Li Auto (NASDAQ: LI; HKEX: 2015) has released its unaudited financial results for the quarter and full year ended December 31, 2025. The report indicates that Li Auto's full-year 2025 revenue was 112.3 billion yuan ($16.1 billion), a decrease of 22.3% compared to 144.5 billion yuan in 2024.
Vehicle sales revenue for 2025 was 106.7 billion yuan ($15.3 billion), down 23.0% from 138.5 billion yuan the previous year. Annual vehicle deliveries reached 406,343 units, a reduction of 94,165 vehicles compared to 500,508 units delivered in 2024.
The company's gross profit for 2025 was 21.0 billion yuan ($3.0 billion), a decline of 29.2% from 29.7 billion yuan in 2024. The gross margin was 18.7%, down 1.8 percentage points from 20.5% a year earlier. Li Auto reported an operating loss of 521 million yuan ($74.5 million) for 2025, contrasting with an operating profit of 7.0 billion yuan in 2024. The operating margin was negative 0.5%, compared to a positive 4.9% the previous year.
Net profit attributable to Li Auto for 2025 was 1.1 billion yuan ($163 million), a sharp decrease of 85.8% from 8.0 billion yuan in 2024. Non-GAAP net profit was 2.4 billion yuan ($343 million), down 77.5% from 10.7 billion yuan.
Net cash used in operating activities for 2025 was 8.6 billion yuan ($1.2 billion), compared to net cash provided by operating activities of 15.9 billion yuan in 2024. Free cash flow was negative 12.8 billion yuan ($1.8 billion), a significant reversal from the positive 8.2 billion yuan recorded the previous year.
As of December 31, 2025, Li Auto operated 548 retail stores across 159 cities in China, along with 561 service and collision repair centers in 224 cities. The company had deployed 3,907 supercharging stations equipped with 21,651 charging piles.
Li Xiang, Chairman and CEO of Li Auto, stated, "Following our proactive strategic adjustments in 2025, we began to see positive changes in organizational efficiency, supply chain capability, and our sales system in the fourth quarter. This includes improved store efficiency, resolved production capacity issues for the Li i6, and a sales recovery for the Li i8. In 2026, we will usher in an important product cycle. The new Li L9, launching in the second quarter, will feature comprehensive upgrades in powertrain, autonomous driving, and chassis technology, delivering a generational leap in user experience. Moving forward, Li Auto will continue to refine our R&D system tailored for AI transformation."
Li Tie, CFO of Li Auto, commented, "Facing short-term challenges from product cycle transitions and intensified industry competition, we achieved a resilient gross margin in the fourth quarter, supported by solid operational capabilities and stringent cost management. A robust financial position also underpinned our performance, helping the company achieve profitability on an annual net income basis. By year-end, our cash reserves stood strong at 101.2 billion yuan."
The company's stock price has faced significant pressure, declining over 30% in the past six months. Since September 2025, Li Auto's share price has trended downwards, falling to a low of HK$61.15 per share. As of the latest close, the stock was at HK$70.15, with a market capitalization of HK$143.1 billion. This represents a drop of more than 30% from the HK$105 level seen in mid-September 2025.
Despite this being a period of strategic investment, Li Auto maintained profitability for the full year with a net profit of 1.1 billion yuan. The company highlighted that it is the only emerging Chinese automaker to have achieved annual revenue exceeding 100 billion yuan and sustained profitability for three consecutive years. It was also noted that Li Auto is the only major player in China's new energy vehicle market that has never conducted a share buyback, a factor that has contributed to significant investor losses as the stock price declined.
The period of difficulty has also seen an exodus of senior executives. Several high-level managers, including former heads of product lines, foundational models, autonomous driving, and SoC development, have departed. Many were founding members of the company. Some of these executives have since founded new ventures, such as Zhijian Power, which recently raised 2.0 billion yuan and is led by former Li Auto CTO Wang Kai. In another instance, former Alibaba Vice President Ren Geng teamed up with former Li Auto Intelligent Driving President Lang Xianpeng to establish an embodied AI company focused on humanoid robots.
This wave of departures, particularly from the AI division, reflects pressures during Li Auto's strategic transformation. Contributing factors include significant shifts in the company's AI strategy, frequent adjustments in autonomous driving technology approaches, and organizational restructuring back to a "startup mode," which increased internal friction. The intense, results-oriented management style described as "tightening the screws," coupled with attractive funding opportunities in the embodied AI and robotics sectors, has also motivated executives to pursue entrepreneurial ventures.
