On August 26th, Beijing Time, Li Auto (Li: NASDAQ/02015.HK), a company dual-listed on both the US and Hong Kong stock exchanges, released its financial results for the first half of 2026 (H1 2026) after the Hong Kong market closed and before the US market opened.

As anticipated, Li Auto's core financial indicators witnessed a downturn in H1 2026, primarily attributed to a sales slump. Here are the key financial performances:

1. Total revenue amounted to 48.6 billion yuan, marking a 13.4% year-on-year decrease from 56.2 billion yuan in the same period last year.

2. Vehicle sales revenue reached 45.6 billion yuan, down 14.9% year-on-year from 53.6 billion yuan in the same period last year. This decline is attributable to a decrease in the average selling price, influenced by a varied product mix and reduced vehicle deliveries.

3. Other sales and service revenue stood at 3.1 billion yuan, showing a 16.9% year-on-year increase from 2.6 billion yuan in the same period last year, driven by an expansion in the vehicle fleet.

4. Sales costs totaled 44 billion yuan, a slight 1.7% year-on-year decrease from 44.8 billion yuan in the same period last year, reflecting the impact of reduced vehicle deliveries.

5. Gross profit was 4.6 billion yuan, a significant 59.2% year-on-year drop from 11.4 billion yuan in the same period last year.

6. Gross profit margin stood at 9.5%, a 10.8 percentage point year-on-year decrease from 20.3% in the same period last year. Notably, the gross profit margin improved to 7.9% in Q1 2026, indicating a positive trend in Q2.

7. Vehicle gross profit margin was 7.8%, down 11.8 percentage points year-on-year from 19.6% in the same period last year. With a vehicle gross profit margin of 6.1% in Q1 2026, the improvement in Q2 2026 resulted in an H1 vehicle gross profit margin of 7.8%, a crucial metric for Li Auto.

8. Sales, general, and administrative expenses were 4.3 billion yuan, compared to 5.3 billion yuan in the same period last year. The financial report attributes this decrease to reduced employee compensation. Note: According to the financial report, Li Auto's employee count decreased by 3,970 in H1 2026 compared to H1 2025, encompassing passive layoffs, voluntary resignations, non-renewal of contracts upon expiration, and outsourcing of business operations. Another key statistic is total compensation, which decreased from 6.7 billion yuan in H1 2025 to 6 billion yuan in H1 2026.

9. Operating profit incurred a loss of 5.3 billion yuan, contrasting sharply with a profit of 1.1 billion yuan in the same period last year.

10. Net profit also reported a loss of 4 billion yuan, compared to a profit of 1.7 billion yuan in the same period last year.

11. Cash position: As of June 30, 2026, cash reserves were 87.5 billion yuan, down from 101.2 billion yuan on December 31, 2025. Notably, a cash outflow of 13.7 billion yuan occurred over six months. Specifically, cash reserves were 94.3 billion yuan as of March 31, 2026, indicating a net cash outflow of 6.9 billion yuan in Q1 2026 and a cash outflow of 6.8 billion yuan in Q2. The question remains: when will the cash outflow cease?

12. R&D investment reached 5.498 billion yuan in H1 2026, a 3.3% year-on-year increase from 5.324 billion yuan in the same period last year. Due to the revenue decrease, the R&D expense ratio rose to 11.3%, up 1.9 percentage points.

US$1 billion Stock Repurchase Plan: As of June, 2.34 billion Hong Kong dollars were repurchased on the Hong Kong stock exchange; as of July, US$289 million was repurchased on the US stock exchange.

From a macro perspective, overall car sales declined in H1 2026 due to policy changes. Combined with factors such as the company's product cycle and product competitiveness, Li Auto experienced a significant downturn in H1 2026.

However, with the completion of the L series refresh and the impending release and delivery of higher-priced models like MEGA, which is set to be unveiled on September 2nd, Li Auto's sales are expected to rebound in H2 2026, leading to an improvement in overall financial performance. Whether a full reversal will occur remains to be seen.