Li Auto (NasdaqGS:LI) has officially launched the all new Li L9 in China, with deliveries scheduled to begin on May 17, 2026, following recent discussion around its valuation and market positioning.

The new Li L9 launch comes after a weaker period for the stock, with the share price at US$16.18 and short term share price returns down over the past week and month. The 1 year total shareholder return has also fallen sharply, hinting that the market is still reassessing both growth potential and risks around valuation.

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After a share price that has fallen about 43% over the past year and valuation checks that flag Li Auto as overvalued on several metrics, the key question is simple: is there real value here, or is the market already pricing in future growth?

Most Popular Narrative: 24% Undervalued

The most widely followed narrative puts Li Auto's fair value at $21.18, comfortably above the last close at $16.18. This frames the current debate around its execution and guidance.

The company's ongoing transition from extended-range vehicles (EREVs) to pure battery electric vehicles (BEVs), including successful launches of the Li MEGA and Li i8, and the upcoming Li i6, is described as positioning Li Auto to capture expanding market share as Chinese middle-class consumers upgrade and EV adoption accelerates, which in turn is seen as directly supporting long-term revenue growth and total addressable market expansion.

Want to see what sits under that EV transition story? The narrative leans on compound revenue growth, rising margins and a future earnings multiple that requires a high degree of conviction.

Result: Fair Value of $21.18 (UNDERVALUED)

However, that story can quickly change if higher spending keeps free cash flow under pressure, or if competition and weaker margins drag on earnings for longer.

Another View: Earnings Multiple Looks Stretched

That $21.18 fair value narrative leans on future earnings, but today the stock trades on a P/E of 100.1x, compared with 23.3x for peers, 17.8x for the global auto group, and a fair ratio of 39x. In plain terms, a lot has to go right for that premium to hold.

Next Steps

Conflicted about the mixed signals so far? Take a closer look at the data, weigh the potential upside against the concerns, and review the 1 key reward and 1 important warning sign.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.