Li Xiang has declared 2026 a pivotal year for Li Auto's evolution into an "embodied AI" enterprise. Facing a increasingly competitive market, the company aims to heighten its technological moat and complete the transition from a smart electric vehicle maker to an embodied AI company to establish a competitive edge for the next phase. In 2025, R&D expenditure reached 11.3 billion yuan, with 50% allocated to AI-related projects. Li Auto plans to continue this investment strategy in 2026 to solidify its core capabilities in embodied intelligence.
For Li Auto, AI involvement spans two areas: creating AI and using AI. Creating AI involves giving products a form of life, while using AI focuses on enhancing operational efficiency. The company has restructured its R&D organization to operate like an embodied AI firm, viewing product development as akin to creating intelligent beings, with efforts focused on developing capabilities in inference chips, foundational models, software, and hardware. At the product level, vehicles are seen as living intelligent entities, with AI being key to animating them. The company believes its next-generation technology platform will yield products that are not mere extensions of traditional or electric cars but are proactive, life-like entities integrated into daily high-frequency experiences. Operationally, AI is being used to counter declining information flow and decision-making efficiency as the company scales, with the introduction of Agent collaboration helping to restore startup-like agility, a change already observed in daily operations.
Li Xiang emphasized that Li Auto intends to translate the complete technological system of vehicles and embodied intelligence developed from the 2022 Li L9 to the present into tangible user experience and commercial value, thereby building the core competitive barrier for its second decade.
**Fourth Quarter 2025 Financial Details**
Li Auto's fourth quarter 2025 revenue was 28.8 billion yuan ($4.1 billion), a decrease of 35.0% from 44.3 billion yuan in Q4 2024, but an increase of 5.2% from 27.4 billion yuan in Q3 2025.
Vehicle sales revenue in Q4 was 27.3 billion yuan ($3.9 billion), down 36.1% year-over-year but up 5.4% quarter-over-quarter. The annual decrease was primarily due to lower vehicle deliveries. Other sales and services revenue was 1.5 billion yuan ($218 million), relatively stable compared to both prior periods.
Total cost of sales in Q4 was 23.6 billion yuan ($3.4 billion), down 33.0% year-over-year. The decrease was mainly attributable to fewer deliveries, partially offset by increased volumes compared to Q3 and lower average cost due to product mix changes, which counteracted the impact of recall costs for the Li MEGA model in the previous quarter.
Gross profit for Q4 was 5.1 billion yuan ($734 million), a 42.8% decline from Q4 2024. The vehicle gross margin was 16.8%, compared to 19.7% a year earlier and 15.5% in Q3 2025. The year-over-year decline was due to changes in product mix, while the sequential improvement reflected the absence of the significant Li MEGA recall cost from Q3, partially offset by a lower average selling price following the start of Li i6 deliveries.
Total operating expenses for Q4 were 5.6 billion yuan ($800 million), up 5.8% year-over-year. R&D expenses increased by 25.3% to 3.0 billion yuan ($431 million), driven by costs related to AI and other projects supporting an expanded product portfolio and technology. Selling, general, and administrative expenses decreased by 14.0% to 2.6 billion yuan ($379 million), primarily due to reduced employee compensation.
Li Auto reported an operating loss of 443 million yuan ($63.3 million) for Q4 2025, compared to an operating profit of 3.7 billion yuan in Q4 2024. The operating margin was negative 1.5%. Non-GAAP operating loss was 188 million yuan ($26.9 million).
Net profit for the quarter was 20.24 million yuan ($2.9 million), a dramatic 99% decrease from the 3.5 billion yuan net profit in Q4 2024. Non-GAAP net profit was 274 million yuan ($39.2 million).
As of December 31, 2025, Li Auto had total assets of 154.3 billion yuan ($22.1 billion), total liabilities of 81.56 billion yuan ($11.6 billion), and total shareholders' equity of 73.1 billion yuan ($10.5 billion). Net cash provided by operating activities in Q4 was 3.5 billion yuan ($500 million), and free cash flow was 2.5 billion yuan ($353 million). The company had 30,728 employees.
For the first quarter of 2026, Li Auto expects vehicle deliveries to be between 85,000 and 90,000 units, representing a year-over-year decrease of 8.5% to 3.1%. Total revenue is forecasted to be between 20.4 billion yuan ($2.9 billion) and 21.6 billion yuan ($3.1 billion), a decrease of 21.3% to 16.7% compared to the first quarter of 2025.
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