Li Auto (NASDAQ:LI) executives said the company returned to a sales growth trajectory in the first quarter of 2026, but the Chinese electric vehicle maker reported sharply lower margins and a net loss as product mix and its model refresh cycle weighed on profitability.
Chairman and CEO Xiang Li said Li Auto returned to the top position in sales among Chinese brands in China’s new energy vehicle market priced at RMB 200,000 and above during the January-to-April period. He said monthly sales of the company’s BEV model, the Li i6, have stabilized at 20,000 units per month, placing it among the top three BEV SUVs.
Li also highlighted the May 15 launch of the all-new Li L9, with deliveries beginning May 17. The model is offered in Livis and Ultra trims priced at RMB 509,800 and RMB 459,800, respectively. Li said the company’s goal is to position the new L9 as a flagship SUV and that the Livis trim secured more than 10,000 orders within two weeks, with transaction prices above RMB 500,000.
Revenue Falls as Margins Contract
CFO Johnny Tie Li said total revenue in the first quarter was RMB 23 billion. Vehicle sales revenue was RMB 21.5 billion, down 12.7% year over year and 21% quarter over quarter. He attributed the year-over-year decline mainly to a lower average selling price from product mix, while the sequential decline reflected reduced deliveries tied to Chinese New Year seasonality and lower average selling price.
Gross profit fell to RMB 1.8 billion, down 66% from a year earlier and 64.8% from the prior quarter. Vehicle margin declined to 6.1%, compared with 19.8% a year earlier and 16.8% in the fourth quarter. Gross margin was 7.9%, down from 20.5% a year earlier and 17.8% in the prior quarter.
Operating expenses were RMB 4.8 billion, down 4.8% year over year and 13.8% sequentially. Research and development expenses rose 8.3% year over year to RMB 2.7 billion, while selling, general and administrative expenses declined 19% year over year to RMB 2 billion.
Li Auto reported a loss from operations of RMB 3 billion, compared with operating income of RMB 271.7 million a year earlier. Net loss was RMB 2.3 billion, compared with net income of RMB 646.6 million in the year-ago period. Diluted net loss per ADS attributable to ordinary shareholders was RMB 2.26.
The company used RMB 6.1 billion in operating cash flow during the quarter, and free cash flow was negative RMB 7.4 billion. Li said the company ended the quarter with RMB 94.3 billion in cash. He also noted that Li Auto has repurchased 17.5 million Class A ordinary shares, including 7.3 million ADS, for $148.1 million under a $1 billion share repurchase program announced in March.
Second-Quarter Outlook and Margin Recovery
For the second quarter, Li Auto expects deliveries of 95,000 to 100,000 vehicles and total revenue of RMB 24.1 billion to RMB 25.4 billion.
In response to an analyst question about profitability, Johnny Tie Li said the first-quarter gross margin was affected by the L-series refresh cycle, a higher mix of i6 deliveries and purchase tax subsidies for the i6. He said the company expects gross margin to recover to about 10% in the second quarter.
“Looking at the full year, as we complete our model refresh cycle and optimize our production layout, we expect a continued improvement in our gross margin,” Li said.
L9 Ramp-Up and L8 Launch Plans
During the Q&A session, management said the Livis version accounts for more than 90% of all L9 orders, while the Ultra version accounts for less than 10%. The company said it plans to strengthen promotion of the Ultra version to optimize the order mix.
Management said the all-new L9 and upcoming L8 will both be produced at the company’s Changzhou base, with flexible adjustment between production lines. May and June will be ramp-up months, with monthly capacity of 4,000 to 5,000 units. The company expects to deliver about 8,000 L9 units between mid-May and the end of June and said it is confident the new L9 can exceed the previous-generation L9’s delivery level after full ramp-up in the third quarter.
President Donghui Ma said the all-new Li L8 is planned for launch and delivery in June 2026. He described the L9 as a flagship six-seater and the L8 as a flagship five-seater. The new L8 will be larger than the previous generation, have an extended wheelbase, feature a five-seat layout and use the company’s in-house 1.5-liter turbocharged range extender system with a 72.7 kilowatt-hour 5C battery, the same battery as the new L9.
Focus on In-House Chips and AI
Xiang Li said the all-new L9 marks Li Auto’s full deployment of its proprietary Mach M100 chip and MindVLA model. He described the Mach M100 as a five-nanometer automotive-grade AI inference chip and said the integrated hardware and software design delivers three times the effective computing power per unit cost.
CTO Yan Xie said Li Auto’s ADAS 9.0 system, powered by the in-house Mach M100 chip, shows significant improvements over ADAS 8.0, particularly in decision-making in complex scenarios and smoother longitudinal and lateral control. He said the company’s goal is to match the performance of Tesla’s FSD v14 in the U.S. in the second half of this year.
Xiang Li said Li Auto plans a separate June event focused on software and AI, including in-cabin interaction, foundation models, autonomous driving, system agents and the Mach chip. He also said competition in the mid- to high-end smart vehicle market over the next three to five years will center on embodied AI and the integration of chips and large foundational models.
International Expansion and Store Program
Management said Li Auto is taking a phased approach to overseas expansion, using local subsidiaries, dealerships or sole distributors depending on market conditions. The company has signed contracts with distributors in Saudi Arabia and the United Arab Emirates and plans to enter Middle East and Central Asia markets in the third quarter with L-series range-extended models, starting with an overseas version of the new L9.
The company also plans to enter Macau, Cambodia, Laos and Myanmar starting in May, introduce the all-electric Li i6 in Europe in the second half of the year, and launch a right-hand-drive Li Mega in Hong Kong and Singapore by year-end.
On its Store Partner Program, management said giving store managers decision-making authority and profit-sharing rights has helped shift managers from “store executors” to “business operators.” The company said stores beat monthly sales targets on average in the first quarter, while also clearing inventory of the previous-generation L series and improving user satisfaction.
Xiang Li reaffirmed the company’s full-year sales growth target of 20%, citing the rollout of core technologies and updates to the product portfolio.
About Li Auto (NASDAQ:LI)
Li Auto Inc is a Chinese automotive company that develops, manufactures and sells smart electric vehicles, with an early focus on range-extended electric SUVs designed for family use. The company is headquartered in China and serves the domestic market through a combination of online channels and a network of retail/showroom locations. Li Auto was founded to address range-anxiety in electric vehicle buyers by integrating a small internal-combustion engine as a range extender alongside a large battery, enabling longer driving range while retaining electric driving characteristics.
The company's product lineup centers on multi‑occupant SUVs that combine electric propulsion, advanced in‑vehicle connectivity and driver‑assistance features.
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