Li Auto Inc. (NASDAQ: LI) reported deliveries of 33,951 vehicles in September 2025, showing a rebound from August but underlining the strain of a steep year-on-year decline. The Chinese new energy vehicle manufacturer said third-quarter deliveries totaled 93,211 units, bringing cumulative deliveries since inception to 1,431,021 vehicles. While the figures met its earlier guidance, they highlight the challenges facing Li Auto as it pivots away from its extended-range electric vehicle base and pushes deeper into battery electric vehicle territory.
Why are Li Auto’s September deliveries showing monthly recovery but yearly weakness?
The September delivery figure reflected a 19 percent improvement from August, when volumes fell to 28,984 units. That sequential uptick suggested some early traction for its new BEV models. However, compared with September 2024, deliveries were down 36.8 percent, continuing a four-month streak of double-digit year-on-year declines.
The third quarter told a similar story. Deliveries dropped nearly 39 percent compared with the same quarter last year and slipped 16 percent from the second quarter. Although Li Auto’s 93,211 units for Q3 came within its guidance range of 90,000 to 95,000, its trajectory diverged from rivals. Xpeng Inc. (NYSE: XPEV) and Zhejiang Leapmotor Technology Co., Ltd. (HKEX: 9863) posted strong gains, underscoring Li Auto’s loss of momentum in China’s fiercely contested EV market.
How is the shift from extended-range EVs to pure BEVs reshaping Li Auto’s trajectory?
Li Auto rose to prominence as the leading player in extended-range electric vehicles, which deploy a gasoline engine as a generator to offset charging anxiety. This approach helped the company achieve mass-market adoption of its Li L7 and Li L8 SUVs, building a customer base that pushed it past the one million cumulative delivery milestone faster than many global peers.
But policy changes and consumer sentiment in China are accelerating the move toward pure battery electric vehicles. The company’s flagship BEV minivan, the Li Mega, had a splashy debut but struggled to sustain demand. To regain momentum, Li Auto launched the Li i8 SUV in August and followed up with the Li i6 five-seater SUV in late September. Both are expected to drive the transition away from EREVs and position Li Auto for a BEV-led future.
Management has internally targeted about 6,000 monthly units for the i8 and between 9,000 and 10,000 monthly units for the i6 by year-end. Including the Mega, Li Auto expects its BEV lineup to reach 18,000 to 20,000 monthly units, which could restore its growth profile. Execution risk, however, remains high, given the need to ramp production, stabilize supply chains, and strengthen consumer demand for higher-priced models.
What does Li Auto’s performance reveal about competitive dynamics in China’s EV market?
September’s delivery figures underscore how quickly the competitive balance is shifting. Leapmotor reported 66,657 deliveries, nearly doubling year-on-year, fueled by strong demand for affordable EVs. Xpeng delivered 41,581 units, also posting robust growth. Nio Inc. (NYSE: NIO) was estimated to have delivered around 35,000 units, supported by refreshed models such as the ET7 and ES6.
In this context, Li Auto’s 33,951 deliveries leave it trailing behind. Its focus on the mid-to-premium BEV SUV segment places it in a crowded niche where rivals are capturing share through aggressive pricing and product diversity. The company must demonstrate that its higher-end BEV strategy can hold ground against lower-priced entrants that are quickly scaling up.
How has Li Auto stock been reacting and what are investors signaling?
Shares of Li Auto Inc. have been volatile through 2025. The stock began the year strong, lifted by optimism surrounding its BEV strategy, but underperformed rivals like Xpeng and Nio as delivery declines mounted. Market participants point to two areas that now dominate the valuation debate: volume stabilization and margin preservation.
Historically, Li Auto’s extended-range models carried gross margins of around 20 to 22 percent. Its new BEVs, however, are delivering margins in the mid-teens, raising investor concerns about profitability dilution. If volumes remain weak, the pressure to discount could further compress margins and free cash flow.
Institutional investors have shown caution. Foreign institutional investors have leaned toward established leaders such as BYD Company Limited (HKG: 1211) and Tesla Inc. (NASDAQ: TSLA). Domestic investors have rotated into names with visible growth like Xpeng. Li Auto, by contrast, is drawing more neutral or hold positions, with some funds trimming exposure until BEV demand becomes clearer.
Why does Li Auto’s BEV pivot matter for the future of China’s EV ecosystem?
Li Auto’s September performance is emblematic of a larger industry transition. As subsidies decline and charging infrastructure strengthens, the space for extended-range hybrids is shrinking. Consumers increasingly expect pure BEVs with fast charging, long range, and competitive pricing.
Li Auto, once the most successful proponent of EREVs, is now a test case for whether a company can reinvent itself as a BEV player without losing its market base. Its ability to execute this pivot will not only determine its own survival but also indicate whether EREVs still have relevance in the Chinese market.
What is the institutional sentiment and forward outlook for Li Auto going into 2026?
Investor views remain divided. Some analysts argue that Li Auto’s design capabilities, balance sheet, and proven success in scaling SUVs give it an edge once BEV production ramps up. Others warn that it risks ceding ground to faster-moving competitors like Leapmotor and Xiaomi Auto, who are offering more aggressively priced vehicles integrated with wider technology ecosystems.
Short-term sentiment is cautious. Most brokerages have placed the stock at neutral or underweight, with buy ratings contingent on delivery stabilization over the next two quarters. Traders will focus on whether Q4 guidance signals momentum in the i6 and i8 launches. Longer-term investors are watching whether Li Auto can defend its margins while expanding its BEV lineup.
Sector-wide catalysts may also shape outcomes. Potential consolidation among Chinese EV startups, new policy measures to support domestic supply chains, and expanded foreign listings could all impact sentiment. For Li Auto, a successful BEV ramp would swing sentiment back to bullish quickly, but execution missteps could widen the gap with competitors.
Li Auto’s September deliveries highlight both resilience and vulnerability. Sequential gains suggest that its pivot is starting to show traction, but the year-on-year declines emphasize the uphill battle in a hyper-competitive market. For investors, the next two quarters will serve as a referendum on whether Li Auto can transform from an EREV pioneer into a BEV contender, or whether rivals will continue to define the pace of China’s electric vehicle industry.
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