Li Auto Stock (NASDAQ:LI) Dips With Revenue Markedly Lower

Li Auto's stock (NASDAQ:LI) is trading 0.71% lower in pre-market trading, adding to year-to-date losses as the company grapples with the financial repercussions of a recent vehicle recall and intensified market competition. The stock price is extending a 3.17% decline already made since the beginning of the year with this morning's move lower.

The downward pressure on Li Auto's stock follows the release of its third-quarter 2025 financial results, which revealed a significant downturn in profitability. The company reported a net loss attributable to parent company shareholders of RMB 625 million, approximately USD 89.286 million.

This marks a stark reversal from the same period last year and brings an end to an 11-quarter streak of profitability. Total revenues also experienced a substantial decrease, falling 36.2% year-over-year to RMB 27.4 billion. Vehicle sales mirrored this decline, dropping 37.4% to RMB 25.9 billion. Consequently, vehicle deliveries also saw a significant reduction, falling 39% to 93,211 units.

Impact of the MEGA MPV Recall

A primary driver of this financial setback was the recall of 11,400 Li Auto MEGA multi-purpose vehicles (MPVs) due to a potential risk of battery fires. This recall, initiated on October 1, 2025, had a significant impact on the company's vehicle margin, which decreased to 15.5% in the third quarter of 2025, compared to 20.9% in the same period the previous year. Excluding the costs associated with the recall, the vehicle margin would have been a more favorable 19.8%. The recall affected a substantial portion of the Li MEGA's cumulative deliveries, exacerbating the financial strain on the company.

Adding to the challenges, Li Auto is operating within an increasingly competitive Chinese electric vehicle market. This intensified competition has contributed to a decline in vehicle deliveries, with October 2025 marking the fifth consecutive month of year-over-year decreases. The company delivered 31,767 vehicles in October 2025, representing a 38.25% drop compared to the same month in the previous year. This trend underscores the challenges posed by evolving consumer preferences and the proliferation of new EV models in the market.

Despite the current headwinds, Li Auto continues to pursue product innovation and strategic expansion initiatives. In September 2025, the company launched the Li i6, a five-seat battery electric SUV with a CLTC driving range of 720 kilometers and a starting price of RMB 249,800. Furthermore, in October 2025, Li Auto inaugurated its first overseas authorized retail store in Tashkent, Uzbekistan, signaling the commencement of its global expansion strategy. These initiatives reflect the company's commitment to long-term growth despite the current market challenges.

Edging closer to 52 week lows of $16.11, there will be plenty of eyes looking to see how LI reacts as the market opens. Is there a restest of lows on the cards, and if so, what comes next?