Li Auto's Q2 revenue decreased by 4.5% year-on-year, net profit remained basically flat year-on-year, and the guidance for the third quarter fell far short of expectations | Financial Report Insights

Li Auto's total revenue in the second quarter decreased by 4.5% year-on-year, while net profit remained basically flat year-on-year but increased by 69.6% quarter-on-quarter.

What has attracted the most market attention is its weak guidance for the third quarter. Li Auto expects vehicle deliveries in the third quarter to be only 90,000 to 95,000 units, a year-on-year decline of as much as 37.8% to 41.1%. At the same time, the company expects total revenue in the third quarter to sharply decrease by 38.8% to 42.1% year-on-year, falling to between 24.8 billion and 26.2 billion yuan.

On the 28th, Li Auto announced its Q2 financial report:

• Total revenue for the second quarter of 2025 was 30.2 billion yuan, a year-on-year decrease of 4.5%, but a quarter-on-quarter increase of 16.7%.
• Net profit was 1.1 billion yuan, basically flat year-on-year, with a quarter-on-quarter increase of 69.6%.
• Adjusted net profit attributable to shareholders was 1.46 billion yuan.
• Vehicle deliveries were 111,074 units, a slight year-on-year increase of 2.3%.

Dim Third Quarter Guidance

For investors, forward guidance is key to assessing the company's future growth trajectory. Li Auto's outlook for the third quarter of 2025 shows that it will face significant growth pressure in the short term.

According to the announcement, the company expects third-quarter vehicle deliveries to be 90,000 to 95,000 units, far below the 152,800 units in the same period of 2024. The revenue guidance is similarly bleak, expected to total between 24.8 billion and 26.2 billion yuan, a significant decline from last year's level. According to media analysis of analyst expectations, the market's previous consensus estimate was 41.15 billion yuan, which means that Li Auto's upper guidance limit is also more than 36% lower than market expectations.

Negative Cash Flow, Financial Pressure

Despite achieving quarterly profitability, Li Auto's cash flow performance has raised red flags. The financial report shows that the net cash used in operating activities for the second quarter was 3 billion yuan, compared to 430 million yuan in the same period last year; free cash flow was negative 3.8 billion yuan, more than doubling the loss of negative 1.9 billion yuan from the same period last year, and further widening from the negative 2.5 billion yuan in the previous quarter.

The company explained in the financial report that the change in net cash used in operating activities was mainly due to increased payments related to inventory purchases. As of June 30, 2025, the company's total cash and cash equivalents, restricted cash, time deposits, and short-term investments amounted to 106.9 billion yuan (approximately 14.9 billion USD), providing a strong cash reserve to buffer against short-term pressures.

Profitability Remains Resilient

Against the backdrop of declining year-on-year revenue, Li Auto's profitability and cost control have shown a degree of resilience. In the second quarter, the overall gross margin was 20.1%, up from 19.5% in the same period last year, and basically flat compared to the previous quarter's 20.5%. The vehicle gross margin was 19.4%, also higher than 18.7% in the same period last year The company's operating profit for the quarter was 827 million yuan, a year-on-year increase of 76.7%, and a quarter-on-quarter surge of 204.4%. Chief Financial Officer Li Tie stated that the company continues to focus on cost optimization and operational efficiency improvement in a constantly changing market environment, achieving robust profitability that demonstrates financial resilience and high execution capability.

New Products and Brand Upgrade

In the face of challenges, Li Auto is seeking breakthroughs by accelerating the launch of new products and upgrading its brand. The company launched the family six-seat SUV, Li Auto i8, based on a new high-voltage pure electric platform in July, priced at 339,800 yuan, and deliveries began in August.

Company Chairman and CEO Li Xiang stated that the recently announced brand upgrade aims to provide high-quality products to a wider range of consumers, including family users. He also revealed that he looks forward to the launch of Li Auto i6 in September, which is expected to further expand the product matrix and enhance the company's position in the high-end pure electric vehicle market in China.

After the data was released, Li Auto's U.S. stock fell over 4% in pre-market trading.

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