Li Auto Inc. Reports Q1 2025 Financial Results: Revenues Reach RMB25.9 Billion with 92,864 Vehicle Deliveries

Li Auto reported Q1 2025 revenues of RMB25.9 billion (US$3.6 billion) with 92,864 vehicle deliveries, a 15.5% year-over-year increase, though down significantly from Q4 2024 due to seasonal factors. Gross margin remained stable at 20.5%, while net income increased 9.4% year-over-year to RMB646.6 million (US$89.1 million), though non-GAAP net income decreased by 20.5%. For Q2 2025, Li Auto projects deliveries of 123,000 to 128,000 vehicles and revenues between RMB32.5 billion and RMB33.8 billion.

Analysis

Li Auto's Q1 2025 results present a mixed financial picture, characterized by year-over-year growth juxtaposed with significant quarter-over-quarter declines and cash flow concerns. Total revenues reached RMB25.9 billion, a modest 1.1% increase YoY, driven by a 15.5% YoY rise in vehicle deliveries to 92,864 units. Vehicle sales revenue grew 1.8% YoY to RMB24.7 billion. The company maintained a stable gross margin of 20.5%, with vehicle margin improving slightly to 19.8% from 19.3% in Q1 2024. GAAP net income increased 9.4% YoY to RMB646.6 million, and operating expenses saw a notable 14.0% YoY decrease, indicating improved cost discipline. However, these figures contrast sharply with sequential performance; total revenues plummeted 41.4% from Q4 2024, and net income dropped 81.7% QoQ, attributed to seasonal factors. Non-GAAP net income also fell, declining 20.5% YoY and 74.9% QoQ to RMB1.0 billion. A key point of concern is the negative free cash flow of RMB2.5 billion, a stark reversal from the positive RMB6.1 billion in Q4 2024, signaling potential financial strain. Looking ahead, Li Auto projects Q2 2025 deliveries between 123,000 and 128,000 vehicles (a 13.3% to 17.9% YoY increase) and revenues between RMB32.5 billion and RMB33.8 billion (a 2.5% to 6.7% YoY increase). Recent developments include a 31.6% YoY increase in April 2025 deliveries, refreshed product launches, and an open-source initiative for its vehicle operating system. Institutional holdings data from Q1 2025 reveals a net decrease in positions (104 additions vs. 144 decreases), with significant new investments from firms like MIRAE ASSET and Marshall Wace, but substantial divestments by ASPEX Management and Viking Global Investors. HSBC issued a "Buy" rating in March 2025.

Key Decisions for Investors

• Investors should carefully evaluate the conflicting signals from Li Auto's Q1 performance, balancing the positive year-over-year metrics such as delivery growth and net income increase against the substantial quarter-over-quarter contraction and the emergence of negative free cash flow.
• The Q2 2025 guidance for deliveries and revenue implies a recovery; therefore, achievement of these targets will be a critical indicator of the company's ability to overcome seasonal impacts and capitalize on its new product cycle.
• Note the divergent actions among institutional investors, with some large funds significantly increasing their stakes while others exited, suggesting varied conviction levels on the stock's prospects, which should be weighed alongside the single reported 'Buy' rating from HSBC.
• Assess the potential long-term benefits from strategic initiatives like the refreshed Li L series, Li MEGA Home, and the open-source Li Halo OS against the backdrop of current financial pressures and the intensely competitive Chinese NEV market.