Li Auto narrowly returned to profitability in the fourth quarter of 2025, as declining sales and challenges in its transition toward pure electric vehicles continued to pressure its financial performance.
The company reported fourth-quarter revenue of 28.8 billion yuan ($4.1 billion), down 35.0% from the same period a year earlier, though still within its previously issued guidance range of 26.5 billion yuan to 29.2 billion yuan. Net income came in at 20.2 million yuan, a sharp drop from 3.5 billion yuan in the fourth quarter of 2024, following a net loss in the preceding quarter.
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The results highlight mounting pressures on the automaker, with vehicle deliveries falling 31.19% year-on-year to 109,194 units. Li Auto also recorded an operating loss of 442.6 million yuan in the quarter, compared with operating income of 3.7 billion yuan a year earlier. However, the figure improved from a 1.2 billion yuan operating loss in the third quarter of 2025.
Profitability metrics showed mixed trends. Vehicle margin declined to 16.8% from 19.7% a year earlier but improved from 15.5% in the previous quarter, partly supported by the conclusion of the Li Mega recall. Meanwhile, changes in product mix following the launch of the Li i6 model weighed on average selling prices. Gross margin stood at 17.8%, compared with 20.3% a year earlier.
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Research and development spending rose to 3.0 billion yuan in the fourth quarter, up 25.3% year-on-year, reflecting continued investment in new technologies. Selling, general and administrative expenses declined 14.0% to 2.6 billion yuan, primarily due to lower employee compensation.
Once a leading player among China’s EV startups, Li Auto now faces intensifying competition as rivals enhance their extended-range offerings with larger battery capacities. At the same time, its highly anticipated pure electric i-series models have seen weaker-than-expected market reception.
Amid these challenges, the company is reportedly adjusting its strategy, with plans to refocus on its extended-range vehicle segment in 2026, according to local media reports.
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Li Auto provided a cautious outlook for the first quarter of 2026, forecasting vehicle deliveries between 85,000 and 90,000 units, representing a potential year-on-year decline of 8.5% to 3.1%. Revenue is expected to range between 20.4 billion yuan and 21.6 billion yuan, with March deliveries projected at 30,911 to 35,911 units.
As of Dec. 31, 2025, Li Auto held cash reserves of 101.2 billion yuan, which could help support operations as the company navigates a challenging market environment and works toward restoring profitability.