LI: Shares Will Recover As Global Expansion Progress Supports Long Term Upside

Analysts have trimmed their price target on Li Auto by roughly $4 per share to about $19. They cite a slightly higher discount rate and lower future valuation multiples, despite stronger long term revenue growth and margin expectations, amid concerns over the company’s uncertain global expansion strategy and intense competition in China’s auto market.

Analyst Commentary

Analyst views on Li Auto are mixed, reflecting both the company’s strategic potential and the risks embedded in its current trajectory and market backdrop.

Bullish Takeaways

• Bullish analysts note that Li Auto’s long term revenue and margin outlook remains attractive. This supports the view that the company can justify a mid-teens to high-teens valuation multiple if execution on its product roadmap continues.
• They highlight that Chinese electric vehicle specialists benefit from strong electronics self reliance, which can support cost advantages and faster innovation cycles compared to many global peers.
• Some see the Neutral rating and $19 price target as leaving room for upside if Li Auto demonstrates credible progress on overseas expansion and converts its technology strengths into sustainable global market share.
• There is recognition that, relative to certain domestic peers, Li Auto’s brand and technology platform could allow it to participate meaningfully in premium segments, potentially enhancing long term profitability.

Bearish Takeaways

• Bearish analysts emphasize that China’s auto market is characterized by cutthroat competition and high policy risk. This pressures pricing power and margins and justifies a lower valuation multiple despite solid growth prospects.
• They view Li Auto’s global strategy as uncertain, arguing that limited clarity on timing, scale, and differentiation in overseas markets creates execution risk and caps near term multiple expansion.
• Concerns persist that stronger, better positioned peers in the Chinese EV ecosystem may capture a disproportionate share of industry profits, potentially limiting Li Auto’s long term earnings power.
• Given these competitive and policy headwinds, cautious analysts believe the current valuation appropriately discounts execution risk, with only modest room for multiple re rating absent clear catalysts on global growth and profitability.

What's in the News

• Issued fourth quarter 2025 guidance calling for vehicle deliveries of 100,000 to 110,000 units, implying a year over year decline of 37.0% to 30.7%, and total revenue of RMB 26.5 billion to RMB 29.2 billion, down 40.1% to 34.2%, with management cautioning that the outlook may change with market conditions (Company guidance).
• Scheduled a board meeting on November 26, 2025 to review and approve unaudited financial results for the quarter ended September 30, 2025 and their public release (Company board notice).
• Officially launched the Li i6, a five seat battery electric SUV priced at RMB 249,800 for the standard configuration, with deliveries set to begin on September 27, 2025 (Product launch announcement).

Valuation Changes

• Fair Value Estimate has fallen from $28.09 to $24.43 per share, reflecting a moderate downward revision in long term intrinsic valuation.
• Discount Rate has risen slightly from 11.58% to 11.66%, indicating a marginally higher required return and perceived risk profile.
• Revenue Growth has increased from 15.16% to 18.23%, signaling a more optimistic view of Li Auto’s top line expansion over the forecast period.
• Net Profit Margin has edged up from 6.45% to 6.56%, suggesting a modest improvement in expected long term profitability.
• Future P/E Multiple has declined from 20.1x to 17.8x, implying a lower valuation multiple being applied to earnings despite stronger growth and margin assumptions.