Li Auto takes a nosedive after selling 32.1 billion yuan less in a year.

01 Return to Profitability, but Under Overall Pressure

Ideal Auto, regarded as an "outstanding student" among new car - making forces, showed obvious signs of weak growth during the transition from the extended - range to the pure - electric track. After achieving profitability for 11 consecutive quarters, it suffered its first loss in the third quarter of 2025, triggering intense discussions in the market about its future direction.

On the evening of March 12th, Ideal Auto released its financial reports for the fourth quarter and the whole year of 2025. Although it managed to turn a profit in the fourth quarter and remained profitable for the whole year, its overall financial situation was under high pressure. Its revenue, net profit, and gross profit margin all declined significantly, faring much worse than in the "peak periods" of 2023 and 2024.

In the fourth quarter of 2025, Ideal Auto achieved a total revenue of 28.8 billion yuan, a year - on - year decrease of 35%. The pressure at the operational level intensified. The operating loss for the quarter was 443 million yuan, with an operating profit margin of - 1.5%. The net profit was 20 million yuan, a year - on - year plunge of 99.4%. Under the Non - GAAP, the net profit was only 274 million yuan, indicating a relatively fragile profitability.

Affected by factors such as the intensifying market competition and price war, and the fact that low - priced models became the sales mainstay, the average selling price per vehicle of Ideal Auto dropped from 278,000 yuan in the third quarter of 2025 to 250,000 yuan in the fourth quarter. The decline in the average price directly compressed the profit margin, causing the vehicle gross profit margin, which had long been maintained at around 20%, to "fall" - the vehicle gross profit margin in the fourth quarter dropped to 16.8%, a 3 - percentage - point decline compared with the actual gross profit margin of 19.8% in the third quarter of 2025 after excluding the impact of the MEGA recall.

Throughout 2025, both the revenue and net profit of Ideal Auto declined. The revenue decreased by 22.3% year - on - year, and the net profit plunged by 85.8% year - on - year. Notably, Ideal Auto suffered an annual operating loss for the first time in recent years. The operating loss in 2025 was 521 million yuan, while in 2024, it was a profit of 7 billion yuan.

The operating cash flow also turned negative, changing from 15.9 billion yuan in 2024 to - 8.6 billion yuan in 2025. The free cash flow changed from 8.2 billion yuan to - 12.8 billion yuan. However, Ideal Auto still has a relatively strong financial foundation. As of the end of 2025, the total of its cash and cash equivalents, time deposits, and short - term investments reached 101.2 billion yuan, far exceeding that of its peers.

In the capital market, Ideal Auto briefly boosted market confidence in July 2025 with the launch of its first pure - electric model, the i8. Its stock price soared to HK$124.5 at one point, and its total market value exceeded HK$260 billion. However, it has been falling since then and had dropped to about HK$151.8 billion on March 12th.

02 The "Super Product Manager" Hits a Setback

2025 was a year for Ideal Auto when strategic transformation and in - depth adjustment went hand in hand - it not only delved deeper into the pure - electric track but also underwent significant organizational restructuring.

Since March 2025, Ideal Auto has carried out at least six major organizational adjustments, including implementing the "theater system" in the sales system, merging R & D and sales into the "Intelligent Vehicle Group", abolishing the theater system and integrating into the "Sales Department", and splitting the autonomous driving department.

During the adjustment process, Huawei - affiliated executives faded out, and Ideal Auto returned to the "founder model". Li Xiang took charge of core businesses such as human resources in person. Ma Donghui, a co - founder and "veteran", was in charge of the "Intelligent Vehicle Group", and Yang Haishan was appointed as the new head of human resources, reporting directly to Li Xiang.

In the general trend of the new - energy vehicle market accelerating towards pure - electric vehicles, for Ideal Auto, the pure - electric strategy is not just an expansion of the product line but a battle that must be won, even at a heavy price.

In July 2025, the i8, the first SUV model in Ideal's pure - electric series, was officially launched. To avoid repeating the failure of the MEGA, Ideal Auto spent 2 billion yuan just on design changes for the i8. However, the new car got off to a bad start as soon as it was launched.

The Ideal i8 adopted a pricing strategy of "same price for gasoline and electric vehicles" and launched a total of three models: the Pro version at 321,800 yuan, the Max version at 349,800 yuan, and the Ultra version at 369,800 yuan. All new cars have a six - seat layout and come standard with hardware such as dual - motors, 5C ultra - fast charging batteries, and dual - chamber air suspension. However, in the eyes of consumers, it "wasn't enough". The Pro version didn't even come with signature features such as "refrigerators and color TVs", and the rear - seat entertainment screen was still an optional extra on the Max version, which triggered a series of complaints. Some consumers who gave up on the i8 even said bluntly, "Ideal still doesn't understand how to sell pure - electric cars."

To make matters worse, the safety test video of the i8 colliding with a truck, released on the day of its launch, was widely questioned. Facing public pressure and a poor market response, the Ideal i8 adjusted its price and configuration less than a week after its launch - it cut the Pro version and "added features and reduced prices" for the Max and Ultra versions, with the prices dropping by 20,000 yuan and 30,000 yuan respectively.

