Li Auto Stock Falls After Wall Street Downgrade. It’s About China.

A Li Auto assembly line at a factory in Changzhou, China. There are concerns about EV demand in the country. (AFP via Getty Images)

Shares of Chinese electric vehicle maker Li Auto fell Thursday after catching a downgrade from JPMorgan.

Analyst Nick Lai cut his rating to Hold from Buy. His price target for Li’s U.S.-listed American depositary receipts (ADRs) went to $28 from $33 a share.

Li’s ADRs dropped 4.6%, closing at $23.75. The S&P 500 and Dow Jones Industrial Average finished closed to flat.

Lai is worried that Chinese passenger vehicle demand will decline in 2026 as government subsidies expire. China has a variety of tax incentives, trade-in subsidies, and licensing requirements that give EVs a leg up. Buyers are expected to lose some of them at the end of 2025.

Through July, Chinese new car sales have been strong, at about 18.6 million vehicles, up 13% year over year. Li has lost market share, however, with Chinese sales through July of about 235,000, down 2% year over year, according to data tracked by Citi analyst Jeff Chung.

Slowing sales and tougher competition for Li could spell tougher times ahead.

Overall, Li remains popular with analysts, with almost 80% of those covering the stock rating shares Buy. The average Buy-rating ratio for stocks in the S&P 500 is about 55%. The average analyst price target is about $34 a share.

Coming into Thursday trading, Li’s ADRs were up about 4% so far this year, trailing the broader market.

Write to Al Root at allen.root@dowjones.com