Al Root

Shares of Chinese electric-vehicle maker Li Auto dropped Thursday after the company reported weaker-than-expected first-quarter earnings.

Pricing continues to be a challenge in the world's largest market for EVs.

Li announced first-quarter earnings per share of 7 cents. Wall Street was looking for 9 cents. A year ago, Li reported profit of 17 cents. Sales reached $3.6 billion, better than forecasts of $3.4 billion, and were up about 1% year over year.

The small rise in sales came as first-quarter deliveries rose 13% year over year to almost 93,000 cars, Li Auto said Thursday. Deliveries faster than sales growth is a sign of relatively weaker pricing, which has been a problem for most Chinese EV makers amid increasing competition.

Looking ahead, Li expects to deliver 123,000 and 128,000 in the second quarter. New products, including the " MEGA home" and "Mega Ultra" multipurpose vehicles, launched in the second quarter, will help. The midpoint, 125,500 cars, represents growth of almost 16% from the second quarter of 2024. Sales are expected to be about $4.6 billion, up about 15% year over year. Wall Street projects sales of about $4.8 billion.

Earnings and guidance looked OK, but a little short of Wall Street's expectations. Li's U.S.-listed American depositary receipts were down 3.1% at $27.04 in premarket trading, while S&P 500 and Dow Jones Industrial Average futures were up 1.2% and 0.6%, respectively.

Coming into Thursday trading, Li's ADRs have risen about 16% this year.

Operating profit margins in the quarter improved to 1% from a negative 2.3% a year ago. Li reported positive net earnings in the first quarter of 2024 despite negative operating profit margins because of interest income. The company's cash balance is still substantial, ending the quarter at more than $15 billion.

Write to Al Root at allen.root@dowjones.com

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May 29, 2025 06:41 ET (10:41 GMT)

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