Li Auto Shares Face Mounting Pressure Amid Safety Recall and Delivery Woes

Chinese electric vehicle manufacturer Li Auto is confronting a severe market downturn as a major vehicle recall compounds existing operational challenges. Investor confidence has been shaken, triggering a wave of selling activity that shows no signs of abating.

Technical Indicators Signal Extreme Oversold Conditions

Market data reveals a concerning picture for Li Auto’s stock performance. The equity recorded its fifth consecutive daily decline on Thursday, falling 2.34% to close at $20.49. This extends a troubling pattern that has seen eight negative sessions within ten trading days, culminating in a cumulative drop of 9.22%.

Trading activity showed increased volatility with shares moving between $20.355 and $20.68, representing a 1.60% intraday range. Volume surged by 487,270 shares to reach $96.86 million. Technical analysis indicates the stock has reached extreme oversold territory with an RSI reading of just 19. Meanwhile, short interest has climbed to a notable 23.34%, reflecting growing bearish sentiment among traders.

Safety Concerns Trigger Widespread Vehicle Recall

The company has announced it will recall 11,411 units of its Mega electric van model beginning November 7, 2025. This action addresses a significant safety issue involving insufficient corrosion protection in the cooling system, which could lead to damage and leaks in aluminum cooling plates. In worst-case scenarios, this defect potentially creates conditions for battery thermal runaway.

The recall affects vehicles manufactured between February and December 2024. Li Auto’s decision comes in response to a fire incident involving a Mega vehicle in Shanghai on October 23. As part of the remediation, the company will replace coolant, batteries, and motor controllers at no cost to owners.

Should investors sell immediately? Or is it worth buying Li Auto?

Delivery Figures Show Sustained Decline

Operational challenges extend beyond the immediate recall concerns. September delivery numbers revealed a sharp contraction, with only 33,951 vehicles delivered—representing a 36.79% decrease compared to the same period last year. This marks the fourth consecutive month of declining deliveries.

The third quarter concluded with 93,211 vehicle deliveries, reflecting a 39.01% year-over-year reduction. These figures indicate significant strain on what was previously considered a growth story in the electric vehicle sector.

Strategic Pivot Faces Headwinds

Li Auto finds itself navigating a critical transition toward pure battery electric vehicles amid these operational setbacks. New models like the Li i6 are intended to recalibrate the company’s trajectory, but they enter an increasingly competitive Chinese EV marketplace.

In response to fiscal policy changes, the automaker has announced it will absorb potential tax differences for i6 orders placed through October 31. However, this measure faces the substantial challenge of overcoming the dual impact of safety recalls and persistent delivery issues. With shares testing new lows, investors are questioning when the downward momentum might finally stabilize.