Li Auto Stock (LI) Falls as JPMorgan Turns Bearish, Cites 'Lack of Major New Models'

Li Auto (LI) stock declined more than 3% on Monday (at the time of writing) after JPMorgan analyst Nick Lai downgraded the Chinese electric vehicle (EV) maker to Sell from Hold and lowered his price target to $14 from $18. The 5-star analyst cited "a lack of major new models this year" as his primary concern. Li Auto has been struggling amid intense competition in the Chinese EV market. Also, Lai lowered his price targets for Nio (NIO) and XPeng (XPEV) stocks.

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JPMorgan Analyst Downgrades Li Auto Stock

Lai expressed concerns about a lack of new launches by Li Auto at a time when competitors are introducing extended-range electric vehicles (EREVs) and battery electric vehicles (BEVs) that overlap with the company's existing models with regard to price points, features, distribution channels, and target market. The analyst added that he currently sees a threat to Li Auto's sales from Nio's ONVO L80, Xiaomi's (XIACF) third SUV, Leapmotor's D19 large 6-seater SUV, Zeekr's 8X SUV, and Huawei's new M7 or M8.

Furthermore, Lai noted that to counter such intense competition, Li Auto is offering cash rebates or discounts of more than RMB 20,000 to 30,000 on most of its models. Consequently, the analyst expects Li Auto's sales to decline by about 10% to about 366,000 units, 36% below the Street's consensus estimate of nearly 500,000 units.

Given potential weakness in sales and cost pressures from price cuts, incentives, and input cost inflation, Lai sees the possibility of Li Auto reporting a loss this year. The analyst noted that, contrary to his projections, Bloomberg's consensus estimates indicate GAAP profit of RMB 4.4 billion and non-GAAP profit of RMB 5.4 billion. He expects the consensus estimates to be lowered.

Analyst Lowers NIO and XPEV Price Targets

Lai reiterated Buy ratings on Nio and XPeng stocks but lowered their price targets, saying that he expects both these Chinese automakers to post losses in 2026. He lowered his volume and margin assumptions to reflect his conservative outlook for the sector and high research and development expenses/capital spending to maintain a competitive new model lineup or continued investment in AI/autonomous driving-related technologies.

Lai lowered his price target for Nio stock to $7 from $8, but stays bullish on the EV maker. He expects Nio's sales volume to grow by 30% to 430,000 units in 2026. Lai believes that Nio can continue to gain market share primarily through its mid-range ONVO brand, backed by the launch of the L80 SUV at the Beijing Auto Show in late April, with deliveries scheduled to commence in May. He expects models such as ONVO L90 and Nio ES8 to contribute to Nio's full-year volume after their successful launches in the second half of 2025.

Meanwhile, Lai reaffirmed a Buy rating on XPeng stock but lowered the price target to $34 from $50. The analyst expects XPeng to increase its volume by 17% to 502,000 units in 2026, driven primarily by four new SUV launches, two under the mass-market Mona brand and two under the XPeng brand. Additionally, Lai expects the company to expand its addressable market, driven by its strategy to offer dual powertrain options (BEV or EREV) for most of its existing models.

Wall Street's Take on LI, NIO, and XPEV Stocks

Wall Street is cautiously optimistic on Nio and XPeng stocks but sidelined on Li Auto. They see higher upside potential in XPEV stock than in the other two Chinese EV stocks.