Li Auto Inc. (NASDAQ:LI) stock fell on Wednesday after the Chinese EV maker reported a steep decline in fiscal third-quarter 2025 results, weighed by lower deliveries, margin compression, and costs tied to a major vehicle recall.
Quarterly revenue fell 36.2% year over year to 27.4 billion Chinese yuan ($3.80 billion), though it came in slightly ahead of the analyst consensus estimate of $3.76 billion. Adjusted net earnings per ADS showed a loss of 0.36 yuan (5 cents), missing the Street’s expectation of a 4-cent gain.
Vehicle sales dropped 37.4% to $3.6 billion, driven primarily by weaker delivery volumes. Li Auto delivered 93,211 vehicles during the period, down 39.0% from 152,831 units a year earlier and below the 111,074 units delivered in the second quarter of 2025.
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Margin Pressure Driven by Recall Costs
Vehicle margin contracted 540 basis points to 15.5%. Excluding estimated costs linked to the Li MEGA recall, vehicle margin would have been 19.8%. Gross margin fell 520 basis points to 16.3%, or 20.4% when adjusting for the recall-related impact.
The Tesla Inc. (NASDAQ:TSLA) rival posted an adjusted operating loss of 912.5 million yuan ($128.2 million), compared with adjusted operating income of 4.5 billion yuan in the prior year. Adjusted net loss came in at 360.3 million yuan ($50.6 million), down sharply from adjusted net income of 3.84 billion yuan a year ago.
Li Auto ended the quarter with $13.9 billion in cash and equivalents. The company reported a net operating cash outflow of 7.4 billion yuan ($1.0 billion) in the third quarter of 2025, reversing from 11.0 billion yuan in net operating cash inflow a year earlier and widening from the 3.0 billion yuan outflow recorded in the second quarter of 2025.
Free cash flow was negative 8.9 billion yuan ($1.3 billion), compared with 9.1 billion yuan in the prior-year period and a 3.8 billion yuan outflow in the previous quarter.
As of Sept. 30, 2025, the company operated 542 retail stores across 157 cities, 546 service centers, Li Auto-authorized body and paint shops in 225 cities, and 3,420 supercharging stations with 18,897 charging stalls.
Management Commentary
Chairman and CEO Xiang Li said combined orders for the Li i8 and Li i6 surpassed 100,000, while adoption of the company’s VLA Driver large AI model reached a 91% monthly usage rate in October. CFO Tie Li cited intensified market competition, supply chain constraints, and recall-related costs as key headwinds during the quarter.
Outlook
For the fourth quarter of 2025, Li Auto expects revenue of 26.5 billion to 29.2 billion yuan ($3.7 billion to $4.1 billion), representing a year-over-year decline of 40.1% to 34.2%, well below the analyst consensus estimate of $5.22 billion.
The company projects vehicle deliveries of 100,000 to 110,000 units, representing a year-over-year decrease of 37.0% to 30.7%.
Price Action: LI stock was trading lower by 2.40% to $17.88 premarket at last check Wednesday.
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