Li Auto (NasdaqGS:LI) Valuation in Focus After Major Recall and Falling Deliveries

Li Auto (NasdaqGS:LI) is in the spotlight this week after announcing an urgent recall of over 11,000 MEGA 2024 electric vehicles. The move follows a Shanghai vehicle fire and concerns about coolant corrosion protection.

See our latest analysis for Li Auto.

Even before the recall, investor sentiment had cooled as Li Auto’s October deliveries dropped sharply and revenue forecasts turned cautious. The share price has slipped 15.9% over the past month and is down 13.2% year-to-date, while the one-year total shareholder return is negative 16.8%. Despite rapid expansion moves such as launching new models and opening retail centers overseas, momentum is clearly fading for now, reminding investors that growth in EVs can be bumpy even for established names.

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So with the stock now down sharply and trading nearly 39% below consensus analyst targets, is the recent drop a compelling entry point for investors, or is the market already reflecting weaker growth ahead?

Most Popular Narrative: 27.8% Undervalued

With Li Auto’s last close at $20.85 and the most widely followed narrative putting fair value at $28.90, sentiment suggests a wide gap between current price and expected future potential. The narrative sharply disagrees with recent market pessimism, setting up a compelling case for deeper investigation.

The company's ongoing transition from extended-range vehicles (EREVs) to pure battery electric vehicles (BEVs), including successful launches of the Li MEGA and Li i8 and the upcoming Li i6, positions Li Auto to capture expanding market share as Chinese middle-class consumers upgrade and EV adoption accelerates. This directly supports long-term revenue growth and total addressable market expansion.

Read the complete narrative.

Want to know which bold forecasts, shifting product mixes, and aggressive expansion plans fuel this valuation? The narrative’s recipe for upside includes blockbuster product launches, margin expansion, and ambitious global moves. See which surprising strategic bets and quantitative assumptions drive this fair value call, then test if they match your convictions.

Result: Fair Value of $28.90 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, sustained cash burn and fierce competition could pressure Li Auto’s growth narrative if vehicle sales disappoint or if market dynamics shift suddenly.

Find out about the key risks to this Li Auto narrative.

Build Your Own Li Auto Narrative

Take a fresh look at all the data and put your own perspective to the test. Create a unique narrative from scratch in just a few minutes. Do it your way

A good starting point is our analysis highlighting 3 key rewards investors are optimistic about regarding Li Auto.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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