China's electric vehicle (EV) market is facing a storm, and Li Auto's latest earnings report just added fuel to the fire. The company's fourth-quarter revenue forecast fell significantly short of expectations, raising concerns about its ability to compete in this cutthroat industry. But here's where it gets controversial: is this a temporary setback or a sign of deeper troubles for China's EV sector? Let's dive in.
On November 27, 2025, Li Auto Inc. revealed its Q4 revenue projection of 26.5 billion to 29.2 billion yuan (approximately US$3.7 billion to US$4.1 billion), missing the analyst estimate of 37 billion yuan by a wide margin. This disappointment was compounded by the company's vehicle delivery guidance, which predicted 100,000 to 110,000 units—far below the expected 135,633 units. This gap highlights the challenges Li Auto faces in meeting market demands, especially when compared to its ambitious goals.
The company's struggles come on the heels of a brutal third quarter, where revenue plummeted by 36%, marking the steepest decline since its 2020 US listing. Despite this, Li Auto's shares rose 1.5% in early Hong Kong trading on Thursday, though they remain down approximately 22% year-to-date. Is this a fleeting rebound or a sign of investor optimism?
Chief Financial Officer Tie Li attributed the company's woes to supply chain bottlenecks and the costly recall of over 11,000 Mega multi-purpose EVs, triggered by a vehicle fire incident. These setbacks, combined with intensifying market competition, have put Li Auto in a tight spot. Meanwhile, CEO Li Xiang warned that China's reduction of EV subsidies could lead to a significant drop in deliveries in Q1 2026, as consumers rush to place orders before year-end. Could this subsidy cut be the tipping point for the EV market?
Adding to the challenges, Li Auto has faced production delays for its i6 models due to supply chain constraints and slower-than-expected ramp-up. However, Li Xiang assured that monthly production capacity for the i6 will steadily increase to 20,000 units starting early next year. Looking ahead, the company envisions transforming its vehicles into “embodied AI” robots, a bold move that could redefine the industry. But is this vision enough to steer Li Auto toward recovery?
Investors remain skeptical, as Li Auto grapples with fierce competition from local rivals in the extended-range EV segment. Its Hong Kong-listed shares have lost over 20% this year and more than half their value since peaking in August 2023. Are investors losing faith, or is this a buying opportunity?
Li Auto’s struggles mirror those of its peers, Nio Inc. and Xpeng Inc., all pointing to a challenging final quarter for China’s EV industry. And this is the part most people miss: the broader implications of these setbacks for the global EV market. As China’s EV giants stumble, could this create opportunities for international competitors? Or will the industry consolidate, leaving only the strongest players standing?
What’s your take? Do you think Li Auto can bounce back, or is the writing on the wall for China’s EV market? Share your thoughts in the comments below, and don’t forget to subscribe to our newsletter for more insights delivered straight to your inbox.
