Li Auto Inc. Q4 FY2025 earnings call

Over past years, company re-examined core capabilities like sales. Since third quarter last year, explored improving sales through optimizing division of labor, concentrating personnel, launching store partner project. In products, Q2 2025 to launch new VL9 lineup with upgrades in powertrain, autonomous driving, chassis tech. Pure electric vehicles: supply issues of Ideal i6 being resolved, Ideal i8 NPS growing, goal to solve problems for pure electric products to occupy market. 2025 R&D investment RMB 1.13 billion, 50% AI-related. 2026 to be pivotal year for evolving into embodied AI company, continue R&D investment in AI

Fourth quarter total revenues were RMB 28.8 billion, down 35% year-over-year, up 5.2% quarter-over-quarter. Vehicle sales revenue was RMB 27.3 billion, down 36.1% year-over-year, up 5.4% quarter-over-quarter. Cost of sales was RMB 23.6 billion, down 33% year-over-year, up 3.3% quarter-over-quarter. Gross profit was RMB 5.1 billion, down 42.8% year-over-year, 14.8% quarter-over-quarter. Vehicle margin was 16.8% vs 19.7% last year, 15.5% prior quarter. Gross margin was 17.8% vs 20.3% last year, 16.3% prior quarter. Operating expenses were RMB 5.6 billion, up 5.8% year-over-year, down 1.3% quarter-over-quarter. R&D expenses were RMB 3 billion, up 25.3% year-over-year, 1.4% quarter-over-quarter. SG&A expenses were RMB 2.6 billion, down 14% year-over-year, 4.4% quarter-over-quarter. Loss from operations was RMB 442.6 million vs RMB 3.7 billion income last year, RMB 1.2 billion loss prior quarter. Operating margin was negative 1.5% vs 8.4% last year, negative 4.3% prior quarter. Net income was RMB 20.2 million vs RMB 3.5 billion net income last year, RMB 624.4 million net loss prior quarter. Diluted net earnings for ADS attributable to ordinary shareholders was RMB one cent vs RMB 3.31 last year, RMB 0.86-2 net loss prior quarter. Cash position solid with year-end balance RMB 101.2 billion. Net cash provided by operating activity RMB 3.5 billion vs RMB 8.7 billion last year, RMB 7.4 billion used prior quarter. Free cash flow RMB 2.5 billion vs RMB 6.1 billion last year, negative RMB 8.9 billion prior quarter. At end of 2025, 30,728 employees. First quarter 2026 delivery expected 85,000 - 90,000 vehicles, total revenues RMB 20.4 billion - 21.6 billion

For first quarter of 2026, company expects delivery to be between 85,000 and 90,000 vehicles, and quarterly total revenues to be between RMB 20.4 billion and RMB 21.6 billion. This business outlook reflects current and preliminary view on business situation and market condition, subject to change

Q: Follow up on channel reform, rumor of closing 100 stores, details of store partner mechanism.

A: Rumor of closing 100 stores is false, core is quality over quantity, adding stores in top malls. Store partner program launched in early March, turn store into basic business unit, give decision power and profit share to store manager.

Q: Launch timeline, pricing strategy, product competitiveness of upcoming OU L9 and L9 Levis.

A: Q2 2025 launch of all-new VL9 Libis equipped with in-house developed Mach 100 chips, focus on perception and hardware execution.

Q: 2026 sales volume target, balance of volume and market share vs margins.

A: Goal to achieve over 20% growth, key strategies include managing sales system well, success of L series replacement, stable pure power.

Q: Impact of raw material cost inflation, strategy to face challenge.

A: Strengthen supply chain collaboration, sign long-term agreements, drive end-to-end cost optimization, rational pricing.

Q: Share buybacks, R&D expense guidance for 2026.

A: No additional info on share buybacks, expect R&D expenses around RMB 12 billion, AI-related initiatives account for about half.

Q: i-Series details, i6 production ramp, battery strategy.

A: i8 NPS up over 20%, i6 in stable delivery stage, supply chain bottlenecks resolved, 2026 all models equipped with batteries from two brands.

Q: In-house chip Mahoe 100 details.

A: M100 delivered with L9, mass production started, higher effective compute, system-level integration accelerating autonomous driving improvement.

Q: Embodied AI strategy, R&D restructuring progress.

A: Invest 100% in giant technology, be careful in product landing, major organization change in January, improving efficiency in workflows