Li Auto released a mixed first-quarter 2026 earnings report on Thursday: revenue slightly exceeded expectations but declined 11% year-on-year, profits turned from positive to negative, and second-quarter guidance fell short of market expectations.
Specifically, total revenue for the first quarter was RMB 229.8 billion, down 11% year-on-year but above the market consensus of RMB 220.9 billion. The company reported a net loss of RMB 23 billion, compared to a net profit of RMB 6.47 billion in the same period last year and a net profit of RMB 0.20 billion in the fourth quarter of last year.
In terms of profitability, the gross margin for the first quarter was 7.9%, lower than 20.5% in the same period last year but above the market expectation of 6.94%. Vehicle sales revenue was RMB 215.3 billion, a decrease of 13% year-on-year. The operating loss was RMB 30 billion, with an operating margin of negative 13.0%, compared to a positive 1.0% in the same period last year.
For the second quarter outlook, the company expects revenue to be between RMB 241 billion and RMB 254 billion, below the Bloomberg consensus estimate of RMB 292.8 billion. It also forecasts deliveries of 95,000 to 100,000 vehicles, lower than the market expectation of 107,527 units.
Management attributed the changes to product portfolio adjustments, delivery initiatives related to the Li i6, fluctuations in raw material prices, and the overlapping impact of model transition cycles. On the product front, the all-new Li L9 began deliveries in mid-May, featuring the integrated application of the in-house-developed Mocha M100 chip and Mocha VLA large model. As of the end of the first quarter, the company's cash reserves stood at RMB 943 billion, and it is executing a $1 billion share repurchase plan.
Following the earnings release, Li Auto's U.S. pre-market shares fell nearly 5%.
Revenue Decline: The Cost of "Trading Price for Volume" During Transition In the first quarter of 2026, Li Auto's vehicle sales revenue was RMB 215 billion, a decrease of 12.7% year-on-year and 21.0% quarter-on-quarter. The company stated that the year-on-year decline was primarily due to lower average selling prices resulting from product mix changes, while the quarter-on-quarter drop was compounded by a seasonal contraction in deliveries during the Chinese New Year period.
Other sales and service revenue was RMB 14 billion, an increase of 16.1% year-on-year, correlating with cumulative vehicle sales growth. Revenue from after-sales services and accessories remained robust, serving as one of the few bright spots in the period.
On the cost side, the total cost of sales for the quarter was RMB 212 billion, a slight increase of 2.7% year-on-year, while revenue experienced a double-digit decline. The "scissors effect" of contracting revenue against rigid costs directly squeezed gross margin.
Gross Margin Plummets to 7.9%, Net Loss Records RMB 23 Billion Profitability became the focal point of this quarter's earnings report. The company's first-quarter gross margin was only 7.9%, a significant drop of 12.6 percentage points from 20.5% in the same period last year and also lower than the 17.8% recorded in the fourth quarter of last year. Specifically, the vehicle gross margin plummeted from 19.8% in the prior-year period to 6.1%.
Impacted by the compressed gross margin, the company recorded an operating loss of RMB 30 billion for the first quarter, compared to an operating profit of RMB 2.7 billion in the same period last year. The net loss reached RMB 22.8 billion, versus a net profit of RMB 6.5 billion in the prior-year period. On a non-GAAP basis, the net loss was RMB 21.1 billion, compared to a profit of RMB 10.1 billion in the same period last year.
Chief Financial Officer Li Tie explained in the earnings report that the first-quarter gross margin reflected "the impact of user-centric delivery initiatives for the Li i6, fluctuations in raw material prices, and the effects of the model transition cycle."
Products and Strategy: All-New L9 Launches Flagship Counteroffensive Li Auto focused its efforts on the product front. The all-new Li L9 officially launched in mid-May, offering Ultra and Livis versions priced at RMB 459,800 and RMB 509,800, respectively, targeting the flagship luxury SUV market.
The main technological highlights of the new vehicle are the integrated application of the in-house-developed Mocha M100 chip and the Mocha VLA large model. The Livis version is equipped with two Mocha M100 chips and four lidar units, while the Ultra version features steer-by-wire and a third-generation dual-chamber, dual-valve Magic Carpet air suspension. CEO Li Xiang defined it as an "industry-leading technological breakthrough."
Additionally, the company plans to launch the all-new Li L8 by the end of June, further expanding its product portfolio. Regarding its charging network, as of the end of the first quarter, Li Auto had deployed 4,057 supercharging stations nationwide with 22,439 charging piles.
From the second-quarter guidance, the company expects deliveries to be between 95,000 and 100,000 units, a decrease of approximately 10% to 15% year-on-year. It anticipates revenue to range from RMB 241 billion to RMB 254 billion, a decline of about 16% to 20% year-on-year. Short-term pressures have not yet eased, and the performance of the all-new L9 and L8 in the second half of the year will be key variables for product portfolio upgrades and profitability recovery.
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