i6 is crucial for Li Auto. Morgan Stanley suggests: pricing should be more aggressive, lowering to the 200,000 yuan range.
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Li Auto is facing a critical moment in its all-electric vehicle strategy. Morgan Stanley believes the i6 is a life-or-death battle for Li Auto and recommends aggressive pricing to drive sales.
On September 12, according to Zuifeng Trading Desk, Morgan Stanley said in its latest research report that the i6 model, which will be launched in late September, is crucial for Li Auto. It suggests adopting a more aggressive pricing strategy, lowering the guide price from the previously proposed 250,000-300,000 yuan to the 200,000-250,000 yuan range.
The report points out that the disappointing performance of the i8 has greatly frustrated investors, while record pre-orders by peers may force Li Auto to readjust its product, delivery, and pricing strategies more quickly than expected.
Morgan Stanley analysts believe Li Auto must choose between a 20% gross profit margin and monthly sales of 20,000 units. To reach the target of 10,000 units per month for the i6 or a combined 20,000 units per month for all-electric models (i6/i8/Mega), immediate delivery of high-end versions and aggressive pricing strategies are vital.
The report says that while investors may worry this could dilute the 20% gross margin or impact L6 sales, Morgan Stanley considers this the lesser of two evils at present. The bank maintains its "overweight" rating on Li Auto with a target price of $36.
Intense Competition for i6, Pricing Strategy Is Key
The Li Auto i6 will compete in the fiercely competitive mid-to-large SUV market. According to Morgan Stanley’s competitor analysis, the main rivals of the i6 include the Aito M7, Xiaomi YU7, Tesla Model Y, XPeng G9, Zeekr 7X, and NIO ES6.
In terms of specs, the i6 has a wheelbase of 3,000 mm, is equipped with one lidar and a Thor chip, and has a CLTC range of 660–720 km. This configuration is competitive among similar models, but the pressure on pricing cannot be underestimated.
Morgan Stanley notes that the Aito M7 has a pre-sale price of 288,000–348,000 yuan, the Xiaomi YU7 sells for 254,000–330,000 yuan, the Tesla Model Y for 264,000–314,000 yuan, and the XPeng G9 for 249,000–279,000 yuan. Within this price range, Li Auto i6 needs to find the right market positioning.
Morgan Stanley believes that while Li Auto previously set the i6 guide price at 250,000–300,000 yuan, a more aggressive 200,000–250,000 yuan pricing strategy, combined with immediate delivery of high-end versions, is more critical for achieving sales goals.
L Series Upgrade Is Urgent, Competitive Pressures Mount
Morgan Stanley says the outdated L Series' weak sales remain a major problem for Li Auto. As new range-extended EV models continue to hit the market later this year, competition will become more intense, requiring Li Auto to release an upgraded version of the L Series as soon as possible.
Morgan Stanley recommends that the L Series upgrade be equipped with a completely new interior and exterior design and an 800V electric drive system. Although it may be difficult to achieve this within the year, the sooner the better.
Analysts point out that a timely upgrade of the L Series should be Li Auto's top priority. In an increasingly competitive new energy vehicle market, the speed of product iteration directly relates to maintaining market share.
Morgan Stanley says Li Auto needs to quickly rebuild market confidence in its 2026 product cycle while maintaining its existing product strategy. This is critical not only for short-term sales but also for the company's long-term layout in the all-electric vehicle market.
Potential for Share Price Rebound Exists
Morgan Stanley says investors have been closely watching every move Li Auto makes ahead of the upcoming i6 launch, which will provide the company with another shot in the EV race.
Against a backdrop of lowered expectations, Morgan Stanley is looking for marginal improvement from the i6 launch to trigger a more meaningful share price rebound. The stock’s previous heavy shorting has set the stage for a rebound.
Morgan Stanley maintains an "overweight" rating on Li Auto, reflecting confidence in the company’s long-term prospects. Despite near-term challenges, analysts believe Li Auto remains competitive in the EV transition. The key will be how effectively it executes more precise market strategies.
Currently, Li Auto’s P/E ratio is 21.7x (based on 2024 earnings), and it is forecast to drop to 19.7x and 12.5x in 2025 and 2026 respectively, showing increasing valuation attractiveness.
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