Sales volume and average price both declined; Li Auto's net profit plummeted nearly 86% last year

Li Auto was once hailed as the “most profitable student” among the new forces in car-making, but its 2025 financial report has completely torn off that label.

On March 12, Li Auto released its 2025 financial report. Full-year net profit just topped 1.1 billion yuan, a year-on-year plunge of nearly 86%, and revenue fell 22% to 112.3 billion yuan. Especially in the fourth quarter of last year, when many automakers saw momentum in sales, Li Auto’s operating profit and net profit both dropped sharply, showing the company is going through an unprecedented “performance crash.”

In fact, in the third quarter of 2025, due to the impact of the MEGA recall incident, it recorded over 1.1 billion yuan in one-time provisions for losses, and Li Auto’s operating loss was 1.17 billion yuan. And based on the 2025 fourth-quarter financial report, Li Auto has already returned to losses in its core business.

Some media called this annual report a “train-wreck scene.” Behind the 85.8% collapse in net profit are multiple blows: a snowballing drop in sales of the main models, the bleeding caused by the price war, a surge in market complaints, and a string of negative events—each one hits a performance pain point and delivers the worst performance since the company went public.

Li Auto’s performance slide is most directly triggered by the loss of momentum in sales and the deterioration of its product mix. While AITO Wenjie and extended-range competitors like Leapmotor are tightening the net step by step, pure electric technology is aggressively squeezing the market. The extended-range route was once Li Auto’s killer move, but now it feels powerless.

Looking at core delivery figures, Li Auto delivered 406.3k units in 2025, down 18.8% year-on-year. Not only did it fail to meet the 700k-unit target set at the beginning of the year, it also only achieved six-tenths of the adjusted 640k-unit target. Once the “new force” leader in profitability and sales, Li Auto has already been overtaken by rivals including XPeng and NIO.

2025 was supposed to be a key year for Li Auto’s transition from a single extended-range approach to a “extended-range + pure electric” dual-energy strategy, but the pure electric segment got off to a poor start.

Whether it was the MEGA or subsequent pure electric models, the market response was nothing short of bleak. Some models that were originally expected to deliver great returns saw delivery delays in the early stage of launch due to negative public opinion and battery issues, missing the best period to ramp up sales. In the fierce competition in the pure electric sector, Li Auto has struggled to maintain the high-premium capability it enjoyed in the prior extended-range era.

From today’s perspective, pure electric models have not only failed to make up for the gap, but have instead dragged Li Auto down. In recent years, including XPeng and others, many automakers have been pushing forward with new routes, but strategic missteps like Li Auto’s are very rare.

This has set off a chain reaction. Even with relevant departments repeatedly calling for a halt to the price war, Li Auto, facing pressure from rivals such as AITO Wenjie and ZEEKR, still increased end-user discount efforts. This directly led to continued declines in per-vehicle selling prices, making an already strained gross margin even uglier. The financial report shows that the company’s gross margin in 2025 fell by about two percentage points year-on-year, which sharply contrasts with NIO’s trend of rising gross margin in 2025.

With both sales volume and average selling price declining, operational quality is directly taking the hit. Under multiple pressures—extended-range benefits fading, setbacks in the pure electric transition, and turmoil within the organization—Li Auto’s days are becoming harder than ever.

Under mounting operational pressure, Li Auto is also looking for a breakthrough. Previously, Li Auto relied on extended-range to win the market. On one hand, it hoped to move into the pure electric track; on the other hand, it bet heavily on an AI gamble for the future. But with its performance faltering, whether this transformation can break through amid fierce competition in the auto market remains to be seen in the coming period. Some long-term automaker analysts believe that before this company gets past the “long night,” the former profitability king first needs to make sure it doesn’t lose too much warmth in the cold winter.