Li Auto swung to a net loss in the second quarter as weaker demand and lower deliveries hurt revenue and profitability, despite sequential improvement from the prior quarter.

The Beijing-based new energy vehicle maker said on 26 August that net loss for the quarter ended 30 June 2026 was 1.70bn yuan ($251.3m), versus net income of 1.09bn yuan a year earlier.

Net loss narrowed by 25.1% from 2.27bn yuan in the first quarter.

Total revenue fell 15.1% year on year to 25.66bn, while rising 11.7% quarter on quarter.

Vehicle sales, which accounted for most revenue, dropped 16.7% year on year to 24.06bn yuan, as deliveries fell 11.5% to 98,330 vehicles and average selling price declined due to product mix.

Vehicle sales increased 11.8% sequentially.

Li Auto posted an operating loss of 2.3bn yuan compared with operating income of 827m yuan a year earlier.

Operating margin turned to negative 9%, from positive 2.7% a year ago, but improved from negative 13% in the prior quarter.

Gross profit more than halved, falling 53.3% year on year to 2.83bn yuan, while gross margin narrowed to 11% from 20.1%.

Operating expenses were 5.13bn yuan, down 2% from a year earlier and up 6.9% from the first quarter.

Li Auto chairman and CEO Xiang Li said: “Amid intense market competition and a major model refresh cycle, Li Auto remained the best-selling domestic automotive brand in China’s 200,000 yuan-and-above NEV market in the first half of 2026.”

The company’s CFO Tie Li said: “In the second quarter of 2026, our gross margin improved sequentially to 11%, benefiting from the launch of the all-new Li L9,” adding that the company expects “further margin expansion for the second half of the year.”

For the third quarter, Li Auto expects deliveries of 95,000 to 100,000 vehicles, up 1.9% to 7.3% year on year, and revenue of 26.6bn yuan to 28bn yuan, ranging from down 2.8% to up 2.3%.