Investing.com -- HSBC lowered its price target on Li Auto (HK:2015) (NASDAQ: LI) to $15.60 from $17.20 and maintained its Hold rating on the Chinese electric vehicle maker, flagging a more difficult competitive landscape and a weaker near-term profitability outlook as the company’s product refresh cycle gets underway.

The bank also lowered its target for the Hong Kong-listed shares to 61 from 67 Hong Kong dollars.

The company’s U.S.-listed shares slipped 1.4% in premarket trading by 06:17 GMT.

The bank revised its 2026 earnings outlook from a prior profit forecast to a loss, a move driven by three factors: weaker volume estimates, gross margin pressure from cost inflation, and a higher operating expense ratio as the company steps up research and development spending.

HSBC now expects Li Auto’s 2026-28 earnings to come in 6%, 13%, and 9% below Bloomberg consensus, respectively.

The refreshed L9 SUV has shown an encouraging early start, with around 10,000 orders in its first two weeks and a product mix skewed toward higher-end trims. A new L8 model, expected to launch later this month, should provide further support.

HSBC said it expects a gradual recovery in deliveries and profitability through the second half of 2026, but warned that the upside is likely to be more moderate than in previous product cycles.

The bank’s main concern is a structural one. "The key challenge is that industry demand is increasingly shifting towards premium BEVs, while Li Auto remains largely reliant on its EREV franchise," analyst Yuqian Ding wrote.

“With limited BEV refresh catalysts in 2026 and rising competitive intensity across both EREV and BEV segments, we see operational improvement but limited scope for meaningful earnings reacceleration, he added.

First-quarter 2026 vehicle gross margin held steady at 16.8%, reflecting a higher mix of lower-priced i6 BEV models, purchase-tax subsidies, and raw material cost inflation. While HSBC forecasts some margin recovery, it does not expect them to return to prior peak levels of around 19-20% anytime soon.

The new target price of $15.60 implies around 10% upside to current levels, which analysts said is insufficient to warrant a more constructive stance.

“We maintain a Hold rating on the stock as L series volume momentum may be capped this year given the intensifying competition in the large EV SUV segment,” they wrote.