On May 15, 2026, the Li Auto L9 Livis made its official debut. This flagship extended-range model, representing nearly two years of intense focus and high expectations from the company, was unveiled.
At precisely 4:00 PM that day, as the launch event concluded with the announcement of the L9 Livis's price, the Hong Kong stock market was entering the Friday afternoon closing auction. The final closing price showed little significant movement. However, when trading resumed on Monday, May 18, Li Auto's stock price plunged over 14%. The decline continued the next day, falling approximately another 5%. In just two days, the stock lost 18% of its value.
Internally, this vehicle was viewed as the most crucial catalyst for the year, with hopes that the new L9 generation would recapture market share in the premium segment. Yet, judging solely by the capital market's reaction, significant divergence exists. Investor skepticism towards Li Auto is mounting. It is worth noting that the stock price has already halved from its relative peak six months ago at HK$128.
But has Li Auto truly lost its appeal and begun to falter? The answer is no.
What is the Market Worried About? Is the stock price decline a reversion to mean value for Li Auto, or is it an unjustified sell-off? First, we must understand what investors are concerned about within these two down days.
This time, Li Auto launched two versions of the L9: the Ultra at 459,800 yuan and the Livis version at 509,800 yuan. The Livis version's price was 50,000 yuan lower than the pre-sale price, with an additional 20,000 yuan discount during the initial sales period. Consumers viewed this price cut as a gesture of sincerity. However, some securities firms considered the pricing still not aggressive enough.
Following the launch, several institutions expressed a less-than-optimistic view of the new Li L9. Citigroup noted that even with the 70,000 yuan concession, the L9 Livis's price-performance ratio merely matches its peers in the same class. Morgan Stanley pointed out that the six-seater SUV market is already fiercely competitive, with numerous rivals like NIO, XPeng, the AITO M9, and the Zeekr 9X.
Based on this, Citigroup provided monthly sales forecasts of 4,000 units for the Ultra and 1,000 units for the Livis. The market seemed to believe this, but reality quickly presented a different picture.
Channel sources indicated that within 72 hours of the new L9's launch, weekend store traffic peaked. Customers noted the Livis version's price was 30,000 yuan lower than their original expectations. Furthermore, the proportion of existing owners upgrading or replacing their vehicles exceeded store expectations, leading to a surge in test drives.
Regarding sales mix, the Livis to Ultra ratio was 9:1. Store feedback suggested customers overwhelmingly chose the Livis version, showing the strongest interest in features like the 800V active suspension, solid-state lidar, and wheel-hub sensing, perceiving the Livis configuration as offering higher value for money.
Li Auto's product line head, Tang Jing, confirmed this: "During the launch event, perhaps because we spent most of the time discussing the Livis, 90% of users ultimately chose the Livis version. The take rate for the two-tone paint option also far exceeded expectations." Citigroup's assessment that the more expensive L9 Livis would be "harder to sell" and that the flagship product lacked appeal was thus refuted.
However, hot money is often short-sighted. From an investor's perspective, the market indeed hoped that after recent volatility, Li Auto would launch a new blockbuster to turn the tide, rapidly pushing sales and profits back onto a growth trajectory.
Li Auto's 2025 financial report showed a total annual sales decline of 18.8%. The average selling price per vehicle also decreased by 14,000 yuan year-over-year to 262,600 yuan. The volume ramp-up of entry-level products like the i6 has disrupted Li Auto's previous brand logic of high gross margins and predictable growth.
To stabilize the situation, Li Auto's 2026 strategic focus has shifted towards extended-range products, with only one new pure-electric model planned. This strategy can be understood as concentrating firepower to fight a decisive battle in its most familiar territory.
However, with an influx of competitors, the extended-range segment has also become a fiercely competitive market. Industry researchers note that monthly deliveries for NIO, XPeng, Li Auto, Xiaomi, Deepal, and Zeekr fluctuate between 29,000 and 34,000 units, with minimal gaps. This means the success or failure of a single product could trigger a reshuffling of rankings.
Therefore, investors hoped the new L9 would deliver a knockout blow to competitors, replicating the miracle of the first-generation product three years ago—achieving both high volume and high profit contribution. This would also help alleviate pressures from the industry-wide price war and rising raw material costs.
