Li Auto Q2 FY26 earnings call LI

Li Auto completed a full refresh of its L Series (L9, L8, L6) in Q2 FY26, integrating the MCM100 chip, 5C range extension, and drive-by-wire chassis, covering the RMB 200,000-500,000 extended-range SUV market. The high-end L9 delivered version accounts for over 85% of sales, and the L8 Ultra is a key sales driver. The new L6 has been well-received, addressing user feedback on EV range, charging speed, and intelligent platforms, with a target demand of 10,000 units per month. The company acknowledged temporary disruptions from the refresh cycle but is optimizing processes and focusing on OTA enhancements and expanding its 5C supercharging network, which now includes 4,141 stations and 22,800 charging stores.

The new generation Li Mega, scheduled for launch on September 2, has been revamped based on user feedback, focusing on chassis improvements (rear-wheel steering, active anti-roll bars for agility), intelligent platform upgrades (MCM100 ADAS, Qualcomm cabin chips), and an enhanced family cabin experience. Positioned as a flagship SUV over RMB 500,000. Additionally, the all-new flagship BEV SUV Li I9 will launch mid-September, designed as a 6-seater for large families. It will feature an 800-volt 5C high-voltage charging platform, in-house developed electric motors, the MCM100 ADAS chip, and a Qualcomm cabin chip, aiming to complete coverage of the RMB 200,000-500,000 high-end NEV market.

Li Auto is deepening its competitive moat through full-stack in-house development of core technologies, including batteries and chips. The company has developed cell, BMS, and pack fully in-house, with proprietary batteries deploying across all models in H2 FY26, aiming for industry-leading performance in quality, safety, and service life. Shipments of the in-house MCM100 ADAS chip have exceeded 50,000 units, maintaining an excellent quality track record. These advancements are steadily translated into product experience and commercial efficiency.

The company is making rapid progress in ADAS, driven by the integration of its in-house MCM100 chip and full-stack system capabilities. The July OTA 9.1 update improved MAC VLA performance by 20% and nearly doubled user mileage penetration in urban scenarios. The October OTA 9.2 update will adopt full 3D vision transformers for longer range (>250 meters) and better precision (within 5cm accuracy), aiming to reduce undesirable behaviors by over 30% and improve success rates in challenging scenarios by 50%. The year-end OTA 9.3 update will exponentially scale VLA model parameters for enhanced task comprehension and reasoning. MAC BLA 2.0 for NVIDIA ORIN platforms will launch in early September.

Li Auto faces temporary cost pressures from cyclical fluctuations in upstream raw materials, particularly chips, PCBs, memory, and lithium carbonate, which have impacted gross margin. The company's strategy to counter this involves a two-pronged approach: driving cost reductions through more efficient operations and leveraging its full-stack in-house technology and proprietary supply chain to build long-term structural cost advantages. This includes in-house development of electric drivetrains, battery systems, and MCM100 chips. While not passing price increases to customers, the company aims for a long-term healthy gross margin of 15%-20% through these efforts.

Overseas expansion is a long-term strategic focus, with progress on track. For the Middle East and Central Asia, the L Series extended-range models are key offerings, with launches in Kazakhstan, Uzbekistan, and Dubai. A strategic partnership with Allure in Kazakhstan aims for local assembly. In Europe, BEV models, specifically the Li I6, will launch at the October Paris Motor Show and begin sales in Q4. For right-hand drive markets, the Li Mega and ISC will roll out in Hong Kong SAR and Singapore by year-end. The company emphasizes a careful, tailored approach due to geopolitical and regulatory uncertainties, focusing on premium branding, compliance, and after-sales service.