Li Auto Inc. (NASDAQ: LI) has approved a share repurchase program that authorizes the company to buy back up to US$1.0 billion of its Class A ordinary shares and/or American depositary shares through March 31 2027. The program will be funded from the company’s existing cash balance, which stood at RMB 101.2 billion (approximately US$14.7 billion) as of December 31 2025, and will be executed through open‑market transactions, block trades, or other permissible means.
The announcement comes against a backdrop of declining business performance. Total revenue for 2025 fell 22.3% to RMB 112.3 billion (US$16.1 billion) from RMB 144.5 billion in 2024. Vehicle sales revenue dropped 23% to RMB 106.7 billion (US$15.5 billion), and vehicle deliveries fell 19% to 406,300 units. Vehicle margin contracted to 17.9% from 19.8% and gross margin fell to 18.7% from 20.5%. Q4 2025 deliveries were down 31.2% year‑over‑year, and the company’s Q1 2026 guidance projects deliveries of 85,000–90,000 units, a 3.1%–8.5% decline, with revenue expected to be RMB 20.4–21.6 billion, a 16.7%–21.3% drop.
Li Auto’s board believes the buyback signals confidence in the company’s strategic roadmap and will ultimately benefit shareholders. The program is intended to support the stock price and reduce the share count while the company maintains a strong cash position. The move is also seen as a way to demonstrate fiscal discipline amid tightening margins and a competitive market that has eroded vehicle sales and profitability.
"The share repurchase program reflects our strong confidence in Li Auto’s strategic roadmap and future value creation, and will ultimately benefit the Company and create value for our shareholders," said Mr. Xiang Li, chairman and chief executive officer. "In 2026, we will embark on an important product cycle," he added. The company is preparing to launch the all‑new Li L9 flagship in Q2 2026, featuring an 800‑V architecture and an in‑house range‑extender, and is investing heavily in AI‑native R&D and a supercharging network.
The program is being pursued while Li Auto confronts margin compression, intensifying competition, and a decline in vehicle deliveries. The company’s retail network is being optimized by consolidating underperforming locations and focusing on high‑traffic first‑ and second‑tier cities. Management’s confidence in the upcoming product cycle and AI strategy suggests a long‑term view, but the short‑term outlook remains cautious as the company navigates a challenging market environment.
The share repurchase program is expected to be well received by investors, reflecting confidence in Li Auto’s future prospects despite the current headwinds. The company’s cash‑rich balance sheet and planned product launches provide a foundation for potential upside, while the declining deliveries and margin compression underscore the need for disciplined execution and strategic focus.
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