How are macro‑economic factors in China, such as consumer demand and government EV subsidies, reflected in the Q2 2025 results?

Fundamental view:  Li Auto’s Q2 2025 numbers will be a direct barometer of China’s broader macro‑economics. Recent data show a gradual rebound in household consumption after the 2024 slowdown, driven by higher disposable income in Tier‑2/3 cities and a renewed “green‑lifestyle” mindset. At the same time, Beijing’s extension of the NEV purchase subsidy (now 20 % of the vehicle price for models under ¥200,000 and a ¥30,000 cash rebate for home‑charging installation) has lifted the effective price‑gap between Li Auto’s plug‑in hybrids and conventional gasoline SUVs. Expect the company to report stronger‐than‑trend deliveries in the 15‑20 % YoY range, higher average selling price (ASP) stability, and a modest uplift in gross margin (≈300‑350 bps) as subsidy‑linked cost offsets are realized. Any miss on these metrics would signal that the consumer demand rebound is still fragile and that the subsidy ceiling is being reached, prompting a short‑term re‑rating.

Technical & trade implications:  The stock has been trading in a tight 20‑day range (USD 24.5‑26.0) ahead of the earnings window, with the 50‑day SMA (≈USD 25.2) acting as a pivot. A clear beat‑and‑raise on deliveries and margin should push the price above the upper bound and trigger a breakout above the 20‑day high (≈USD 26.0) with bullish volume – a good entry point for a long position targeting the $28‑30 zone (≈3‑4 % upside) and a stop‑loss just below the 50‑day SMA. Conversely, a miss—especially on subsidy‑adjusted ASP—could see the price retest the lower band and break the 20‑day low (≈USD 24.5), offering a short‑bias trade with a target near $22.5 and a stop above $25.5. Keep an eye on post‑earnings commentary for guidance on the next phase of China’s EV subsidy policy and consumer‑credit trends, as those will dictate the longer‑term bias.