Although Ideal Auto quickly corrected its mistakes, the market situation had changed. The i8 also experienced delayed deliveries in the fourth quarter of 2025 due to battery and other issues, seriously affecting its sales. What's more, even the "core" L series was under continuous sales pressure under the multi - dimensional attacks of high - end competitors such as Wenjie, Zhijie, Xiaomi, and NIO, as well as mid - range models emphasizing cost - effectiveness such as Ledao and Leapmotor.

In the eyes of some consumers, the current L series has neither significant breakthroughs and innovations nor cost - effectiveness.

In the first half of 2025, Ideal Auto launched the 2025 - version L series models, named the "Intelligent Upgrade Version". Although there were obvious improvements in intelligent assisted driving hardware and the intelligent cockpit, there were not many differences in other aspects compared with the 2024 - version, resulting in a decline in its attractiveness to consumers. Coupled with factors such as little change in the range extender and exterior design, since mid - 2025, the sales of the L7, L8, and L9 models have all shown an obvious downward trend.

In 2025, the sales of Ideal Auto almost entirely relied on the L6, which accounted for more than 40%. The L6 reached a monthly sales peak of over 18,000 units in May 2025, always outperforming other L series models. However, starting from the second half of the year, the L6 also showed signs of weakness in the face of fierce market competition, and its sales in October and November did not exceed 10,000 units.

The good news is that the third pure - electric model, the i6, launched in September 2025, was successfully recognized by the market. This time, Ideal Auto "learned its lesson" in terms of configuration and pricing and tried to offer as much as possible. Half a month after the launch of the i6, the number of orders exceeded 50,000, and its sales climbed rapidly. From December 2025 to February 2026, the monthly sales were stable at around 16,000 units, indicating that the pure - electric transformation has achieved results.

However, another hidden danger has emerged. In the past six months, the main - selling products of Ideal Auto have been the L6 and i6, which have the lowest price thresholds. The sales of the once - ace models, the L9 and L7, have declined significantly in the past year, which is not optimistic for Ideal Auto, which has always targeted the high - end market first. The loss of high - end products not only affects profits but may also shake Ideal Auto's image and label of "technology" and "innovation".

03 Can Focusing on AI Boost Sales?

In the first quarter of 2026, Ideal Auto needs to face the dual challenges of sales and operations.

According to Ideal Auto's sales guidance, its total delivery volume in the first quarter is expected to be between 85,000 and 90,000 units, a year - on - year decline of 8.5% to 3.1%. In the first two months, Ideal Auto delivered a total of about 54,000 units. Based on this calculation, the delivery volume in March needs to reach between 31,000 and 36,000 units, which is no small pressure. At the same time, the revenue in the first quarter is expected to decline by 16.7% to 21.3% year - on - year.

Despite the short - term pressure, Li Xiang still set the goal of achieving a year - on - year sales growth of over 20% in 2026.

To achieve this goal, he proposed a "3 + 2" strategic path. The "3" refers to restructuring the sales system, ensuring the successful replacement of the L series, and promoting the stable increase in the volume of pure - electric models; the "2" refers to transforming the investment in intelligentization into product experience advantages and making breakthroughs in the overseas market.

At the end of 2024, Li Xiang proposed that Ideal Auto is no longer an automobile manufacturing enterprise but an AI enterprise. For this reason, Ideal Auto has positioned the "AI intelligent agent" as its primary development strategy and goal. In 2025, during the period of declining revenue and net profit growth, Ideal Auto's R & D investment reached 11.3 billion yuan, a record high. In particular, the investment in the AI field accounted for 50%, accounting for 10% of the total revenue.

This strategy is being accelerated through the flagship product. The new - generation Ideal L9 Livis, which is scheduled to be launched in the second quarter of 2026, is called by Li Xiang "the pioneering work of embodied intelligent robots".

It is equipped with a self - developed third - generation range extender, and the battery capacity has been increased from 52.3 kWh in the previous L9 to 72.7 kWh. Most importantly, the new car will be equipped with an 800V fully independent active suspension and a "complete" full - by - wire chassis. In terms of computing power, it will be equipped with two self - developed Mach 100 chips, with an effective computing power five or six times that of NVIDIA's Thor - U.

In the second half of 2026, Ideal Auto will also launch a new pure - electric flagship SUV model, the i9, to further enrich its pure - electric product matrix.

While breaking the boundaries of "automobile manufacturers", Li Xiang is looking towards the more distant future. In December 2025, Ideal Auto launched its first smart wearable device - the Ideal Livis glasses. This AI - enabled glasses can cooperate with the VLA driver large model and the Ideal Classmate intelligent agent to create an ecological closed - loop of "car + AI terminal + service".

Whether AI, this "distant water", can quench the "near thirst" of sales depends on whether consumers are willing to buy it. Judging from the market response to the 2025 - version L series, at this stage, more users believe that hardware is the real deal, and AI is only an added bonus rather than a necessity. Ideal Auto's all - in on AI and embodied intelligence is in the right direction, but it still needs time.

This article is from the WeChat official account "Caixin Tianxia WEEKLY", author: Caixin Tianxia WEEKLY. Republished by 36Kr with permission.