Li Auto Posts Narrow Profit as Sales Slow and Margins Come Under Pressure

Chinese electric vehicle manufacturer Li Auto reported a narrow profit in its latest results as weakening sales momentum and declining margins weighed on performance. The company, known for its plug‑in hybrid and extended‑range electric vehicles, is navigating a more competitive market environment while trying to expand into the fully electric segment.

Recent financial data show a significant slowdown in the company’s operating performance. In the third quarter of 2025, vehicle sales revenue fell about 37% year over year to roughly RMB 25.9 billion, while gross profit dropped by more than 50% compared with the same period a year earlier. Profitability was pressured by higher production costs linked to lower volumes as well as costs related to the recall of the Li Mega multi‑purpose vehicle.

Li Auto’s margins have also been squeezed by an increasingly intense price war in China’s electric vehicle industry. The company historically generated strong margins from its extended‑range electric vehicle lineup, but competition from rivals such as BYD, Nio, and XPeng in the battery‑electric segment has intensified, eroding its competitive edge.

To address these challenges, Li Auto is accelerating investments in new battery‑electric models and next‑generation technologies. However, analysts warn that profitability could remain under pressure in the near term as the company scales its new EV platforms while competing in one of the world’s most crowded electric vehicle markets.