Does Li Auto have a future? - Attached is the summary of Q2 2025 financial report.

2025Q2 Financial Data Overview:

1. Delivery Volume:

Q2 delivery volume was 111,074 units, below the Q1 guidance of 123,000-128,000 units; as of the end of July this year, the delivery volume was 234,669 units, compared to 239,981 units in the same period last year, a year-on-year decrease of 2.2%.

Q3 sales guidance is 90,000-95,000 units, with July delivery volume at 30,371 units, implying August + September delivery volume of approximately 60,000-65,000 units.

2. Infrastructure:

As of the end of July, there were 535 retail centers, 527 after-sales centers, 3,028 charging stations, and 16,671 charging piles.

3. Revenue:

Q2 revenue was 30.25 billion, a year-on-year decrease of 4.5%; automotive revenue was 28.89 billion, a year-on-year decrease of 4.7%; service revenue was 1.36 billion, a year-on-year increase of 0.1%.

Vehicle delivery was 111,074 units, with an average price per vehicle of 260,000.

4. Gross Profit:

Q2 total gross profit was 6.07 billion, with a gross margin of 20.1%, compared to 19.5% in the same period last year; vehicle gross profit was 5.61 billion, with a gross margin of 19.4%, compared to 18.7% last year; service gross profit was 460 million, with a gross margin of 33.5%, compared to 36.3% last year.

5. Expenses:

Total expenses were 5.24 billion, with an expense ratio of 17.3%; R&D expenses were 2.81 billion, with an R&D expense ratio of 9.3%, compared to 3.03 billion last year, with an expense ratio of 9.6%; sales & administrative expenses were 2.72 billion, with an expense ratio of 9.0%, compared to 2.82 billion last year, with an expense ratio of 8.9%.

6. Profit:

Operating profit was 830 million, with a profit margin of 2.7%; compared to 470 million last year, with a profit margin of 1.5%.

7. Cash Flow, Cash Reserves:

Cash reserves were 106.9 billion, with loans & convertible bonds totaling 8.2 billion, net cash was 98.7 billion, compared to 88.4 billion last year, and 102.3 billion last quarter.

Net assets were 73.1 billion, compared to 62.9 billion last year, and 72.3 billion last quarter.

Operating cash flow was -3 billion, capital expenditure was 800 million, free cash flow was -3.8 billion; compared to operating cash flow of -420 million last year, capital expenditure of 1.42 billion, free cash flow of -1.85 billion; last quarter operating cash flow was -1.7 billion, capital expenditure was 800 million, free cash flow was -2.5 billion.

Let's talk about Li Auto:

Looking solely at the financial data, objectively speaking, it exceeded expectations, with a downward adjustment of delivery volume guidance, sales below expectations, yet maintaining a gross margin around 20%, and achieving decent operating profit, which is truly "ideal," aligning with Li Xiang's consistent approach of prioritizing gross margin and profitability.

However, as a shareholder and car owner, seeing this financial report doesn't bring any joy, instead, it fills me with anxiety. The situation is dire, yet the focus is solely on making money, losing market share, competitiveness, and user trust, rendering the money meaningless.

Those who know me are aware that I've been quite dissatisfied with Li Auto over the past six months, frequently criticizing it in the group, leading to being "attacked" by group members and eventually leaving the group I created.

Summarizing the numerous dissatisfactions, it boils down to one point:

Li Auto (Li Xiang) doesn't truly value users, failing to prioritize user experience and interests. Despite management's verbal commitment to return to user value after last year's mega release failure, many subsequent actions have contradicted user value.

To give a simple example:

Let's not talk about distant matters, but recent ones. Extended-range car owners know that while extended-range is indeed a great innovation, its current pain points are evident - frequent charging and slow charging. In northern summers, pure electric range is 150 km, and in winters, just over 100 km. For car owners without home charging, they need to charge two to three times a week, with highway runs requiring charging after an hour, and each full charge taking an hour. In the rapidly evolving new energy market, these two pain points of extended-range are particularly prominent.

However, in May this year, the L series facelift mainly focused on updating the intelligent driving chip, a trivial update, while users eagerly anticipated larger batteries and ultra-fast charging, neither of which were provided. Now, just four months after the L series facelift, sales have plummeted, not due to users' fault, but as a consequence of not truly considering users.

There are many similar examples, such as the now-standard left-side small table board and zero-gravity seats, which were previously not provided, claiming it was for safety. Now, with increased competitive pressure, they are all standard; and this year's i8 refrigerator and TV, with minimal cost, were not provided for some models, resulting in widespread criticism, ultimately leading to full standardization.

So I've long said that Li Auto doesn't prioritize users. Without pressure, it will never provide the best to users. However, this toothpaste-squeezing approach, when repeated, deteriorates reputation and perception. If you like a girl, treat her well consistently, don't act like a sycophant when there's only one choice, and ignore her when there are multiple choices, that's being a jerk.

Not truly prioritizing users, in my opinion, is one of the key factors causing Li Auto's current predicament.

In a company, if someone only raises issues and complains without offering their own ideas and solutions, such an employee is a liability, detrimental to the company, and should be promptly removed.

Therefore, as a shareholder and car owner, I also share my thoughts and suggestions.

At this stage, it must be acknowledged that Li Auto is a company without significant user accumulation and foundation, especially compared to brands like Huawei and Xiaomi with large loyal fan bases. Previously, blind confidence led to overestimating its brand influence and appeal.

Since it's difficult to capture users' hearts through branding, you must impress them through other means, and it's clear that this other means is better products and product strength. When you can achieve what others don't have, what others have but you excel, and what others excel but you are faster, even if your brand is weaker, users will feel your sincerity and be moved by your products and product strength.

Li Auto's past glory actually stemmed from this, initially insisting on extended-range, achieving what others didn't have, firmly capturing users' hearts; now, mega's resurgence is also due to mega home's uniqueness. These all demonstrate that users are willing to pay for leading product strength.

The current predicament also stems from this, as extended-range is now being done by everyone, losing its uniqueness; refrigerators, TVs, and large sofas are also available elsewhere, possibly with larger screens and cheaper prices, losing the advantage of excellence; as for being faster, it's gone too, originally leading the market, now becoming a follower, with larger batteries and ultra-fast charging being introduced by others first.

Losing uniqueness, excellence, and speed, it's no surprise that users vote with their feet.

Therefore, the solution to Li Auto's predicament is clear:

1. L series 80-degree large battery +50-liter fuel tank +5C ultra-fast charging should be prioritized, providing good things to users sooner, avoiding the previous toothpaste-squeezing approach.

In the future, the L series will be a pure electric car with a backup power bank, no longer following the logic of using electricity in the city and fuel for long distances. Li Auto is a pure electric car company with two pure electric product lines, those pursuing energy efficiency and liking avant-garde designs choose the i series, those who can't accept avant-garde designs choose the L series pure electric.

2. Don't be constrained by the traditional annual minor facelift and biennial major facelift of new energy vehicles, break the tradition, as long as users need it, and there's better technology and product experience to offer, why not have a major facelift in a year, or even a facelift in half a year. Just like the mobile internet era, many product managers were eager to release a version a day for better experience, and solve issues immediately, this determination to treat products and users is necessary to find one's advantage in fierce competition.

Although it's currently Li Auto's darkest hour, it still has many cards to play. If it truly insists on prioritizing user experience and feelings, Li Auto's chances of success still exist. $Li Auto(LI.US) $LI AUTO-W(02015.HK) $NIO Inc(NIO.US)