Li Auto posted a fourth-quarter net income of 20.2 million yuan, though it still recorded an operating loss of 442.6 million yuan.
Total revenue for the fourth quarter plunged 35% from a year earlier to 28.8 billion yuan.
Li Auto narrowly returned to profitability by net profit in the fourth quarter as the automaker grapples with sliding sales and setbacks in its transition to pure electric vehicles.
Its revenue dropped 35% from a year earlier to 28.8 billion yuan ($4.1 billion) in the three months ended December 31, according to financial results released Thursday.
Despite the sharp contraction, the top line landed within the company's previous guidance range. The results follow Li Auto's first quarterly net loss in three years in the preceding period.
Net income for the fourth quarter stood at a mere 20.2 million yuan. That compares with a profit of 3.5 billion yuan in the same period of 2024.
The massive profit squeeze underscores the severe market headwinds facing the automaker. Vehicle deliveries tumbled 31.2% year-on-year to 109,194 units in the fourth quarter.
Notably, Li Auto still posted an operating loss of 442.6 million yuan for the quarter, compared with an operating income of 3.7 billion yuan a year ago and an operating loss of 1.2 billion yuan in the third quarter of 2025.
Vehicle margin came in at 16.8% in the fourth quarter. While that marks a significant drop from 19.7% a year earlier, it represents a slight improvement from 15.5% in the third quarter.
The sequential margin recovery was partly driven by the absence of estimated costs related to a vehicle recall in the prior quarter. However, a shift in product mix following the rollout of the new Li i6 model dragged down the average selling price.
The sequential improvement in profit margins was partly attributable to the resolution of the Li Mega recall incident in the previous quarter. However, the introduction of the new Li i6 model shifted the product mix, depressing the average selling price.
The company, once a leader among China's EV startups, now faces intense competition. Rivals are aggressively equipping extended-range models with larger-capacity batteries to narrow the experience gap.
Meanwhile, the highly anticipated pure-electric i-series models have shown weak market performance.
Facing market share erosion, Li Auto appears to be executing a strategic recalibration. According to local media reports, the company will refocus on its most certain extended-range business in 2026.
Li Auto provided relatively pessimistic guidance for its first-quarter performance. The company expects vehicle deliveries to range between 85,000 and 90,000 units during the quarter.
This delivery guidance implies a continued year-on-year decline of 8.5% to 3.1%. Its first-quarter revenue guidance is set between RMB 20.4 billion and RMB 21.6 billion.
This guidance implies Li Auto currently expects March deliveries to range between 30,911 and 35,911 units.
As of December 31, 2025, Li Auto held cash reserves of RMB 101.2 billion. This robust cash flow may help the company weather the current industry downturn and restore profitability.
