Li Auto Navigates Delivery Slump and Strategic Pivot as Investors Question Valuation

BEIJING—Li Auto Inc., one of China's prominent electric vehicle (EV) makers, finds itself at a strategic crossroads. The company is grappling with a prolonged slump in vehicle deliveries while simultaneously undertaking a significant internal reshuffle, redirecting its research and development focus toward integrated software, hardware, and robotics systems.

The pressure is palpable. Li Auto's stock has reflected the strain, with a 90-day return of -18.8% and a one-year total shareholder return down 29%. This downturn coincides with management's efforts to revitalize the brand, notably through a major upgrade to its flagship Li L9 SUV. The question now looming over the market is whether the current pessimism has overshot, creating a value gap, or if it accurately prices in the mounting execution risks.

"The delivery numbers are undeniably concerning, signaling intense market competition and potential demand saturation for their current model lineup," said Michael Chen, a senior auto analyst at Horizon Research in Shanghai. "However, the strategic pivot to a more integrated tech stack is a necessary, albeit painful, long-term play. The market hates uncertainty, and that's what we're seeing priced in right now."

According to a recent valuation model, Li Auto's fair value is estimated at $24.43 per share, a figure substantially above its recent close near $16.63. This suggests a potential undervaluation of roughly 32%. Yet, this bullish narrative hinges on the company's ability to reignite growth through new battery-electric vehicle (BEV) rollouts, an expanded charging network, and improved profitability—all while navigating a fiercely competitive domestic EV landscape and an uncertain path for overseas expansion.

A point of contention for investors is the company's current price-to-earnings (P/E) ratio of 25.1x. While below the fair value model's implied ratio of 29.3x, it remains elevated compared to the peer average of 23x and the global auto industry's 17.9x. This disparity leaves room for debate: is it a premium for future growth or a vulnerability if that growth stumbles?

Investor Perspectives:

• David Park, Portfolio Manager at Clearwater Capital: "This is a classic 'transition versus traction' story. The R&D restructuring is forward-thinking, aligning with where the industry is headed. The delivery slump hurts, but it might be the short-term pain required for long-term gain. The valuation disconnect could be an opportunity for patient capital."
• Sarah Jennings, Independent Retail Investor: "Eight months of declining deliveries isn't a 'slump'—it's a trend. Throwing more tech at the problem feels like rearranging deck chairs. The core issue is product appeal in a saturated market. Until they show a convincing turnaround in units sold, I see the stock as a value trap, not a value play."
• Rajiv Mehta, Technology Sector Analyst: "The focus on software and robotics integration is critical. The car is becoming a smart device on wheels. Li Auto's attempt to control more of that stack could be a key differentiator. However, they need to communicate a clearer timeline to market with these innovations to restore investor confidence."
• Lisa Wang, Automotive Industry Veteran: "It's brutal out there. Price wars, consumer caution, and regulatory shifts are squeezing everyone. Li Auto's moves are defensive and offensive at once. The next two quarters are crucial; they need the L9 upgrade to land strongly and show early signs that their R&D bets are translating into tangible product advantages."

As Li Auto steers through this turbulent phase, the investment community remains divided. The company's ability to bridge the gap between its ambitious technological restructuring and the immediate imperative to halt delivery declines will likely determine whether the current share price represents a strategic entry point or a precursor to further challenges.

Disclaimer: This analysis is based on publicly available data and analyst commentary. It is for informational purposes only and does not constitute financial advice. Investors should conduct their own research or consult a financial advisor before making any investment decisions.