Li Auto is counting on its new i9 electric flagship to reverse a sharp downturn that saw the company post its first half-year loss since 2023. The model launched on September 16, with founder Li Xiang calling it a "100-point answer sheet" after what he described as overcoming three hurdles: the shift from range-extender to pure electric architecture, mass production of self-developed battery technology, and installing self-developed chips in its vehicles.
The optimism contrasts with the financial picture. For the first half of 2026, Li Auto reported revenue of 48.65 billion yuan (about $6.85 billion), down 13.4% year-on-year, and a net loss of 3.99 billion yuan (about $562 million), according to the company's earnings report. It was the first half-year loss since Li Auto turned profitable in 2023, when it earned 11.81 billion yuan. Profits fell to 8 billion yuan in 2024 and 1.1 billion yuan in 2025 before turning negative.
Margins squeezed by price war
In the second quarter of 2026, revenue fell 15.1% to 25.7 billion yuan, and deliveries dropped 11.5% to 98,330 vehicles. The vehicle gross margin collapsed to 9.4% from 20.1% a year earlier, meaning each car sold generated 23,000 yuan in gross profit versus 50,500 yuan before—a drop of 27,500 yuan per vehicle. The company attributed the squeeze to price cuts that outpaced cost reductions, with industry-wide price cuts averaging about 15% in the first half.
Li Auto's cash position remains strong, with 87.5 billion yuan in cash and financial investments as of June 30, and free cash flow turned positive in the second quarter. But management acknowledged that its share of the above-200,000-yuan market "cannot return to the levels of 2022-2023."
The company's troubles began when rivals copied its recipe of large SUVs with range-extender powertrains and family-friendly features. Huawei-backed Aito's M7 and later M8 and M9 models directly challenged Li Auto's L-series. By 2025, Aito sales rose 77% while Li Auto's fell 31.3%. Competitors like Leapmotor, Xpeng, and Xiaomi also launched large-battery EREVs (range-extender electric vehicles), pushing parameters beyond Li Auto's offerings.
Three failed EV launches
Li Auto's transition to pure electric vehicles has stumbled three times. The MEGA MPV, launched in March 2024 at 559,800 yuan, faced a design controversy that hurt sales. The i8 SUV, launched in July 2025, suffered a botched debut, a price cut, and a crash-test dispute, leading to weak orders and eventual production suspension. In November 2025, Li Auto recalled 11,411 MEGA 2024 models over coolant corrosion risks that could cause battery thermal runaway, which cut third-quarter gross margin by about 4 percentage points and ended an 11-quarter profit streak.
The only bright spot has been the i6, a five-seat electric SUV launched in September 2025 at 249,800 yuan, which sold well enough to keep one production line running double shifts. But by October 2025, no Li Auto model sold more than 10,000 units in a month, and total deliveries fell 38.24% year-on-year, dropping the company behind Nio and Xpeng.
Li Xiang has admitted organizational problems. After a 2022 strategy meeting, the company adopted Huawei-style management practices, including sales incentives that led to rebate schemes and internal competition. The company later abandoned these practices, with Li Xiang saying, "We became a worse version of ourselves." The i9 launch is a test of whether the company can execute its electric pivot without repeating past mistakes.
