Chinese electric vehicle manufacturer Li Auto (NASDAQ:LI) stock traded lower on Friday after the company cut its delivery outlook for the second quarter of 2025.
This adjustment closely follows Xiaomi’s successful YU7 SUV launch, which aggressively undercut rivals like Tesla’s Model Y and intensified competition in the Chinese EV market.
Li Auto now anticipates delivering approximately 108,000 vehicles in the second quarter of 2025, which represents a 0.5% year-on-year decline.
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This is a significant reduction from its previous forecast of 123,000-128,000 vehicles, which would have represented a 13.3%-17.9% year-on-year increase.
For context, Li Auto reported total vehicle deliveries of 108,581 units in the fiscal second quarter of 2024.
Li Auto attributes this adjustment to the temporary impact of an ongoing sales system upgrade, a strategic move intended to support its long-term growth.
It expressed conviction in completing its organizational upgrade before the launch of Li i8, enabling it to embrace the new product cycle effectively. The stock gained 53% in the last 12 months.
Li Auto plans to launch two new SUVs in 2025 and may debut its first sedan if market conditions allow.
During its Q1 2025 earnings call, the company shared details about the Li i8, its first all-electric SUV designed for six passengers, and the smaller five-seat Li i6. Li Auto aims to release the i8 in July and the i6 in August.
The broader geopolitical landscape, particularly evolving U.S.-China trade relations, is influencing the semiconductor and EV sectors.
In the second week of June, President Donald Trump confirmed a China trade deal after two days of negotiations in London, which sent the U.S.-listed Chinese stocks down. The U.S. plans to apply 55% tariffs on selected Chinese imports, while China will impose a 10% tariff rate on U.S. goods.
According to reports, U.S. and Chinese officials met in London for trade talks, which likely focused on rare earth minerals. Rare earth elements play significant roles in everything from smartphones to electric vehicles to fighter jets. The U.S. depends on China for ~70% of its imports of rare earth elements.
Furthermore, U.S. restrictions on China’s access to Nvidia Corp. (NASDAQ:NVDA) technology have spurred Chinese automakers, including Li Auto, to accelerate efforts to replace foreign semiconductors with domestic alternatives in their vehicles by 2027. At least two Chinese brands are reportedly aiming for mass production of cars using 100% domestic chips by 2026.
Price Action: LI stock is trading lower by 3.36% to $27.07 premarket at last check Friday.
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