Inc is a Chinese automotive company that develops, manufactures and sells smart electric vehicles, with an early focus on range-extended electric SUVs designed for family use. The company is headquartered in China and serves the domestic market through a combination of online channels and a network of retail/showroom locations. Li Auto was founded to address range-anxiety in electric vehicle buyers by integrating a small internal-combustion engine as a range extender alongside a large battery, enabling longer driving range while retaining electric driving characteristics.

The company’s product lineup centers on multi‑occupant SUVs that combine electric propulsion, advanced in‑vehicle connectivity and driver‑assistance features.

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The article “Li Auto Q2 Earnings Call Highlights” was originally published by MarketBeat.

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