Li Auto reported a 66.0% plunge in first-quarter gross profit on Thursday as its vehicle margin dropped to single digits, sending the shares lower.
Gross profit fell to 1.8 billion yuan in the quarter from 5.3 billion yuan a year earlier, while vehicle margin collapsed to 6.1% from 19.8% in the first quarter of 2025 and 16.8% in the fourth quarter.
Li Auto‘s CFO Tie Li said that the company’s first-quarter gross margin “reflected our user-centric measures related to Li i6 deliveries, as well as raw material price fluctuations and our model refresh cycle.”
“As delivery rebounds drive economies of scale and our updated product portfolio gains traction, we expect a gradual improvement in profitability,” Li added.
US-listed shares of the Chinese EV maker were falling about 4% to $15.13 shortly after the results were published.
A Swing to Losses
Total revenue fell 11.4% to 23.0 billion yuan from 25.9 billion yuan a year earlier, and dropped 20.1% from the fourth quarter.
Vehicle sales, the bulk of revenue, declined 12.7% year-over-year to 21.5 billion yuan, which Li Auto tied to a lower average selling price on a shifting product mix.
The company swung to a loss from operations of 3.0 billion yuan, compared with operating income of 271.7 million yuan a year earlier. Operating margin fell to negative 13.0% from positive 1.0%.
Net loss was 2.3 billion yuan, against net income of 646.6 million yuan in the first quarter of 2025. On a non-GAAP basis, the net loss was 2.1 billion yuan, reversing a 1.0 billion yuan profit a year earlier.
Loss per ADS was 2.26 yuan, compared with earnings of 0.65 yuan a year earlier.
Cash Burn Accelerates
Net cash used in operating activities widened to 6.1 billion yuan from 1.7 billion yuan a year earlier, which the company linked to lower cash received from customers on reduced selling prices.
Free cash flow was negative 7.4 billion yuan, compared with negative 2.5 billion yuan in the first quarter of 2025 and positive 2.5 billion yuan in the fourth quarter.
Li Auto held a cash position of 94.3 billion yuan as of March 31.
A Weaker Outlook
For the second quarter, Li Auto guided for deliveries of 95,000 to 100,000 vehicles, a year-over-year decline of 14.5% to 10.0% — meaning the carmaker expects demand to continue trailing last year’s levels.
Li Auto sees total revenue reaching between 24.1 billion yuan and 25.4 billion yuan, down 20.2% to 16.0% from a year earlier.
The L9 Livis Launch
The results land weeks after Li Auto launched its flagship Li L9 SUV earlier this month with two trims — the Ultra edition starting at 459,800 yuan, or about $67,500, and the Livis flagship edition at 509,800 yuan, or about $75,000.
The Livis top configuration is priced 9% below the pre-sale price of 559,800 yuan set when it made its public debut at the Beijing Auto Show in late April.
Deliveries began immediately, with first-launch incentives bringing the effective starting prices substantially lower.
