Li Auto Reports Mixed Q2 2025 Results, Misses EPS Estimates

Li Auto (LI.US) reported Q2 2025 non-GAAP net income of RMB1.5 billion (US$204.9 million), marking a 2.3% decrease year-over-year but a 44.7% increase quarter-over-quarter. Total revenues reached RMB30.2 billion (US$4.2 billion), a 4.5% decrease from Q2 2024, yet a 16.7% increase from Q1 2025. Non-GAAP diluted net earnings per ADS were RMB1.37 (US$0.19), slightly below the analyst estimate of US$1.73 per share, indicating a significant miss on EPS expectations for Q2 2025.

Vehicle Sales and Margins

Vehicle sales for Q2 2025 were RMB28.9 billion (US$4.0 billion), reflecting a 4.7% year-over-year decrease but a 17.0% quarter-over-quarter increase. The year-over-year decline was mainly due to a lower average selling price resulting from a different product mix, interest subsidies, and increased sales incentives, partially offset by an increase in vehicle deliveries. Vehicle deliveries for the quarter reached 111,074 vehicles, a 2.3% year-over-year increase.

Vehicle margin was 19.4% in Q2 2025, an increase from 18.7% in Q2 2024, primarily due to lower average cost of sales driven by cost reduction initiatives. Gross profit for the quarter was RMB6.1 billion (US$846.9 million), a 1.8% year-over-year decrease but a 14.1% quarter-over-quarter increase. The company's gross margin was 20.1%, up from 19.5% in Q2 2024.

New Product Launches and Strategic Initiatives

In July 2025, Li Auto launched the Li i8, a six-seat battery electric family SUV, featuring a 97.8 kWh ternary lithium 5C super charging battery pack and a 720 km CLTC range. This new model aims to redefine the modern SUV experience with advanced assisted driving and intelligent agent systems. The company also announced a brand upgrade aimed at providing a high-quality mobile home experience for a diverse range of consumers.

Li Auto's CEO, Mr. Xiang Li, highlighted the company's continuous pursuit of user-centric innovations, which has solidified its position as a leading domestic automotive brand in China's NEV market. The company continues to invest in products and intelligence, with plans to launch the Li i6 in September to expand its model lineup and strengthen its position in the premium BEV market. These initiatives are expected to further enhance the company's product offerings and market presence.

Management Outlook and Efficiency

For Q3 2025, Li Auto anticipates vehicle deliveries to be between 90,000 and 95,000 vehicles, representing a projected year-over-year decrease of 41.1% to 37.8%. Total revenues are expected to range from RMB24.8 billion (US$3.5 billion) to RMB26.2 billion (US$3.7 billion), indicating a year-over-year decrease of 42.1% to 38.8%. Mr. Tie Li, CFO, emphasized the company's focus on cost optimization and operational efficiency, contributing to solid profitability despite a dynamic market environment.

Operating expenses for Q2 2025 decreased by 8.2% year-over-year to RMB5.2 billion (US$731.5 million), mainly driven by decreased employee compensation in research and development and selling, general, and administrative expenses. Income from operations increased significantly by 76.7% year-over-year to RMB827.0 million (US$115.4 million), reflecting improved operating margin of 2.7%. Despite increased payments for inventory purchases, Li Auto's cash position remained strong at RMB106.9 billion (US$14.9 billion) as of June 30, 2025.