In stark contrast with western electric vehicle (EV) makers, who have been struggling as of late, Chinese companies in the space have performed quite well since the start of the year. Li Auto (NYSE: LI) is one such business — and despite a recent slump, Wall Street seems confident that the best is yet to come.
On March 1, the automaker released its February 2025 delivery figures. The company delivered 13,192 vehicles in the second month of the year, constituting a 29.7% year-over-year (YoY) increase. The price of Li Auto stock shot up to a high of $32.92, but the rally didn’t last.
By press time on March 17, Li shares were trading at a price of $26.59, bringing year-to-date (YTD) returns to 10.82%.
Picks for you
As severe as the pullback has been, the stock’s performance in 2025 thus far is admirable, especially compared to several high-profile EV companies. One renowned Wall Street firm recently revised its outlook on LI — and its forecast implies plenty of upside.
Jefferies’ revised forecast for Li Auto stock implies a 40% upside
On March 17, Jefferies reiterated an earlier ‘Buy’ rating on LI stock. In addition, the firm hiked its 12-month price forecast for the carmaker’s stock from $31 to $37.20. If met, this figure would correspond to a 39.9% rally from current prices.
In a note shared with investors, the firm expressed confidence that Li Auto “has more cards to play’’ in the second half of the year. Jefferies also expressed confidence that the market has not yet priced in the company’s artificial intelligence (AI) initiatives.
Lastly, the firm noted that the business’s early mover strategy in the large-scale deployment of supercharging stations on highways has helped in the recovery of its Mega minivan sales.
On a more cautious note, Nomura analysts downgraded Li Auto stock from a ‘Buy’ to a ‘Neutral’ rating — although they also increased their price target from $27 to $31. The firm cited uncertainty regarding near-term shipments as the reason behind its decision.
In much the same vein, Macquarie analyst Eugene Hsiao also downgraded Li Auto stock from an ‘Outperform’ rating to a ‘Neutral’ rating. Hsiao expressed concern as to whether or not the company can maintain a solid growth trajectory outside its extended range electric vehicle (EREV) niche.
While the entire Chinese EV sector is now attractive, particularly in view of U.S. recession worries, the field is also highly competitive. XPeng, a key rival, has surpassed Li Auto in terms of deliveries for the first time since 2022. Recently announced stimulus measures in China will most likely be a ‘rising tide that lifts all boats’, but a closer comparison between Li Auto and its peers and rivals is certainly warranted.
Featured image via Shutterstock
