• HSBC downgraded Li Auto (NASDAQ:LI) from "Buy" to "Hold" with a price target of $18.60, reflecting a potential upside of about 6.65%.
• The recall of the MEGA MPV has significantly impacted Li Auto's financial performance, leading to a shift to a loss in the third quarter.
• Despite current challenges, Li Auto's strong underlying margins, excluding recall costs, suggest a potential for recovery and long-term growth.

Li Auto (NASDAQ:LI) is a prominent player in the electric vehicle market, known for its innovative approach to hybrid electric vehicles. The company has faced recent challenges, including a significant recall of its MEGA MPV, which has impacted its financial performance. Despite these hurdles, Li Auto remains a key competitor in the industry, with a market capitalization of approximately $17.6 billion.

On December 3, 2025, HSBC set a price target of $18.60 for Li Auto, while the stock was trading at $17.44. This target suggests a potential upside of about 6.65%. However, HSBC downgraded the stock from a "Buy" to a "Hold," as highlighted by TheFly. This downgrade reflects the challenges Li Auto faces, including a 39% year-over-year decline in deliveries.

The recall of the MEGA MPV has been a significant factor in Li Auto's recent struggles, leading to a shift to a loss in the third quarter. This recall has put pressure on the company's margins. Despite this, Li Auto's underlying margins remain strong compared to industry peers, excluding recall costs. This resilience indicates the company's potential for recovery.

In November, Li Auto's delivery performance fell short of expectations, contributing to the stock's recent decline. The stock has decreased by 3.65%, or $0.66, and has fluctuated between $17.27 and $18.17 during the day. Over the past year, the stock has seen a high of $33.12 and a low of $17.27, reflecting its volatility.

Despite these challenges, there is optimism for Li Auto's long-term potential. If the company can resolve its margin issues, there is a possibility of doubling its value. This potential for growth keeps investors interested, even as the company navigates its current difficulties.