Investing.com — Bernstein cut its rating on Li Auto (NASDAQ:LI) to Market-Perform from Outperform and slashed its price target to $26 from $33 given mounting competition in China’s premium plug-in hybrid and battery EV markets and growing pressure on margins.
While Li Auto remains a leader in extended-range electric vehicles (EREVs) with strong technology and advanced driver-assistance systems, its once-dominant market share in premium PHEV SUVs has slipped to 34% from 72% two years ago as rivals like Huawei’s AITO, BYD (SZ:002594), and Xiaomi (OTC:XIACF) ramp up.
After two years of triple-digit growth, Bernstein said penetration in the high-end PHEV segment is reaching saturation and growth is starting to slow.
The firm also flagged Li Auto’s push into the battery electric vehicle (BEV) space as margin dilutive, expecting unit margins for the i8 BEV in the mid-teens versus about 20% for its EREV models, due largely to higher battery costs.
Even though BEVs have a simpler drivetrain, the competitive landscape headlined by Tesla (NASDAQ:TSLA), Xiaomi and others will make it harder for Li Auto to replicate past profitability, the note said.
Bernstein cut its revenue forecasts for 2025 and 2026 by 6% and 16%, and trimmed EPS estimates by 12% and 36%, now 18% and 22% below consensus.
The brokerage said Li Auto still has long-term potential in overseas markets and new technologies, but those opportunities are unlikely to offset near-term pressure.
Price targets were also lowered for the Hong Kong listing to HK$102 from HK$128, based on the same valuation multiples.
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