Title

Earning Preview: LI AUTO-W this quarter’s revenue is expected to decrease by 35.84%, and institutional views are bearish

Abstract

Li Auto Inc. will report quarterly results on March 12, 2026 post-Market; investors are watching for revenue stabilization, margin repair from last quarter’s trough, and clarity on near-term delivery cadence and software monetization ahead of a year that began with mixed sell-side sentiment.

Market Forecast

Based on the latest quarter-tracking forecast, Li Auto Inc.’s to-be-reported quarter is projected to deliver RMB 28.72 billion in revenue, a 35.84% year-over-year decline, alongside an estimated EBIT of -RMB 0.86 billion (YoY -123.25%) and adjusted EPS of approximately 0.03 (YoY -98.39%). While explicit gross or net margin guidance for the quarter is not available, the negative EBIT estimate indicates operating deleverage persists even as revenue is expected to tick up sequentially from the prior quarter’s trough.

Automobile manufacturing remains the company’s principal revenue engine; management’s ongoing OTA rollouts and feature upgrades are positioned to support average selling prices and attach rates in the installed base while deliveries normalize through the quarter. The most promising segment near term is still automobile manufacturing itself, which generated RMB 27.36 billion last quarter, down 36.18% year over year, with sequential improvement implied by the current quarter’s revenue estimate and monthly deliveries reported early in the quarter.

Last Quarter Review

In the previous quarter, Li Auto Inc. reported revenue of RMB 27.36 billion, a gross profit margin of 16.33%, a GAAP net loss attributable to the parent company of RMB 0.63 billion with a net profit margin of -2.28%, and adjusted EPS of -0.31 (down 123.31% year over year).

Operating performance weakened significantly as EBIT came in at -RMB 1.18 billion (YoY -134.29%), underscoring the pressure from promotional activity and product-transition costs flowing through the income statement. The main business, automobile manufacturing, delivered RMB 27.36 billion in revenue for the quarter, down 36.18% year over year, mirroring the company’s overall top-line trend during the period.

Current Quarter Outlook (with major analytical insights)

Automobile manufacturing: volume, mix, and pricing into the print

The operating narrative for this print centers on whether volume and mix can offset persistent promotional headwinds to lift revenue from last quarter’s trough. Early in the quarter, Li Auto Inc. disclosed 27,668 vehicle deliveries in January 2026 and 26,421 in February 2026, framing an initial run rate that was seasonally impacted by the Lunar New Year but provides a visible base into March. With the current-quarter revenue estimate at RMB 28.72 billion versus RMB 27.36 billion last quarter, sequential growth appears achievable if March deliveries accelerate and average selling prices hold against recent discounting. The company’s gross margin ended last quarter at 16.33%, and the negative EBIT forecast of -RMB 0.86 billion for this quarter implies that operating leverage remains challenged even if volumes lift, placing importance on cost of goods sold discipline and fixed-cost absorption. A sustained improvement in product mix—especially if higher-trim models and popular configurations regain share—would be a key lever for gross margin repair and could help narrow the gap between gross profit and operating expenses. Conversely, if discount intensity remains elevated or if the sales mix tilts toward more entry configurations, revenue growth may not translate into margin progress, leaving full-year profit normalization dependent on tighter spending control and later-cycle product catalysts.

Intelligent software and services: early monetization catalysts within the installed base

Beyond hardware shipments, management is leaning on software and services to improve unit economics and customer lifetime value. The company’s OTA software cadence—including an update announced early this year adding dozens of features across assisted driving, in-car systems, and electric performance—creates an opportunity to reinforce differentiation within the installed base and nurture paid feature adoption. While the revenue contribution from software remains modest relative to hardware sales, the strategy is to incrementally drive attach rates for advanced driver assistance packages and premium infotainment features, which can bolster gross profit per vehicle and partially buffer discounting pressure on hardware. The near-term test is whether these upgrades convert into measurable subscription revenues or higher take-rates in configurations associated with premium software, thereby nudging blended ASPs upward while keeping hardware costs in check. Any management commentary that quantifies take-rate improvements or outlines a clearer monetization roadmap for assisted-driving packages will be interpreted as a constructive signal for medium-term profitability.

Key stock-price swing factors this quarter

The first swing factor is delivery cadence and its translation into recognized revenue through the quarter. Investors will parse management’s commentary on March momentum to validate whether the sequential step-up implied in the RMB 28.72 billion revenue estimate is on track, especially after January and February deliveries set a modest baseline. A second swing factor is margin directionality relative to last quarter’s 16.33% gross margin and negative EBIT. Stabilization in gross margin, even within a narrow band, would be a supportive datapoint, but the street will scrutinize whether operating expense growth moderates enough to improve EBIT from the -RMB 1.18 billion actual last quarter toward the estimated -RMB 0.86 billion this quarter. A third swing factor is guidance and qualitative color on product transitions and organizational execution. Reports earlier in the year pointed to product-line adjustments and leadership changes, which the market may view as an effort to streamline decision-making; clarity on how these changes affect launch timelines, channel strategy, and cost structure will influence sentiment. Finally, rating drift on the sell side has turned more cautious since January, which can amplify volatility into and after the print; commentary that convincingly addresses demand durability, discounting, and monetization of software features could go a long way toward easing those concerns.

Analyst Opinions

Based on the opinions gathered since January 1, 2026, the balance of views skews bearish: two notable updates were bearish or cautious downgrades versus one aggregated datapoint indicating an overweight average rating, yielding an approximate 67% bearish versus 33% bullish split among the items collected. The most prominent negative stance came from JPMorgan, where analyst Nick Lai downgraded the stock to a Sell/Underweight with a price target of $14.00. The downgrade highlighted concerns around demand momentum and the risk that pricing actions required to sustain volumes could compress margins, undermining profitability even if revenue stabilizes. Jefferies also cut its rating to Hold from Buy and reduced its price target to HK$68.30, signaling a similarly cautious view that near-term earnings power is capped by a combination of promotional activity and mixed elasticity outcomes. Both views suggest that, heading into the post-Market report on March 12, 2026, investors should expect the narrative to revolve around margin defense and the degree to which operating expenses can be contained while the company navigates a softer revenue backdrop.

These bearish perspectives converge on a few common threads that will shape interpretation of the print. First, the negative EBIT trajectory—estimated at -RMB 0.86 billion for this quarter versus -RMB 1.18 billion last quarter—implies only a modest improvement in operating leverage despite an expected sequential revenue uptick, raising the hurdle for a positive surprise. Second, the steep year-over-year declines embedded in the forecasts (revenue down 35.84%, EPS down 98.39%, and EBIT down 123.25%) suggest last year’s revenue base and margin profile will be difficult to match without a decisive inflection in volume and mix, or a stronger-than-anticipated software contribution. Third, with deliveries of 27,668 units in January 2026 and 26,421 units in February 2026, the quarter depends heavily on March’s performance to lift the quarterly average; any commentary indicating that order intake and conversion improved materially late in the quarter would be a constructive surprise versus the cautious sell-side stance.

In synthesizing the majority view, the key to challenging the bearish case will be evidence that gross margin can stabilize above last quarter’s 16.33% level without sacrificing volume, and that operating expenses—particularly in selling and marketing as well as R&D—are being paced appropriately to revenue. A credible roadmap for software monetization, including clearer attach-rate targets for assisted-driving packages and intelligent cockpit features, would help reframe the earnings power discussion beyond near-term hardware cycles. Absent such signals, the print may be judged against lowered expectations that emphasize preservation of cash flow and operating efficiency, with the burden of proof on management to demonstrate that sequential revenue growth can translate into sustainable margin improvement across 2026.