20-F: Li Auto Reports 2025 Financials Amidst Market Shift

Li Auto Inc. details its 2025 financial performance, showing a significant revenue decrease driven by lower vehicle sales, alongside strategic investments in technology and a focus on future growth.

Summary

• Li Auto Inc. reported a decrease in total revenues for 2025, falling to RMB 112.3 billion (US$16.1 billion) from RMB 144.5 billion in 2024, primarily due to a decline in vehicle sales.
• Vehicle sales revenue dropped from RMB 138.5 billion in 2024 to RMB 106.7 billion (US$15.3 billion) in 2025, reflecting a decrease in vehicle deliveries from 500,508 units in 2024 to 406,343 units in 2025.
• The company recorded a loss from operations of RMB 521.1 million (US$74.5 million) in 2025, a shift from an income from operations of RMB 7.0 billion in 2024, with an operating margin of -0.5% in 2025 compared to 4.9% in 2024.
• Net income for 2025 was RMB 1.1 billion (US$162.9 million), a substantial decrease from RMB 8.0 billion in 2024.
• Research and development expenses remained stable at RMB 11.3 billion (US$1.6 billion) in 2025, while selling, general, and administrative expenses decreased to RMB 10.7 billion (US$1.5 billion) from RMB 12.2 billion in 2024.
• The company ended 2025 with RMB 56.7 billion (US$8.1 billion) in cash and cash equivalents, a decrease from RMB 65.9 billion in 2024.
• Li Auto Inc. continues to invest in its proprietary technologies, including EREVs, HPC BEVs, autonomous driving, and smart space features, and has expanded its global footprint into Central Asia, the Caucasus, and Africa.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this filing as negative due to the significant decline in revenues, shift to an operating loss, and negative operating cash flow in 2025, despite continued strategic investments.

Positives

• Li Auto Inc. continues to invest heavily in R&D, maintaining expenses at RMB 11.3 billion (US$1.6 billion) in 2025, indicating a commitment to technological advancement.
• The company has expanded its global presence by introducing models like the Li L9, Li L7, and Li L6 to Uzbekistan, Kazakhstan, Azerbaijan, and Egypt.
• Li Auto Inc. achieved a significant milestone of 1.54 million cumulative vehicle deliveries by the end of 2025.
• The company's proprietary operating system, Li Halo OS, was open-sourced in March 2025, fostering ecosystem development with 16 partners by September 2025.
• Li AI Glasses, Livis, a multimodal AI-powered wearable device, was launched in December 2025, extending the company's AI capabilities beyond vehicles.
• The company maintained a strong ESG rating, receiving an AAA rating from MSCI ESG Research for the third consecutive year and a leading position among Chinese automakers in the S&P Global Corporate Sustainability Assessment.

Negatives

• Total revenues decreased by 22% from RMB 144.5 billion in 2024 to RMB 112.3 billion (US$16.1 billion) in 2025.
• Vehicle sales revenue saw a significant drop of 23% from RMB 138.5 billion in 2024 to RMB 106.7 billion (US$15.3 billion) in 2025.
• The company reported a loss from operations of RMB 521.1 million (US$74.5 million) in 2025, a reversal from the income generated in 2024.
• Net income declined sharply by 86% from RMB 8.0 billion in 2024 to RMB 1.1 billion (US$162.9 million) in 2025.
• Cash used in operating activities turned negative in 2025, amounting to RMB 8.6 billion (US$1.2 billion), compared to positive cash flow in the prior two years.
• The company experienced a significant decrease in its cash and cash equivalents, falling to RMB 56.7 billion (US$8.1 billion) by the end of 2025 from RMB 65.9 billion in 2024.

Risks

• Intensifying competition in the China automotive market, particularly from established domestic automakers, joint ventures, and tech companies like Huawei and Xiaomi, could lead to lower vehicle unit sales and downward price pressure.
• The company faces risks related to supply chain disruptions, including potential shortages of critical components like battery cells and semiconductor chips, which have previously led to delivery delays.
• Changes in PRC government policies, including the phase-out of NEV subsidies and potential shifts in regulations regarding vehicle emissions or license plate policies, could adversely affect demand for the company's vehicles.
• The company's reliance on its executive officers and key employees poses a risk, as significant turnover among managers in core business departments in 2025 could undermine competitive advantages.
• The company is subject to significant legal and operational risks related to doing business in China, including evolving laws and regulations, potential government oversight, and uncertainties in the PRC legal system.
• The company faces risks associated with its corporate structure, particularly its reliance on contractual arrangements with VIEs, which may not be as effective as direct ownership and could be subject to PRC government scrutiny or changes in regulations.
• The company is subject to risks related to cybersecurity and data privacy, with evolving PRC regulations requiring strict compliance and potentially leading to penalties or business disruptions if not managed effectively.
• The company may be compelled to undertake product recalls, as evidenced by the recall of 11,411 units of the 2024 Li MEGA in Q3 2025 due to hardware-related safety risks, which could harm its brand image and financial condition.
• The company faces challenges in expanding its business and operations internationally due to legal, regulatory, political, and economic risks, including potential tariffs and trade tensions.
• The company is subject to the Holding Foreign Companies Accountable Act (HFCAA), and while it was not identified as a Commission-Identified Issuer in recent years, future PCAOB inspection limitations could lead to trading prohibitions in the U.S.

