Li Auto Price Target Cut to $22, but Wall Street Still Sees Upside

Li Auto Inc. (NASDAQ:LI | LI Price Prediction) has had a turbulent stretch. The stock is up 4.67% over the past week and flat over the last month. But over the past year, shares are down by more than 32%.

Most analysts cluster around a consensus target of $21.98, reflecting cautious near-term sentiment. Morgan Stanley analyst Tim Hsiao has kept his Overweight rating intact while cutting his price target to $22 from $26, implying meaningful upside from the current price of $17.58. That $22 target sits just above Street consensus, signaling Morgan Stanley remains among the more constructive voices on the name.

But can LI realistically reach $22 by the end of 2026?

Tim Hsiao’s $22 LI Prediction

Morgan Stanley adjusted its 2026-27 earnings forecasts to reflect cyclical and operational headwinds following Q4 results and ahead of the L9 launch. The Q4 numbers were difficult: vehicle deliveries fell 31.2% year over year to 109,194 units, and vehicle margin compressed from 19.7% to 16.8%. Despite those headwinds, Hsiao sees the product cycle turning in 2026 as reason to stay constructive, with the firm noting that while Li Auto faces execution hurdles, it remains constructive on the shares.

Key Drivers of LI Stock Performance

1. All-New Li L9 Launch (Q2 2026): The all-new Li L9, planned for Q2 2026, will feature comprehensive upgrades in powertrain, autonomous driving, and chassis technology. CEO Xiang Li called it “a generational leap in user experience.” A successful flagship launch could reset margin expectations and reignite delivery growth over a multi-year horizon.
2. AI-Native R&D Investment: Li Auto’s R&D spending rose 25.3% year over year to $3.0 billion, centered on its VLA Driver large model and restructured AI-native R&D system. Sustained investment in autonomous driving technology positions the company for long-term differentiation in a winner-takes-most EV segment.
3. Fortress Balance Sheet and Buyback: Li Auto ended Q4 with $8.11 billion in cash and equivalents and a board-approved $1.0 billion share repurchase program valid through March 31, 2027. Capital returned to shareholders while maintaining financial flexibility is a durable compounding signal for long-term accounts.

What Will It Take for LI to Reach $22?

With 846.7 million shares outstanding, a $22 price target implies a market capitalization of roughly $18.6 billion, up from the current market price of $17.58. Achieving that requires three conditions: a successful Li L9 launch that stabilizes or expands vehicle margins above the 16.8% Q4 level; delivery recovery beyond the guided Q1 2026 range of 85,000-90,000 units; and easing of China’s EV price war pressure that has driven quarterly revenue down to $4.11 billion from prior-year levels.

The primary risk is that margin compression deepens further into mid-2026 if the L9 ramp disappoints or competition intensifies before the new model gains traction. With a strong cash position, an active buyback, and a meaningful product catalyst on the near-term horizon, Morgan Stanley’s $22 Overweight target reflects a credible recovery case for patient investors willing to look past the current cycle trough.