JP Morgan Downgrades Li Auto to Underweight, Cuts PT

JP Morgan analyst Nick Lai downgraded Li Auto from Neutral to Underweight with a price target of HK$56.00 (from HK$73.00).

“Our primary reservation on Li Auto is a lack of major new models this year when competitors are launching EREVs and BEVs that overlap with Li’s existing offerings in terms of:

1) price points, 2) specifications or features (e.g. larger battery), 3) distribution channels and 4) addressable market or family buyers.

To tackle such pressure, we notice Li Auto is currently offering over ~Rmb20-30k cash rebate or discounts on most of its products.

Based on new model launch information at this point, we already foresee five potential competing models that could pressure Li Auto’s sales performance:

1) Nio’s ONVO L80, 2) Xiaomi’s third SUV, 3) Leapmotor’s D19 large 6-seater SUV, 4) Zeekr’s 8X SUV, and 5) Huawei’s new M7 or M8.

On the back of the above considerations, we forecast Li Auto’s sales could slip this year to ~366k units (down ~10% from 2025). This is ~36% below Street consensus ~500k units according to Bloomberg.

As a result of potential weak top line and the cost/ expense pressure (from price cuts, incentive, input cost inflation etc), we conservatively project that Li Auto could turn into a loss this year (both GAAP and non-GAAP basis).

This contrasts with Bloomberg consensus Rmb4.4bn profit (GAAP) or Rmb5.4bn (non-GAAP). We believe the Street will follow suit and cut Li’s forecasts in coming months.”

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