Revenue Exceeded 110 Billion Yuan, Net Profit Declined, Li Auto Restructures Sales Channels

Text | Times Weekly

On March 12, Li Auto (02015.HK) released its Q4 and full-year 2025 financial reports. The financials show that the company’s total annual revenue was 112.3 billion yuan, a decrease of 22.3% year-over-year, with gross profit margin declining from 20.5% in 2024 to 18.7%. Due to reduced revenue scale and a slight increase in R&D expenses to 11.3 billion yuan, the company recorded an operating loss of 521 million yuan, compared to an operating profit of 7 billion yuan in 2024.

However, thanks to interest income and gains from fair value changes in investments, the company’s full-year net profit was 1.1 billion yuan, a significant 85.8% decline year-over-year, but still maintaining profitability for three consecutive years.

As of the end of 2025, the company’s cash reserves reached 101.2 billion yuan, ranking first among Chinese new energy vehicle companies, and becoming the only domestic new force carmaker to achieve over 100 billion yuan in revenue for three consecutive years while remaining profitable.

A Challenging Year for Sales

Sales fluctuations directly impact financial performance.

In 2025, Li Auto delivered a total of 406,300 new vehicles, down 18.8% year-over-year. The annual sales target completion rate was 72.6%, while the overall growth rate of the Chinese new energy vehicle market was about 28% during the same period.

In terms of industry ranking, among new force carmakers in 2025, Leap Motor (09863.HK) delivered 596,600 units, up 103%; Xpeng Motors (09868.HK) delivered 429,400 units, up 126%; Xiaomi Auto delivered over 350,000 units for the year; NIO (09866.HK) delivered 326,000 units, up 46.9%. Hongmeng Zhixing surpassed Li Auto in sales in 2025, topping the new force sales chart. Li Auto fell from the top position in 2024 to fifth place.

To boost sales, Li Auto has made adjustments to its sales system.

Founder, Chairman, and CEO Li Xiang stated at the earnings call that the biggest problem in the past was managing the direct sales system through dealerships. Since Q3 2025, the company has been exploring how to better manage its stores.

In March this year, Li Auto launched a store partner program, decentralizing operational decision-making and introducing profit sharing, with adjustments to the sales incentive system. The goal is to cultivate store managers earning over one million yuan annually, to maintain high-end vehicle sales leadership.

Regarding rumors of “Li Auto closing 100 stores,” co-founder, executive director, and president Ma Donghui denied this, saying that while some underperforming stores have been optimized, the total number of stores will still increase this year, focusing on prime shopping malls and high-quality auto cities. As pure electric vehicle sales grow, plans are in place to expand the store network.

Li Auto Store (Image source: official brand)

The Battle for the Million-Unit Goal

Beyond sales system adjustments, Li Auto’s organizational structure has also undergone significant changes.

In November 2025, Li Xiang announced the end of the management model based on professional managers over the past three years, returning to a startup-style approach.

This was followed by a series of personnel changes. Since August 2025, several core executives have left, covering key roles in autonomous driving, product development, chips, and supply chain, including Huawei-related executives Zou Liangjun and Li Wenzhi.

At the start of 2026, Li Auto restructured its product line organization, reducing from three to two lines based on price segments. Ma Donghui said that in 2026, the Li L series will return to a simplified SKU model, balancing market coverage and supply chain efficiency.

Alongside organizational and sales adjustments, Li Auto has issued cautious outlooks for recent market performance.

The financial report indicates that the company expects vehicle deliveries of 85,000 to 90,000 units in Q1 2026, a 3.1% decrease compared to the same period in 2024, with total revenue estimated between 20.4 billion and 21.6 billion yuan, down 16.7% to 21.3%.

Based on monthly data, Li Auto delivered 27,600 units in January and 26,400 units in February. This means that in March, the company needs to deliver approximately 31,000 to 36,000 units to meet the quarterly guidance.

For the full year 2026, Li Auto set a sales target of 1 million units, requiring about 146% year-over-year growth. During the earnings call, Li Xiang said, “After proactive strategic adjustments in 2025, we’ve seen positive changes since Q4 in organizational efficiency, supply capacity, and sales system improvements, including store efficiency, alleviation of capacity issues with the Li i6, and a rebound in Li i8 sales.”

Regarding capacity, Li Auto’s Changzhou and Beijing factories currently have a combined annual capacity of about 700,000 units. To reach the 1 million units target in 2026, further expansion or contract manufacturing will be necessary. The management did not disclose the latest progress on contract manufacturing partnerships during the earnings call.

As for future product plans, Li Auto is pursuing a dual strategy of extended-range and pure electric models.

The extended-range series will focus on high-end family users, with the new Li L9 set to launch in Q2, targeting the sub-600,000 yuan market. Industry insiders believe revitalizing the Li L series is key to Li Auto’s breakthrough in 2026. The Li L9, launched over three years ago in 2022, is in urgent need of a major upgrade to enhance its competitiveness.

In the pure electric segment, the capacity bottleneck for the Li i6 has been broken through. The financial report shows that due to the Spring Festival holiday, the Li i6 delivered 16,000 units in February; production capacity in March will increase to 20,000 units. By the end of 2025, cumulative orders for the i6 and i8 exceeded 100,000 units. The i6, priced between 200,000 and 300,000 yuan, will compete with models like Tesla Model Y, Xpeng G6, and Xiaomi SUV.