On June 19, Morgan Stanley issued a report revealing that Li Auto's (LI.O) American depositary receipts (ADRs) and Hong Kong shares both declined by 4%. This underperformance is primarily attributed to the deceleration in monthly sales accumulation. Concurrently, investors are closely scrutinizing the recent reduction in Li Auto's shareholding by Wang Xing, the founder of major shareholder Meituan. The report highlighted that in early June, heightened market competition sparked intensified price wars, prompting some consumers to adopt a wait-and-see approach, leading to a modest market start. Furthermore, adjustments to Li Auto's channel strategy might have dampened recent sales momentum. However, Morgan Stanley holds the view that these impacts will be transient, and order momentum will swiftly rebound. Moreover, the subdued sales in June will not derail the trajectory of operational recovery in the second half of the year. The rollout of the new model cycle will bolster operational recovery. Morgan Stanley also anticipates that, amidst lowered expectations, the Li Auto team may introduce more competitive pricing, heralding a pleasant surprise for the upcoming i8 model. Consequently, the institution reaffirms its 'Overweight' rating for Li Auto and retains its target price for American depositary receipts at $36.