Li Auto’s Q3 2025 earnings call delivered more than quarterly results—it doubled as a strategic manifesto. The company reported 25.86709 billion RMB in automotive revenue with a 15.5% gross margin, but the figure masks a significant one-time expense. After accounting for the MEGA recall impact, the adjusted automotive gross margin reaches 19.8%, revealing the true operational cost of the 11,411-vehicle campaign.
Financial mathematics behind Li Auto’s recall proves straightforward. Multiplying 25.86709 billion RMB by the 4.3-percentage-point margin difference yields 1.11228 billion RMB in total recall expenses. Distributed across 11,411 affected vehicles, that works out to roughly 97,475 RMB per unit, or about 97.5k RMB per MEGA owner.
What does that buy? Each service center visit includes a complete 102.7 kWh high-voltage battery pack replacement, front motor controller swap, and cooling fluid refresh. Li Auto sweetened the deal by extending warranty coverage from 8 years or 160,000 km to 10 years or 200,000 km.
CEO Li Xiang used the earnings call to outline what investors might consider Li Auto’s master plan. The company isn’t just iterating on electric vehicles, it’s repositioning for what it calls the embodied intelligence era.
Three pillars anchor the strategy. First, organizational restructure: starting Q4, Li Auto returns to the flat-hierarchy, rapid-decision model that defined its startup phase. Second, product evolution: over the next decade, the company says its core offering won’t be EVs or connected devices but embodied robots. Third, technology development: the proprietary M100 chip leverages customized GPU architecture and dedicated operating systems designed specifically for embodied intelligence challenges.
“If model runtime frame rates can go 2–3 times faster, we can solve some of the comfort issues and slow response we still see in today’s ADAS systems,” the company stated.
Additional R&D includes 3D neural-controlled drive-by-wire and active hydraulic suspension systems. Li Auto claims its drive-by-wire steering reduces the sensing-to-actuation pipeline by 200 milliseconds, potentially cutting accident rates by half.
Li Xiang closed with a bold projection: “100 billion RMB in revenue is only the starting line.” For Li Auto, the MEGA recall might be expensive table stakes in a much larger game.
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