Freedom Capital Trims Li Auto Target Amid Intensifying China EV Price War
Freedom Capital Markets has revised its outlook on Li Auto Inc. (NASDAQ: LI), slashing its 12-month price target to $25 from $34 while maintaining a 'Buy' rating on the stock. The move, announced January 7, reflects the analyst firm's assessment of the Chinese EV maker's "mixed" recent quarterly results and a cautious near-term forecast.
The adjustment comes as China's electric vehicle market, the world's largest, is locked in a bruising price war. Major players are aggressively cutting prices to stimulate demand in a slowing domestic economy, squeezing margins across the board. Freedom Capital noted that Li Auto is navigating a delicate balance between competitive pricing and cost optimization to protect its market position.
"The company's path forward hinges on its ability to leverage technological advancements to reduce production costs and enhance vehicle appeal," the firm stated in its research note. It also highlighted Li Auto's planned international expansion as a critical long-term growth lever to diversify its revenue base away from the hyper-competitive home market.
Li Auto, known for its premium smart SUVs and pioneering extended-range electric vehicles (EREVs), has been a standout performer in China's EV sector. However, the current market turmoil presents a significant stress test for its business model and growth trajectory.
Market Voices
Michael Chen, Portfolio Manager in Shanghai: "This target cut is a pragmatic recalibration. The entire sector is repricing risk. Li Auto's technology and product pipeline remain strong, but no one is immune to the industry-wide margin compression. Their overseas strategy is now more important than ever."
Sarah Wilkinson, Tech Analyst in Hong Kong: "It's a necessary reality check. The 'growth at any cost' narrative is over. Investors need to see sustainable profitability, not just delivery numbers. Li Auto's forecast suggests the next few quarters will be a painful transition."
David Rossi, Independent Auto Analyst: "Maintaining a 'Buy' while hacking the target by over 25%? It sends a confused signal. This feels like an analyst trying to have it both ways. The price war is a bloodbath, and Li is in the thick of it. Their 'weak forecast' is an admission they can't see the bottom yet."
Disclosure: This analysis is based on publicly available information and analyst reports. It is for informational purposes only and does not constitute investment advice.