Li Auto (NasdaqGS:LI): Valuation in Focus Following i6 Launch News and Industry Supply Chain Pledge

Li Auto (NasdaqGS:LI) is at the center of investor conversations this week, driven by a confluence of events that go beyond what most automakers experience in a typical news cycle. The upcoming official debut of the Li i6, positioned to rival heavyweights like the Tesla Model Y with its advanced technology and speedy charging, has sharpened the company’s competitive edge in China’s dynamic midsize SUV market. At the same time, Li Auto’s public commitment, alongside industry peers, to uphold new supplier payment guidelines is sending a message about operational discipline and long-term supply chain health. All of this arrives just as bullish option activity spikes ahead of the next earnings release, signaling that the market is paying close attention to what comes next.

These developments have added fuel to the narrative around Li Auto’s growth trajectory. Over the past year, its stock returned 26%, handily outpacing many automotive peers, though some short-term momentum faded with a slight retreat in the last quarter. Still, the past month saw the shares rebound by nearly 9%, hinting that excitement is building again as the debut of the new model draws near and as investors weigh the impact of recent supply chain pledges. Annual sales and profit growth have been strong as well, underscoring how the company’s story remains firmly tied to innovation and execution in a crowded field.

Given this mix of rapid innovation, renewed market attention, and strong financial trends, is Li Auto’s current price offering a genuine buying opportunity, or are future gains already baked into market expectations?

Most Popular Narrative: 10.9% Undervalued

The most widely followed valuation narrative currently sees Li Auto as significantly undervalued, relative to its projected fair value based on detailed assumptions about future earnings, revenue growth, and profit margins.

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, directly supporting long-term revenue growth and total addressable market expansion.

Want to know what’s powering this undervalued call? The growth math driving this target isn’t just about selling more cars. It’s about explosive profit expansion, rising margins, and a big bet on tech-enabled recurring revenue. What bold analyst assumptions shape this fair value? Dive in to see the key numbers behind the narrative and discover if this premium is grounded in reality.

Result: Fair Value of $29.30 (UNDERVALUED)

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

However, persistent margin pressure and intensifying competition, particularly from rapid peers and potentially fading subsidies, could pose a challenge even in the most optimistic scenario.

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

Another View: Stretched on Valuation Ratios?

While the primary case paints Li Auto as undervalued, looking at its price compared to industry standards tells a different story. By this measure, shares are not cheap, which raises the possibility that future growth is already priced in. Can the fundamentals support this premium?

See what the numbers say about this price — find out in our valuation breakdown.

Stay updated when valuation signals shift by adding Li Auto to your watchlist or portfolio. Alternatively, explore our screener to discover other companies that fit your criteria.

Build Your Own Li Auto Narrative

If you have a different view or want to dig into the numbers firsthand, you can easily craft your own take in just a few minutes, so why not Do it your way?

A good starting point is our analysis highlighting 2 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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