Future Outlook

The company's financial performance in 2025 reflects a challenging market environment with decreased vehicle sales and a shift to an operating loss. However, Li Auto Inc. continues to invest in its core technologies and global expansion, indicating a strategic focus on long-term growth and market positioning.

Management Comments

• Our total revenues decreased from RMB144.5 billion in 2024 to RMB112.3 billion (US$16.1 billion) in 2025, primarily due to decrease in revenues from vehicle sales.
• Our cost of sales decreased from RMB114.8 billion in 2024 to RMB91.3 billion (US$13.1 billion) in 2025, mainly attributable to the decrease in vehicle deliveries.
• As a result of the foregoing, we recorded loss from operations of RMB521.1 million (US$74.5 million) in 2025, compared with income from operations of RMB7.0 billion in 2024.

Industry Context

StockSavvy.ai notes that Li Auto's 2025 performance reflects broader trends in the highly competitive Chinese NEV market, including increased competition from both traditional automakers and tech entrants, and the impact of evolving government policies and subsidies. The company's strategic investments in technology and global expansion are key differentiators in this dynamic landscape.

Comparison to Industry Standards

• Li Auto's revenue decline in 2025, while significant, needs to be viewed in the context of a potentially softening NEV market in China, as indicated by a year-on-year decline in January and February 2026 due to market supply influx and subsidy phase-outs.
• The company's operating loss in 2025 contrasts with the profitability of established players like BYD, which holds a dominant market share in the lower-priced NEV segment, and Tesla, which leads in the premium segment. However, Li Auto's focus on the premium family SUV and MPV segments positions it differently.
• The company's R&D spending as a percentage of revenue (10.1% in 2025) is substantial and aligns with industry leaders who prioritize technological innovation in areas like autonomous driving and smart cockpits to maintain a competitive edge.
• Li Auto's direct sales model, while efficient, requires significant capital expenditure for its network of retail stores and servicing centers, a strategy that differs from traditional dealership models employed by many legacy automakers.

Corporate Governance

Legal Proceedings

• Li Auto Inc. and certain officers and directors are defendants in two putative securities class action lawsuits filed in May 2024, alleging misstatements and omissions in SEC filings regarding business outlook. The cases have been consolidated, and a motion to dismiss is pending. The company believes the case is without merit and intends to defend vigorously.
• The company may be subject to other legal proceedings from time to time in the ordinary course of business, which could result in substantial costs and diversion of resources.

Related Party Transactions

• Transactions with Meituan (a principal shareholder) included purchase of food delivery services amounting to RMB 70.3 million in 2025.
• Transactions with Foshan Che Yijia New Energy Technology Co., Ltd. (an affiliate) included purchase of goods amounting to RMB 22.9 million in 2025.

Stakeholder Impact

• Shareholders may experience reduced returns due to the company's operating loss in 2025 and the potential for future dilution from share incentive plans.
• Employees may face uncertainty due to the company's financial performance and potential restructuring, although the company states it maintains good employee relations.
• Suppliers may face extended payment terms or increased scrutiny due to the company's cash flow challenges, although the company aims for long-term collaboration.
• Creditors may face increased risk given the company's negative operating cash flow and increased borrowings.

Next Steps

• Continue to expand product lineup to target a broader user base.
• Continue to develop and optimize EREV powertrain system performance.
• Continue to optimize autonomous driving solutions leveraging proprietary full-stack software development capabilities.
• Continue to optimize and innovate smart features of vehicles to enhance user experience and satisfaction.
• Continue to leverage data and technologies to facilitate production and rapid iterations of related technologies.
• Continue to advance a data-driven transformation of manufacturing operations.
• Continue to extend in-house development and manufacturing capabilities vertically along the supply chain.
• Continue to expand and innovate the retail distribution and customer experience through additional locations and innovative sales strategies.
• Continue to expand global footprint and establish market presence across Central Asia, the Caucasus, and Africa.

Key Dates

Recommendation

While Li Auto Inc. continues to invest in technology and global expansion, the significant decline in revenue, shift to an operating loss, and negative operating cash flow in 2025 warrant a cautious approach. The competitive landscape and regulatory risks in China also present ongoing challenges. A 'hold' recommendation reflects the company's strategic potential balanced against its current financial performance and market headwinds.

Keywords

Li Auto, SEC Filing, Form 20-F, Automotive, New Energy Vehicles, EREV, BEV, Financial Results, China Market, Electric Vehicles, Autonomous Driving, Smart Cockpit, Corporate Governance, Risk Factors, Shareholder Equity, Revenue, Net Income, Loss from Operations, R&D Expenses, Supply Chain