However, at this juncture, Li Xiang's strategic focus has pivoted towards AI. The company is ramping up R&D investment against the trend, with 2026 R&D expenditure guidance reaching 12 billion yuan, half of which is allocated to AI-related areas. In the short term, this significant increase in R&D spending will erode the profit and loss statement.
Concurrently, the internal narrative for the new L9 has shifted to "the first embodiment of embodied intelligence." Intuitively, this seems less compelling than "loading up features and cutting prices." Consequently, concerns in the secondary market have risen. Yet, as Li Xiang stated bluntly, "Using an old map will never lead to a new continent. For Li Auto, pursuing AI is not a risk. Not pursuing it is the real risk."
Old Maps Cannot Find New Continents Earlier this year, Li Xiang held an all-hands meeting, emphasizing that "2026 is the final year for all companies aspiring to be AI leaders to get on board." He stated that Level 4 autonomous driving would definitely be achieved by 2028 at the latest and clearly outlined plans for humanoid robots.
He laid out a 15-year blueprint: the first half focused on autonomous driving, the second half on humanoid robots, ultimately reaching AGI (Artificial General Intelligence) by 2040.
Li Auto is serious about AI. The 2025 financial report shows annual R&D investment reached 11.315 billion yuan, a year-over-year increase of 2.2%, setting a new company record. This equates to spending approximately one billion yuan on R&D every three days. During a year when operating cash flow from core business turned negative, this is undoubtedly an aggressive choice.
Within the industry, this is termed counter-cyclical investment. This approach evokes memories of Apple and Tesla in their early years.
Looking back, in 2001, Apple, amidst the pain of the dot-com bubble burst, ramped up R&D investment. Several years later, this gave birth to the iPhone. In 2016, Tesla, facing multiple challenges including consecutive losses, production bottlenecks, technical incidents, and strategic investment difficulties, still allocated 13% of its revenue to R&D, ultimately creating the globally successful Model 3.
In its early years, Li Auto chose to persist with extended-range technology when the industry was skeptical, trusting its judgment of market demand. It ultimately witnessed a market explosion and became a leading new force at that time.
Now, despite returning to an industry downturn, Li Auto's thinking remains clear.
"In the later stages of competition, homogenization becomes increasingly severe, and market concentration rises. To differentiate oneself from others, you cannot focus only on the upper layers," Li Auto's CTO, Xie Yan, stated. He explained that upper-layer features are easily replicated, and the room for innovation there is shrinking. The deeper and more vertically integrated one goes, the higher the barriers become.
Xie Yan revealed that Li Auto had this strategic layout early on: "We must go to the foundational layers, tackle the harder, more core aspects." The new L9 Livis is the first shot in this direction. Li Xiang stated that over the past four years, Li Auto has almost entirely redesigned its vehicle chassis system and developed its own 5nm Mach M100 chip. The dual-chip combination offers a computing power of 2560 TOPS.
Xie Yan mentioned that Apple's dominance in the mobile phone industry stems from the integration of its chip and operating system, providing capabilities far exceeding its peers. "Our starting point is that we must possess capabilities exceeding those of others."
On another front, Li Auto's R&D investment is directed towards AI hardware and embodied intelligence, with a significant portion already allocated to directions beyond vehicles. This represents the second growth curve of Li Auto's AI strategy.
It can be said that Li Auto is using today's R&D expenditure to buy future influence. Moreover, the company holds 101 billion yuan in cash (as of the end of 2025). This is not Li Auto's fallback plan; it is its entry ticket.
Li Auto's growth path has consistently followed the same logic: initially betting on the family market and extended-range technology, the success of the Li ONE provided the financial resources to develop the L series. After establishing a foothold in the automotive business, profits were reinvested into self-developing the operating system, models, and chips. Each step is the result of the previous one.
Industry insiders note that with China's existing automotive supply chain, incubating a new Toyota or Volkswagen is not difficult. However, whether Chinese automakers can create a Porsche, BMW, or Mercedes-Benz in the era of embodied intelligence requires making moves one step earlier.
It is worth noting that unlike other automakers that capitalize R&D costs and amortize them slowly, Li Auto chooses to expense them directly, bearing the full impact immediately. While this pressures current period financials, once future products are launched, the potential for profit elasticity becomes very significant.
This means that going forward, if Li Auto can stabilize its extended-range base, achieve volume with its pure-electric models, and successfully realize its embodied intelligence second curve, its performance could chart a steep growth trajectory. That moment will also mark the inflection point of transition between the old and new eras.
Comments