Li Auto Allocates 50% of R&D to AI, Q4 Revenues Fall 35% with 33% Order Surge
Li Auto allocated 50% of Q4 R&D spend to AI, launched a profit-sharing store partner program and closed underperforming outlets to boost efficiency. Q4 revenue slid 35% year-on-year with net income of RMB20.2 million and free cash flow of RMB2.5 billion, while i8 orders rose 33% sequentially.
1. Q4 Financial Performance
Li Auto recorded a 35% year-on-year decline in Q4 revenues, reporting net income of RMB20.2 million and free cash flow of RMB2.5 billion, compared with RMB6.1 billion last year and negative RMB8.9 billion in the prior quarter. Operating margin narrowed to negative 1.5%, with gross margin at 17.8%.
2. AI-Focused R&D Investment
The company directed half of its Q4 R&D budget toward AI initiatives, developing in-house inference chips and foundation models to enhance autonomous driving and vehicle features like AI-powered oil maintenance.
3. New Model Launches and Order Growth
March orders for the Li i8 rose 33% sequentially, signaling strong demand ahead of the Q2 launch of the all-new L9 lineup featuring 800-volt architecture, a drive-by-wire system and MAC 100 chips for advanced autonomy.
4. Sales Network Optimization and Cost Controls
Li Auto closed underperforming stores and introduced a profit-sharing store partner program, shifting decision-making to local managers, while securing long-term supplier agreements to mitigate battery and chip cost inflation.