Core Viewpoint - Li Auto's Q3 2025 profitability has been impacted by the Mega recall, leading to a revision of revenue and profit forecasts for the coming years while maintaining a "Buy" rating [1][2]. Financial Performance - In Q3 2025, Li Auto reported revenue of 27.4 billion yuan, a year-on-year decrease of 36% and a quarter-on-quarter decrease of 10% [1]. - The net loss for Q3 2025 was 620 million yuan, marking a shift to a loss compared to previous quarters [1]. - Vehicle deliveries in Q3 2025 totaled 93,000 units, down 39% year-on-year and 16% quarter-on-quarter [2]. - The average revenue per vehicle in Q3 2025 was approximately 280,000 yuan, an increase of 7,000 yuan year-on-year and 17,000 yuan quarter-on-quarter [2]. Margin Analysis - The vehicle sales gross margin for Q3 2025 was 15.5%, a decrease of 5.4 percentage points year-on-year and 3.9 percentage points quarter-on-quarter [2]. - Excluding the impact of the Mega recall, the vehicle gross margin was 19.8%, reflecting a quarter-on-quarter increase of 0.4 percentage points [2]. - The adjusted net profit, excluding the recall impact, was 490 million yuan, a year-on-year decrease of 83% and a quarter-on-quarter decrease of 55% [2]. Strategic Developments - Li Auto is addressing supply chain bottlenecks for the i series by introducing CATL and Sunwoda as dual battery suppliers starting in November [3]. - The L series is set for a major redesign in 2026, featuring a simplified SKU model and enhanced luxury design elements [3]. - The company plans to implement its self-developed automotive-grade AI chip M100 in 2026, alongside an upgrade to its driver assistance system by the end of December [3]. - Li Auto is shifting back to an entrepreneurial management model starting in Q4 2025, marking a strategic decision for its second decade of operations [3].

Investment Rating - The report maintains a "Buy" rating for the company, with a target price yet to be specified [5]. Core Insights - The company is experiencing a gradual ramp-up in its pure electric product cycle, with accelerated iterations in intelligent driving technology enhancing product competitiveness [1][3]. - For Q4 2024, the company reported revenue of 44.27 billion RMB, a year-on-year increase of 16.6% for the full year, but a decline in net profit by 31.9% [1]. - The company anticipates Q1 2025 vehicle deliveries between 88,000 and 93,000 units, representing a year-on-year growth of 9.5% to 15.7% [1]. - The overall gross margin for Q4 2024 was 20.3%, with vehicle gross margin at 19.7%, impacted by changes in product mix and pricing strategies [1]. Sales and Store Situation - Total sales for Q4 2024 reached 158,696 units, a year-on-year increase of 20.4%, with annual sales of 500,508 units, up 33.1% [2]. - The company holds a 15.3% market share in the RMB 200,000 and above new energy vehicle segment, leading among domestic brands [2]. - By the end of 2024, the company plans to increase its retail presence to 3,700 locations, with significant expansions in service and charging infrastructure [2]. Intelligent Driving - The focus for 2025 will be on further upgrades to intelligent driving software and hardware, aiming to enhance product strength and competitiveness [3]. - The introduction of the MindVLA architecture aims to create a more integrated driving experience, potentially expanding the company's market reach [3]. Product Cycle and Technological Innovation - The company is set to launch new models in the L series and MEGA intelligent driving in the first half of 2025, with additional electric SUV models expected in the second half [4]. - Upgrades to the AD Max system will transition from dual Orin-X chips to a single Thor-U chip, enhancing driving assistance capabilities [4]. - The report suggests that the combination of product cycles and technological innovations may lead to exceeding sales expectations [4].