Chinese electric vehicle manufacturer Li Auto reported a net loss of 1.7 billion yuan for the second quarter of 2026, missing analyst expectations, as revenue declined and margins compressed amid pricing pressure and competitive dynamics in the premium NEV segment.
Total revenue for the quarter reached 25.7 billion yuan, down 15.1% from a year earlier and missing the 30.77 billion yuan consensus estimate by 5.39%. Vehicle sales revenue, the company’s primary driver, fell 15.7% year-over-year to 24.1 billion yuan. Adjusted earnings per ADS came in at minus 0.4587 yuan, missing the forecast of minus 0.3097 yuan by 48.11%.
Gross profit declined 53.3% year-over-year to 2.8 billion yuan, with vehicle gross margin contracting to 9.4% from 19.4% in the same period of 2025. Overall gross margin followed a similar trend, dropping to 11% from 20.1% a year earlier. Operating expenses totaled 5.1 billion yuan, while the company reported a 2.3 billion yuan operating loss, compared with a 827 million yuan operating profit in Q2 2025.
Cash flow showed improvement despite the losses, with operating cash flow turning positive at 15 million yuan, a sharp reversal from 3 billion yuan used in the prior-year quarter. Free cash flow remained negative at 1.3 billion yuan, though improved from 7.4 billion yuan in Q1 2026. The company ended the quarter with 87.5 billion yuan in cash.
Management attributed the margin squeeze to competitive pricing and rising costs, emphasizing efforts to absorb pressure through integrated design, supply-chain optimization, and in-house battery development. Li Xiang, Chairman and CEO, noted that Li Auto retained its position as the top-selling Chinese NEV brand in the RMB 200,000-and-above segment during the first half of 2026, with a balanced order split between extended-range electric vehicles and battery-electric models near 50/50.
Looking ahead, Li Auto guided third-quarter deliveries to a range of 95,000 to 100,000 vehicles, with revenue expected between 26.6 billion and 28 billion yuan. Full-year capital expenditures are projected at approximately 6 billion yuan, focused on product innovation, technology development, charging infrastructure, and international expansion. Long-term gross margin targets remain in the 15% to 20% range, contingent on raw material prices.
The company also outlined a series of product launches for the remainder of 2026, including the new-generation Li MEGA on September 2, the all-new Li L9 flagship SUV in mid-September, and a battery-electric version of the Li L6 at the Paris Motor Show in October. International expansion plans include markets such as Dubai, Hong Kong, and Singapore, with European sales of the Li L6 expected to begin in the fourth quarter.
