Li Auto (NasdaqGS:LI) is in focus after unveiling an updated Mega minivan that keeps its bullet train inspired profile while adding fully active suspension, a larger 108 kWh battery, and expanded LiDAR coverage.

For investors tracking Li Auto, the recent product update arrives as the share price shows mixed momentum, with a 7.67% 1 month share price return and a year to date share price decline of 24.35%, alongside a 1 year total shareholder return decline of 45.62%.

If this kind of EV related news has your attention, it could be a good moment to see what else is moving across 54 AI infrastructure stocks

These price swings sit against a business that is still rolling out new products, such as the updated Mega. Are you seeing a reset in how the market views Li Auto, or a shift in what the business is worth?

Most Popular Narrative: 28.1% Undervalued

Li Auto's most followed valuation narrative puts fair value at $18.14 compared with the recent $13.05 share price, which points to a sizable gap investors are watching closely.

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, positions Li Auto to capture expanding market share as Chinese middle-class consumers upgrade and EV adoption accelerates, directly supporting long-term revenue growth and total addressable market expansion.

Want to understand why this fair value sits well above today’s price? The narrative leans heavily on faster revenue growth, rising margins and a richer earnings profile built over several years. The full story is in how those moving parts connect.

Result: Fair Value of $18.14 (UNDERVALUED)

However, Li Auto's narrative could be challenged if high R&D and capex keep cash flow under strain, or if rising EV competition limits pricing power and margins.

Another View on Li Auto’s Valuation

While the main Li Auto narrative leans on a fair value of $18.14 and an 8.3% discount to that figure, the market is also pricing the stock at a P/S ratio of 0.8x. That is higher than the US Auto industry at 0.7x but below peers at 1.6x and close to the fair ratio of 0.9x.

This mix of “undervalued on fair value” and “only modestly cheap on sales” points to a more balanced risk and reward profile. Is the current price reflecting enough caution on execution, or does it understate what Li Auto could achieve if the BEV shift and software plans stay on track?

Next Steps

With the mixed signals around Li Auto, this could be a useful moment to check the underlying data yourself and decide how compelling the upside really feels. If you want a quick snapshot of what the current optimism is based on, take a look at the 2 key rewards.

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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.