Li Auto posts Q3 loss as deliveries drop and recall hits

Li L7 and L8 sales impact Q3 vehicle deliveries

Li Auto reported a Q3 loss, which was attributed to a decline in deliveries, primarily due to a slowdown in sales of its core sport utility vehicle lineup, the Li L7 and Li L8. These two Extended-Range Electric Vehicles feature spacious, six-seat and five-seat family layouts and are the brand’s volume drivers.

Total vehicle deliveries fell to 93,211 units in the quarter ending Sept. 30, 2025. This figure represents a sharp 39.0% year-over-year decrease. Despite this delivery drop, the cost of sales for the quarter was RMB 22.9 billion ($3.2 billion), reflecting the lower number of vehicles delivered.

Li L9 flagship SUV offers advanced smart cabin

Continuing the trend, the flagship six-seat family SUV, the Li L9, continues to showcase the brand’s focus on premium, bright cabins. This is key to maintaining customer interest despite the net loss of RMB 624.4 million reported for the quarter ended September 30, 2025.

The L9 is fitted with a Qualcomm Snapdragon 8295P chip to power its “Li Smart Space Ultra” system. Its cabin includes a 21.4-inch rear entertainment display with OLED technology and 3K resolution. The vehicle’s range-extender system provides a long combined cruising range of 1,412 kilometers, as measured by the CLTC.

Li MEGA recall causes major vehicle margin drop

The cost of the voluntary Li MEGA recall hit the company’s financial results, directly causing a sharp drop in the Q3 vehicle margin, which fell to 15.5% from 20.9% in the same quarter last year.

The recall covers 11,411 2024 Li MEGA vehicles and addresses insufficient corrosion protection in the coolant, which can cause component corrosion and, in rare cases, battery thermal runaway. Work begins on November 7, 2025.

Pure electric i6 SUV is key to BEV portfolio

Following the problems with the MEGA, the company is strategically focusing on the new Li i6, a pioneering five-seat Battery Electric SUV. The i6 uses a 5C high-voltage battery system designed for rapid charging, with a CLTC range up to 720 km

Management says it is accelerating i6 production and has adopted a dual-supplier battery strategy, a step intended to ease bottlenecks and ramp up output.

New Li i8 SUV offers 400 kW dual-motor power

The following important model is the new Li i8, a six-seat pure electric sport utility vehicle, which became the brand’s second Battery Electric Vehicle model after its launch on July 29, 2025.

It features a powerful dual-motor, all-wheel-drive system delivering 400 kW (536 hp) of combined maximum output. The system also delivers a peak torque of 640 N·m.

New L-series major overhaul planned for 2026

To recover from the Q3 loss, Li Auto’s strategy involves a significant overhaul of its best-selling Extended-Range Electric Vehicle models. The Li L-series, comprising the L7, L8, and L9, will undergo major technology upgrades and receive new designs in 2026 to maintain its lead.

This overhaul will include the next generation of its autonomous driving system, which is based on the Vision-Language-Action model. Li Auto highlights its VLA Driver large model and broader smart-driving roadmap; the company has not provided a firm public timeline for Level-4 capability.

Q4 2025 delivery target is lower than expected

Moving forward, Li Auto’s guidance for the fourth quarter of 2025 disappointed analysts, signaling continued market challenges. The company set a vehicle delivery outlook of 100,000 to 110,000 units for the quarter ending Dec. 31, 2025.

This target is lower than what many market analysts had predicted. Despite the lowered guidance, the company remains financially robust, with cash, time deposits, and short-term investments totaling RMB 98.9 billion ($13.9 billion).

Li L6 SUV leads the brand’s global expansion

The cautious outlook does not stop the Li L6, a five-seat premium family sport utility vehicle, from leading the brand’s global expansion efforts outside of China. Li Auto opened its first overseas authorized retail store in Uzbekistan in October 2025, offering the L-series models.

The company plans to prioritize market expansion into Central Asia, the Middle East, Europe, and the Asia-Pacific regions. The L6 is an Extended-Range Electric Vehicle built using an aluminum-alloy body and utilizes a 1.5-liter, four-cylinder range extender.

M100 chip to power a new AI architecture

In the technology sector, the deployment of the self-developed M100 AI chip in production vehicles next year will be a significant technical advancement aimed at enhancing future sales. This AI inference chip is intended to run the next-generation autonomous driving system.

This AI system will begin a significant architecture upgrade at the end of December 2025. Once implemented, the company states the technology will transition the car from “passive function stacking” to “proactive automated services,” redefining the user experience.

New 5C charging network accelerates BEV plans

The strategic move into pure Battery Electric Vehicles is supported by the rapid expansion of a nationwide charging network. As of Oct. 31, 2025, Li Auto’s total cumulative vehicle deliveries reached 1,462,788 vehicles.

The ultra-fast charging capability of the 5C battery-equipped vehicles, such as the Li i6, allows for an additional 500 kilometers of driving range to be achieved in just 10 minutes of charging. This infrastructure, which currently comprises 19,417 charging stalls, is vital in addressing customer concerns about the driving range of electric vehicles.

Financial volatility impacts analyst forecasts

This aggressive investment led to financial volatility, prompting major investment firms to revise their outlook for the brand. JPMorgan revised down its 2026 earnings forecast for Li Auto by a significant 82% after the third-quarter results.

US Tiger Securities also lowered its price target to $24 from $28 on November 28, 2025, while maintaining a “Buy” rating. Crucially, the Free Cash Flow showed a negative RMB 8.9 billion ($1.3 billion) for the quarter.

Learn how one of China’s fastest-growing automakers is reshaping its management to deal with weakening demand. Li Auto restructures its organization amid a sales slump.

The company reverts to a ‘startup operating model’

To improve execution speed and product clarity after the Q3 challenges, the management formally announced a return to an “entrepreneurial operating model.” This major organizational shift commenced in the fourth quarter of 2025, as confirmed by the Chief Executive Officer.

The new structure focuses on core development in proprietary range extension systems and smart vehicle solutions to combat intense market pressure, which is expected to result in New Energy Vehicle penetration in China reaching 55% to 60% by 2026.

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This slideshow was made with AI assistance and human editing.