Li Auto Inc.’s August 2025 Delivery Update: Strategic and Financial Implications for Hybrid EV Market Leadership

Li Auto Inc.’s August 2025 delivery update reveals a pivotal moment in its strategic evolution, as the company navigates the dual pressures of declining hybrid vehicle demand and the uncertain reception of its first battery electric SUV (BEV), the Li i8. While the firm reported 28,529 deliveries in August—a 15.29% month-on-month decline from July’s 30,731 units—the broader context of its Q2 2025 financial performance and product transition underscores both challenges and opportunities for its hybrid EV market leadership.

Financial Resilience Amid Hybrid Declines

Li Auto’s Q2 2025 financial results highlight a mixed picture. Total revenues reached RMB30.2 billion (US$4.2 billion), a 4.5% year-over-year decline but a 16.7% sequential increase from Q1 2025 [1]. This resilience is partly attributed to its strong gross margin of 20.1% and operating income growth of 76.7% compared to Q2 2024 [1]. However, the company’s hybrid EV segment, represented by the L-series extended-range electric vehicles (EREVs), continues to face headwinds. In July 2025, the L-series models (L6, L7, L8, L9) accounted for 90.84% of total deliveries but saw year-on-year declines ranging from 40% to 53% [2]. The Li L6, its best-selling hybrid model, delivered 14,830 units in July, a 40.34% drop YoY [2]. This trend suggests that Li Auto’s hybrid market leadership is eroding as Chinese consumers increasingly favor pure BEVs and as competitors like BYD dominate the new energy vehicle (NEV) landscape [3].

Strategic Shift to BEVs: The Li i8’s Mixed Reception

The launch of the Li i8 in July 2025 marked Li Auto’s first major foray into the BEV segment, with deliveries beginning on August 20. However, the model’s initial reception was tepid. Despite a CLTC range of 720 km and 5C supercharging capabilities, the Li i8 faced poor demand, prompting a relaunch on August 5 with simplified trims and a price cut to RMB339,800 (from RMB349,800) [4]. Early order data indicated only ~6,000 firm orders in the first week, far below expectations [4]. While the company aims to deliver 8,000–10,000 units of the Li i8 by September 2025 [5], this weak start raises questions about its ability to offset declining hybrid sales.

The Li i8’s struggles reflect broader challenges in the Chinese BEV market, where price competition is fierce. BYD, for instance, captured over 50% of the NEV market share in H1 2025 [3], while Tesla and other domestic brands aggressively cut prices. Li Auto’s Q3 2025 delivery guidance of 90,000–95,000 units—a 37.8%–41.1% year-on-year decline—further signals the difficulty of transitioning to BEVs without cannibalizing its hybrid segment [6].

Hybrid Market Leadership at Risk

The August 2025 delivery data, though not explicitly broken down by hybrid and BEV categories, can be inferred from July trends. The L-series EREVs’ dominance in July (90.84% of deliveries) suggests that hybrids still constitute the majority of Li Auto’s sales. However, the Li Mega MPV’s 330.58% YoY growth in July [2] and the Li i8’s projected 8,000–10,000 units by September indicate a gradual shift toward BEVs. This transition, however, is not without risks. The company’s Q2 2025 net income fell short of forecasts, with earnings per share (EPS) of $1.37 missing the $1.81 target [7], highlighting margin pressures from price cuts and R&D investments in BEV technology.

Strategic Implications and Future Outlook

Li Auto’s long-term strategy hinges on achieving full electrification by 2027, with the Li i8 and upcoming Li i6 BEV models as key pillars [8]. However, the August 2025 update underscores the urgency of accelerating this transition. The company’s infrastructure expansion—535 retail stores and 3,028 super charging stations by July 2025 [1]—provides a foundation for BEV adoption, but execution risks remain. Analysts warn that without a stronger value proposition for the Li i8, Li Auto may struggle to compete in the premium BEV segment [9].

Conclusion

Li Auto’s August 2025 delivery update signals a critical inflection point. While the company maintains a strong gross margin and operational efficiency, its hybrid EV market leadership is under threat from declining EREV sales and BEV competition. The Li i8’s lukewarm reception highlights the challenges of transitioning to pure electric vehicles in a saturated market. For Li Auto to retain relevance, it must not only scale BEV production but also differentiate its offerings through innovation and pricing strategies that resonate with Chinese consumers.

Historical backtests of Li Auto’s earnings misses since 2022 reveal mixed short-term outcomes, with no consistent directional bias in the first 10 trading days. However, medium-term rebounds of 15–30 days have shown positive drift, albeit with high dispersion—half of the events saw significant rebounds, while the other half experienced continued drawdowns [7].

Source:
[1] Li Auto Inc. Announces Unaudited Second Quarter 2025 Financial Results [https://ir.lixiang.com/news-releases/news-release-details/li-auto-inc-announces-unaudited-second-quarter-2025-financial]
[2] Li Auto Jul deliveries breakdown: EREVs all decline, Mega ... [https://cnevpost.com/2025/08/11/li-auto-jul-2025-deliveries-breakdown/]
[3] Chinese Brands Command Domestic EV Market [https://autovista24.autovistagroup.com/news/chinese-brands-command-domestic-ev-market/]
[4] Li Auto relaunches i8 after poor initial acceptance [https://cnevpost.com/2025/08/05/li-auto-relaunches-i8/]
[5] Li Auto aims to deliver over 8000 Li i8 SUVs by end of Sept [https://cnevpost.com/2025/08/13/li-auto-aims-deliver-over-8000-li-i8-end-sept/]
[6] Li Auto's Strategic Transition to BEVs and Its Impact on Long-Term Growth Potential [https://www.ainvest.com/news/li-auto-strategic-transition-bevs-impact-long-term-growth-potential-2508/]
[7] Earnings call transcript: Li Auto Q2 2025 earnings miss forecasts, stock rises [https://www.investing.com/news/transcripts/earnings-call-transcript-li-auto-q2-2025-earnings-miss-forecasts-stock-rises-93CH-4214975]
[8] Li Auto Inc. Launches Li i8, a Six-Seat Battery Electric ... [https://ir.lixiang.com/news-releases/news-release-details/li-auto-inc-launches-li-i8-six-seat-battery-electric-family-suv]
[9] Bernstein Downgrades Li Auto Warning a Tougher Year on EV Competition [https://au.finance.yahoo.com/news/bernstein-downgrades-li-auto-warning-145406837.html]