- Li Auto reported an adjusted net loss of 2.12 billion yuan in the first quarter, compared to a net profit of 1.02 billion yuan in the same period last year. Revenue fell 11.4% year-on-year to 23 billion yuan, but exceeded the market's general expectation of 21.57 billion yuan.
- Affected by the model replacement cycle, fluctuations in raw material prices, and new model delivery measures, the comprehensive gross margin in the first quarter plummeted from 20.5% in the same period last year to 7.9%, and the vehicle gross margin also significantly declined to 6.1%.
- The company provided a weak outlook for the second quarter, expecting vehicle deliveries to decrease by 10% to 14.5% year-on-year, and total revenue to decrease by 16% to 20.2% year-on-year, while announcing a $1 billion share repurchase plan.
Revenue Exceeds Expectations but Profit Margins Under Pressure
According to financial data disclosed by the Hong Kong Stock Exchange, Li Auto recorded an adjusted net loss of 2.12 billion yuan in the first quarter of 2026, failing to continue its past profitability. Although quarterly revenue fell 11.4% year-on-year to 23 billion yuan, this result was still better than the 21.57 billion yuan expected by analysts from the London Stock Exchange Group. The decline in financial indicators was mainly due to the reshaping of the overall sales environment and the drag of the core model replacement cycle. If market demand cannot effectively recover in the coming quarters, the company's financial cash flow may face further adjustment pressure.
Model Replacement and Supply Chain Fluctuations Hit Gross Margin
The most notable data in the financial report is the significant narrowing of the gross margin. Li Auto's comprehensive gross margin in the first quarter was recorded at 7.9%, showing a significant decline from 20.5% in the same period last year and 17.8% in the previous quarter. Meanwhile, the vehicle gross margin also shrank to 6.1%. Management attributed the decline in gross margin to the delivery measures of the Li i6 model, severe fluctuations in raw material prices, and the transitional cost increase brought by the new and old model alternation. If raw material prices remain high or the ramp-up speed of new model production does not meet expectations, the vehicle gross margin may continue to fluctuate at single-digit levels in the short term.
Expense Control and Capital Return in Parallel
In terms of operating expenses, Li Auto's R&D investment in the first quarter was 2.7 billion yuan, an increase of 8.3% year-on-year, but a decrease of 9.8% quarter-on-quarter, indicating that the company is fine-tuning its R&D pace and fund allocation in response to market changes. To boost capital market confidence and demonstrate its commitment to long-term growth prospects, the company announced a $1 billion share repurchase plan. Analysts pointed out that although a solid cash reserve provides Li Auto with strategic investment flexibility, if the pace of share repurchase does not match the shift in market sentiment, its support for the stock price may be somewhat limited.
Second Quarter Outlook Continues to Reflect General Pressure Expectations
For the second quarter of 2026, Li Auto's official guidance shows continued weakening on both the demand and revenue fronts. The company expects second-quarter vehicle deliveries to be between 95,000 and 100,000 units, a year-on-year decline of 10% to 14.5%; total revenue is expected to be between 24.1 billion and 25.4 billion yuan, a year-on-year decline of 16% to 20.2%. This guidance reflects that the pain period of the new and old model alternation is still ongoing. In its latest research report, Jefferies pointed out that although the newly released L9 model has a solid value proposition that helps alleviate some short-term profit pressure, as competition in the six-seat SUV segment intensifies, the difficulty of creating a phenomenal hit is significantly increasing, thus maintaining its hold rating.
