Li Auto's Q4 revenue fell 35% year-on-year, net profit dropped 99%, and Q1 revenue guidance is below expectations | Earnings Report Insights

Li Auto's revenue guidance for the first quarter is far below market expectations, and the fourth quarter financial report released at the same time also shows a comprehensive decline in profitability, with several core indicators experiencing significant drops.

Li Auto's Q4 revenue plummeted 35% year-on-year to RMB 28.78 billion, roughly in line with estimates; in terms of net profit, the company achieved a net profit of RMB 20.2 million in Q4, a dramatic decline of 99% year-on-year, compared to RMB 3.5 billion in the same period last year; on a non-GAAP basis, the net profit was RMB 274 million, while it was RMB 4 billion in the same period of 2024. Adjusted earnings per ADS shrank significantly from RMB 3.79 in the same period last year to RMB 0.25.

The company expects first-quarter revenue to be between RMB 20.4 billion and RMB 21.6 billion, while Bloomberg's consensus estimate was previously RMB 24.01 billion. The delivery guidance for the same period is 85,000 to 90,000 vehicles, roughly in line with the estimated 87,609 vehicles.

On March 12, Li Auto announced its unaudited financial performance:

• The total delivery volume for the full year of 2025 is expected to shrink significantly from 500,500 units in 2024 to 406,300 units, a year-on-year decline of over 18%;
• Full-year revenue is also expected to decrease by 22.3% to RMB 112.3 billion (approximately USD 16.1 billion) compared to 2024;
• The full-year net profit is projected to be RMB 1.14 billion, down 85.8% from RMB 8.05 billion in 2024; on a Non-GAAP basis, the net profit is expected to be RMB 2.4 billion, also down 77.5% year-on-year.
• Q4 vehicle sales revenue was RMB 27.3 billion, a year-on-year decline of 36.1%, but an increase of 5.4% compared to the third quarter.
• Due to declining revenue and rising costs, the company recorded an operating loss of RMB 443 million in Q4, compared to an operating profit of RMB 3.7 billion in the same period last year, but significantly narrowed from an operating loss of RMB 1.2 billion in the third quarter, with an operating profit margin of -1.5%.
• In terms of net profit, the company achieved a net profit of RMB 20.2 million in Q4, a significant decline year-on-year, compared to RMB 3.5 billion in the same period last year; on a non-GAAP basis, the net profit was RMB 274 million, while it was RMB 4 billion in the same period of 2024.
• In terms of profitability, the gross margin for vehicles in the fourth quarter was 16.8%, down from 19.7% in the same period last year, but up from 15.5% in the previous quarter; the overall gross margin was 17.8%, lower than 20.3% in the same period of 2024, but higher than 16.3% in the third quarter.
• Q4 free cash flow turned positive again, recording RMB 2.47 billion.

Li Auto's U.S. stock fell nearly 3% in pre-market trading.

Declining delivery volume drags down revenue, Q4 gross margin shows resilience

In the fourth quarter of 2025, Li Auto's total delivery volume was 109,000 units, a year-on-year decrease of 31.2%. This directly impacted total revenue, which fell to RMB 28.8 billion, a year-on-year decline of 35.0%. Among them, vehicle sales revenue was RMB 27.3 billion, a year-on-year decline of 36.1% Despite pressure on revenue, the company achieved a slight profit in the fourth quarter, with a Non-GAAP net profit of RMB 274 million, boosted by a 14.0% year-on-year reduction in selling, general, and administrative expenses.

In terms of the highly watched profitability metrics, Li Auto's vehicle gross margin in the fourth quarter was 16.8%, down from 19.7% in the same period of 2024, but up from 15.5% in the third quarter of 2025. The financial report indicated that the year-on-year decline in gross margin was mainly due to the impact of different product mixes, particularly after the delivery of the Li L6 model, which lowered the overall average selling price. However, the net cash generated from operating activities for the quarter reached RMB 3.5 billion, with free cash flow at RMB 2.5 billion, indicating that the company's core cash flow remained positively operational in a single quarter.

Annual Profit Structure Changes, Billion Yuan Cash Reserves Build Defensive Position

From the perspective of the full year 2025, Li Auto's total revenue was RMB 112.3 billion, a year-on-year decrease of 22.3%. Annual gross profit fell to RMB 21 billion, with the overall gross margin narrowing from 20.5% in 2024 to 18.7%. Due to the reduction in revenue scale and a slight increase in R&D expenses to RMB 11.3 billion, the company recorded an operating loss of RMB 521 million for the year, compared to an operating profit of RMB 7 billion in the previous year.

Although the full-year Non-GAAP net profit significantly shrank by 77.5% from RMB 10.7 billion in the previous year to RMB 2.4 billion, and the annual free cash flow turned negative at RMB 12.8 billion, Li Auto's balance sheet remains robust. As of December 31, 2025, the company's cash position (including cash, cash equivalents, and restricted cash) reached RMB 101.2 billion. CFO Li Tie pointed out that this strong cash reserve provides ample momentum for the company to seize opportunities in the field of embodied intelligence and accelerate global expansion.

Sales Guidance Becomes Conservative, Betting on New Product Cycle and Ecosystem Expansion

Facing the start of 2026, Li Auto's performance guidance appears relatively cautious.

The company expects vehicle deliveries in the first quarter to be between 85,000 and 90,000 units, a year-on-year decrease of 3.1% to 8.5%; total revenue is expected to be between RMB 20.4 billion and RMB 21.6 billion, a year-on-year reduction of 16.7% to 21.3%. Recent operational data shows that the company delivered 27,600 and 26,400 vehicles in January and February 2026, respectively.

To break through the short-term growth bottleneck, Li Auto is shifting its focus to the upcoming new product cycle and ecosystem expansion. CEO Li Xiang revealed that the all-new Li L9 will be launched in the second quarter of 2026, expected to achieve comprehensive upgrades in power systems, intelligent driving, and chassis technology Beyond its core automotive business, the company launched the AI glasses Livis with a starting price of 1,999 RMB at the end of 2025, aiming to deepen the intelligent experience of seamless integration with vehicle systems. At the same time, its globalization efforts are being realized, having officially entered the markets of Egypt, Kazakhstan, and Azerbaijan in December 2025, with the goal of further expanding its global business footprint