Li Auto Suffers Loss as Hybrid Sales Slow, Margins Shrink — Update

By Jiahui Huang

Li Auto swung to a quarterly loss as the Chinese carmaker discounted older hybrid models and ramped up its push into the competitive market for battery-powered electric vehicles.

The Nasdaq-listed company has been struggling with slowing demand for the plug-in hybrid vehicles it specializes in. It has worked to pivot to battery EVs, but it faces an uphill battle to find its place in an industry characterized by price wars.

Li Auto's first-quarter net loss was 2.29 billion yuan, equivalent to $337.8 million, compared with net profit of 650.3 million yuan a year earlier. Analysts had expected a 2.4 billion yuan loss, according to a Visible Alpha consensus estimate.

Revenue fell 11% to 22.98 billion yuan, below the 23.25 billion yuan market expectation.

Once one of China's best-selling makers of extended-range hybrid vehicles, Li Auto has spent the quarter clearing inventory of its older L-series models, hurting profitability.

Purchase incentives, heavier discounting and rising battery costs also pressured margins.

In the first quarter, the company's vehicle margin stood at 6.1%, dragged by a different product mix. Its gross margin shrank to 7.9% from 20.5%, which the company attributed to "user-centric measures related to Li i6 deliveries," raw-material price fluctuations and its model refresh cycle.

"As delivery rebounds drive economies of scale and our updated product portfolio gains traction, we expect a gradual improvement in profitability," Chief Financial Officer Li Tie said.

The headwinds look set to persist in the second quarter. For the three months to June, Li Auto expects to deliver between 95,000 and 100,000 vehicles, down from the more than 111,000 units delivered a year earlier. period. It projected a 16%-20% decline in revenue to between 24.1 billion yuan and 25.4 billion yuan.

In the second half of the year, the Beijing-based carmaker plans to release the i9 as its new flagship electric sport-utility vehicle, adding another model to its battery EV lineup.

On Thursday, Chief Executive Li Xiang said the company will launch the all-new Li L8 at the end of June to meet broader market demand.

Li Auto has also pressed ahead with its overseas expansion amid intensifying competition in China's market this year. Last month, it signed agreements with United Arab Emirates-based Al Fahim Motors and Saudi Arabia's Mohamed Yousuf Naghi Motors to bring its L-series plug-in hybrids to the Middle East. The company has also outlined plans to enter Macau and expand its presence in Southeast Asia.

Li Auto's American depositary receipts were recently 3.8% lower in premarket trading after the results.

Write to Jiahui Huang at jiahui.huang@wsj.com

(END) Dow Jones Newswires

May 28, 2026 07:14 ET (11:14 GMT)