Li Auto reported a second consecutive quarter of losses, as the Chinese automaker continued to face subdued sales and margin challenges while it tried to spur demand with a spate of model launches.
Once viewed as the most successful of China's top emerging electric-vehicle brands, the Beijing-based company has seen its fortunes decline in recent quarters.
Demand for its extended-range EVs has softened as some buyers held off purchases ahead of model upgrades, while its push into the battery EV market hasn't had the same traction. At the same time, competition in China, the world's largest auto market, remains fierce, forcing price discounts that have chipped away at margins.
For the three months ended June, net loss was 1.70 billion yuan, equivalent to $253 million, compared with net profit of 1.09 billion yuan a year earlier, the automaker said Wednesday. Analysts had expected a 1.52 billion yuan loss, according to a Visible Alpha consensus estimate.
Revenue fell 15% to 25.67 billion yuan, though it slightly exceeded the 25.17 billion yuan market expectation. The Nasdaq-listed company delivered 98,330 vehicles in the second quarter, an 11% drop from a year ago.
Profitability remained under pressure. The company's vehicle margin was 9.4%, while its gross margin stood at 11.0%, compared with 6.1% and 7.9%, respectively, in the first quarter. The company attributed the change in vehicle margin to a different product mix.
Li Auto gave an encouraging outlook, however, expecting third-quarter vehicle deliveries of between 95,000 and 100,000 units, up 1.9% to 7.3% from a year earlier. It guided for roughly stable revenue at between 26.6 billion yuan and 28.0 billion yuan.
"We anticipate further margin expansion for the second half of the year as our product mix optimizes, with a higher sales contribution from the Livis trim and the launch of refreshed BEV models and Li i9," Chief Financial Officer Li Tie said.
The automaker is hoping that an updated product lineup will reverse its sales slump. It launched the new Li L8 in June and unveiled the redesigned Li L6 the following month. The latter model was one of the company's biggest volume drivers prior to the revamp, and the latest version is equipped with its self-developed Mach M100 AI chip, designed for its assisted-driving system.
There are early signs the product refresh is starting to gain traction. Li Auto delivered 30,468 vehicles in July, with the year-over-year pace of decline easing to about 1%.
Li Auto is also looking overseas to offset the domestic slowdown. The company began local production of its L-series lineup in Kazakhstan in July, starting with the flagship Li L9, after signing distribution agreements earlier this year with dealers in Saudi Arabia and the United Arab Emirates for the same lineup.
The company has also said it plans to launch the all-electric Li i6 in Europe in the second half of 2026, and to bring a right-hand-drive version of its Li MEGA minivan to key Asia-Pacific markets by the end of the year.
American depositary receipts of Li Auto were recently about 1% lower in premarket trading after the results.
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