Competitive pressures are rising for this Chinese EV manufacturer says Macquarie

Investing.com -- Li Auto faces mounting headwinds as weaker sales, tougher competition, and execution risks weigh on its outlook, according to Macquarie.

The firm downgraded the stock to Underperform, cutting its target price to HK$82 (US$21) from HK$110 (US$28) in a note on Friday.

“Li Auto looks set to miss lagging sell-side Q2 estimates on volume (-13%) and revenue (-7%),” Macquarie wrote.

While vehicle margins may show upside, “this may not be enough to offset a bottom-line miss (-23%).”

The broker estimates 105,000 units for the third quarter, below consensus expectations of 139,000, noting that July sales reached only 30,000 and August registrations tracked under 30,000 per week.

A key near-term catalyst is expected to be the launch of the i6 BEV in September, which will go head-to-head with Tesla’s Model Y and Xiaomi’s YU7.

However, Macquarie highlighted risks: “No official orders were disclosed by the company, a major contrast to the successful L6 launch last year when updates were given every 10k orders. This could imply a weaker-than-expected order cadence.”

Competition is said to be intensifying, with AITO and ONVO also gaining traction in the large SUV segment.

Macquarie said volumes are down 3% year-to-date despite the broader Chinese EV market growing 29%.

“Beyond a future sedan model, management needs to provide a clear strategy on how to reset growth ahead of the i6 launch,” the analysts added.

Macquarie reduced its FY25/FY26 volume forecasts by 20% and 13%, respectively, cutting EPS estimates by 33% and 19%.

It also lowered its valuation multiple to 13.0x, the two-year average. The firm warned of “downside catalysts” including a weak i6 launch, softer guidance, and further earnings downgrades.

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