Li Auto Stock Rises and Falls. How China’s EV Price War Dented Earnings.

An assembly line at a Li Auto factory in Changzhou. The company’s earnings missed expectations. (AFP via Getty Images)

Li Auto stock fell, and then rose, on Thursday after the Chinese electric-vehicle maker missed Wall Street’s second-quarter earnings and revenue targets amid a brutal price war.

The company’s third-quarter guidance doesn’t point to any relief for the company or investors.

Li Auto’s Hong Kong-listed shares fell 3.6% in overseas trading. Its American depositary receipts were down in premarket trading but recovered, closing up 2.9% at $23.26, while the S&P 500 and Dow Jones Industrial Average rose 0.3% and 0.2%, respectively.

Created with Highcharts 9.0.1Li Auto ADRSource: FactSet

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Both moves came after Li Auto reported adjusted second-quarter earnings per share of about 10 cents from sales of $4.2 billion. Wall Street was looking for profit of 12 cents from sales of $4.5 billion, according to FactSet.

A year ago, in the second quarter of 2024, Li reported earnings of 18 cents a share from sales of $4 billion. Li’s sales dropped 4.5% year over year.

The sales drop came despite Li selling about 111,000 cars in the quarter, up from about 109,000 a year ago. Chinese EV makers are locked in an aggressive price war in a bid to offset faltering domestic demand, and that appeared to dent Li’s bottom line.

“In the second quarter, we remained focused on cost optimization and operational efficiency enhancement while navigating a dynamic market,” said CFO Tie Li in a news release. “Achieving solid profitability that underscores our financial resilience and effective execution.”

Li’s gross profit margin in the quarter was 20.1%, up slightly from the 19.5% reported in the second quarter of 2024.

Looking ahead, the company expects to deliver between 90,000 and 95,000 vehicles in the third quarter, down from the 152,831 delivered in the third quarter of 2024. Sales should be about $3.6 billion, down 40% year over year.

The decline is steep. Investors were looking for closer to 148,000 cars sold and sales of $6 billion, according to FactSet.

Coming into Thursday, Li ADR’s had fallen about 6% this year, but shares have gained 27% over the past 12 months. Li’s ADR’s peaked at $47.70 in November 2020.

Write to George Glover at george.glover@dowjones.com