HSBC Downgrades Li Auto to Hold

HSBC analyst Yuqian Ding downgraded on December 4, 2025, Li Auto from ‘Buy’ to ‘Hold’ with a price target of $18.60 (down from $30.30).

“Although we think the near-term headwinds are largely priced in, visibility for 2026 remains limited.

Key variables include:

1. i6 production capacity is expected to improve to 20,000 units per month starting early 2026, although order volatility may still affect deliveries;
2. while the next generation of the L series (EREVs) is scheduled for around 2Q26 according to the China Association of Automobile Manufacturers (CAAM), the potential impact on the market remains uncertain given intensifying competition from Xiaomi, HIMA and Zeekr.”

We cut our 2025e earnings forecast by 82%.

This reflects:

1. an estimated 10% reduction in volume due to pricing and volume pressure on the legacy EREV L series, combined with a slower-than-expected volume ramp-up of BEV i6;
2. a 1.5ppt reduction in 2025 gross margin to factor in costs related to the MEGA recall, a less favourable product mix and the delayed contribution from new models in 4Q25.

We cut our 2025e earnings forecast to RMB921m and lower 2026-27e earnings estimates by 38% and 31% to reflect the intense competition.

Our 2025e-26e earnings are 66% and 3% below Bloomberg consensus.

We think 2025e consensus is likely to catch up to reflect the one-off recall cost and lower 4Q25 guidance.”

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