The L9 launch is Li Auto’s near-term make-or-break event

Overview

This report focuses on Li Auto’s upcoming 2026 L9 launch. Morgan Stanley believes the L9 is the core lever for restoring company growth and profitability and an important reset point for repositioning the brand in the premium segment. Because sales of high-margin L-series models have declined, compressing profitability, and market expectations remain modest, a successful new model launch could become a near-term stock catalyst.

Core views

The core view is "No expectations are the best expectations": low market expectations reduce the bar the L9 needs to clear. The report is constructive on the post-launch reaction, but it also highlights that the large three-row SUV market is crowded, with direct competition from AITO M9, NIO ES9, Zeekr 9X, and large SUVs from German luxury brands. The stock may remain volatile until 2-3 new-product catalysts, including i9 and L6, are delivered later.

Analysis framework

The report uses a framework combining event-driven catalysts with fundamental recovery. On one hand, it evaluates the potential impact of the L9 launch on deliveries, product mix, brand upgrade, and margins; on the other hand, it applies a probability-weighted DCF framework for the target price and sets bull/base/bear cases using macro, industry competition, ramp-up, and supply-chain risks.

Methodology notes

• Valuation methodsProbability-Weighted DCF

  Assigns 25%/50%/25% weights to bull, base, and bear cases and uses assumptions such as WACC, beta, and long-term growth rates to estimate the target price.

  The report applies the probability-weighted DCF method to both ADR and Hong Kong A-share valuations. Key base-case assumptions include WACC 15.9%, beta 2.1%, and long-term growth rate 3%. The Hong Kong target price is derived from the ADR target using an assumed HKD/USD rate of 7.8.

• event_catalystNew-product launch catalyst

  Assesses how the 2026 L9 launch may affect market expectations, sales recovery, margins, and share-price reaction.

  The report views the May 15 L9 launch as the most important near-term catalyst, arguing that low expectations could support a positive stock reaction, while emphasizing continued monitoring of product ramp-up and competitive dynamics.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Li Auto Inc. (LI.US)

  Core coverage name, with an Overweight rating and a US$21.50 target price.

  Strengths

  L9 is a key new model; high-compute self-developed chips, 800V active suspension, steer-by-wire, electromechanical braking, and four LiDAR sensors reinforce the technical positioning; low market expectations support a potential short-term catalyst.

  Weaknesses

  Previously, declining sales of high-margin L-series models compressed profitability; shares have seen broad volatility year-to-date; subsequent performance still depends on new-model ramp-up.

  Comparison

  Facing direct competition from AITO M9, NIO ES9, Zeekr 9X, and large SUVs from German luxury brands.

  Risks

  Intensifying competition, L-series ramp-up lagging expectations, component bottlenecks, and a slowdown in auto-sales growth.

• Li Auto Inc. (2015.HK)

  Hong Kong-listed equity of the same company; valuation is derived from the ADR target price using a HKD/USD 7.8 exchange conversion.

  Strengths

  Benefits from the same L9 launch logic and the long-term EV penetration narrative.

  Weaknesses

  Similarly exposed to risks from sales, margins, and competitive pressure.

  Comparison

  Shares share the same fundamental drivers as the ADR but trade in different currency and markets.

  Risks

  FX risk, Hong Kong market liquidity, sector competition, and macro shifts.

Key data

• RatingOverweightStock rating under Morgan Stanley’s relative rating framework.
• Sector viewIn-LineSector view for China autos and shared mobility.
• Target priceUS$21.50For Li Auto Inc. ADR.
• Current priceUS$18.00Close on May 8, 2026.
• Upside to target price19%Based on US$21.50 target and US$18.00 close.
• L9 Livis pre-sale priceRmb559.8kThe report expects the company may also launch 1-2 trims below Rmb500k.
• Self-developed chip computing power2560 TOPSTwo 5nm M100 chips, which the report states are equivalent in power to three NVIDIA Thor-U chips.
• Valuation assumptionsWACC 15.9%; beta 2.1; long-term growth 3%Base-case assumptions in the probability-weighted DCF.

Impact & implications

If the L9 launches successfully and achieves a demand ramp, Li Auto could restore L-series momentum, improve margins, and strengthen its intelligent-driving narrative through higher-end models. Its in-house chip and high-computing-power setup suggest the company is trying to shift competitive advantage from one-time hardware launches to OTA iteration and long-term AI platform capability. However, if large-SUV competition continues to intensify or supply-chain bottlenecks emerge, valuation recovery may be constrained.

Risks

• The large three-row SUV market is crowded, which may weaken L9 sales and pricing power.
• If L-series volume ramp is slower than expected, margin expansion may fall short.
• Component bottlenecks could cause unexpected production or delivery disruptions.
• Weak auto-sales growth would suppress industry demand.
• The stock may remain volatile before 2-3 later catalysts such as i9 and L6 are realized.

What to watch

• Orders, deliveries, and customer feedback after the 2026 L9 launch on May 15.
• Whether 1-2 L9 trims under RMB500,000 are launched, and how pricing points affect gross margin.
• Whether the in-house M100 chip, intelligent driving stack, and OTA capabilities translate into differentiated customer experience.
• Competitive responses from AITO M9, NIO ES9, Zeekr 9X, and German large SUVs.
• The launch timing of 2-3 additional models potentially in the second half, including i9 and L6.
• Whether L-series recovery in sales translates into a renewed margin expansion.