Bernstein Slashes Li Auto Rating: ’Competitive Landscape Demands Extreme Caution’
Wall Street's optimism on Chinese EV plays hits a brutal reality check.
Bernstein just downgraded Li Auto—citing a bloodbath brewing in China's electric vehicle arena. The research firm doesn't mince words: the competitive landscape now warrants a far more defensive stance.
No Safe Havens
Even former darlings like Li aren't immune. Rivals are undercutting on price, oversaturating the premium segment, and racing ahead in autonomous tech. Bernstein's move signals deeper sector rot—nobody's cruising on autopilot anymore.
Finance types hate nothing more than admitting their bullish calls aged like warm milk. But when the 'growth story' faces a reality check, even the analysts have to tap the brakes.
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Here’s Why Bernstein Is Cautious on Li Auto Stock
Lee acknowledged Li Auto’s dominance in extended range electric vehicle (EREV) technology, strong financial position, overseas potential, and significant advancements in advanced driver assistance systems (ADAS). However, the 4-star analyst thinks that intense competition in the premium plug-in hybrid electric vehicle (PHEV) and EREV SUV segments, along with challenges in the crowded battery electric vehicle (BEV) market, has impacted the outlook.
Additionally, Lee believes that Li Auto is a “victim of its own success in EREV.” The analyst explained that the company’s robust position in premium PHEV SUVs is seeing rising competition from Huawei-backed AITO, Great Wall, BYD (BYDDF), and upcoming entrants like XPeng (XPEV), Zeekr, and Xiaomi (XIACF). In fact, Li Auto’s market share in the segment fell from 72% in Q2 2023 to 34% in Q2 2025. Notably, following over 100% annual growth for two years, high-end PHEV penetration is NEAR 30%. Consequently, Lee expects future growth to moderate.
Furthermore, Lee noted that Li Auto’s expansion into the BEV segment is diluting margins. In particular, the company’s BEV expansion faces strong competitors like Tesla (TSLA) and Xiaomi. Lee expects the i8’s gross margin to be in mid-teens percentage, below the 20% margin for its EREVs, mainly due to the 45 kWh larger battery. Given these challenges, Lee lowered her 2025 and 2026 revenue forecasts by 6% and 16%, respectively, and EPS estimates by 12% and 36%, respectively.
Lee’s downgrade follows a recent rating downgrade to Hold from Buy by JPMorgan on more “conservative volume assumptions.”
What Is the Forecast for Li Auto Stock?
Given the near-term headwinds, Wall Street is cautiously optimistic on Li Auto stock, with a Moderate Buy consensus rating based on four Buys, six Holds, and one Sell recommendation. The average LI stock price target of $30.12 indicates 26.5% upside potential.
