The "Outsider" in the Frenzied Car Market

Author | Chai Xuchen

Editor | Wang Xiaojun

Anxiety is almost an unavoidable word for all brands in the current automotive market. However, Li Auto, which excels at boosting sales and "rolling out weekly rankings," has turned itself into an "outsider" in this restless market.

At the Shanghai Auto Show at the end of April, Li Auto Chairman Li Xiang made a rare appearance, introducing three new models in one go: the L6 refreshed version, the MEGA Ultra refreshed version, and the grand finale MEGA Home family special edition.

This is Li Auto's renewed commitment to the family market, directly making features like zero-gravity rotating seats, smart electric suction doors, and RNC active noise cancellation standard on the 559,800 yuan MEGA Home.

From the expansion of the MEGA family, it can be seen that Li Auto has not lost its footing due to last year's turmoil; not only has it not cut this product line, but even the exterior and interior have not changed. In a post-event interview with Wall Street Insight, Liu Jie, President of Li Auto's product line, frequently mentioned the term "returning to user value."

Liu Jie candidly told Wall Street Insight that since last year, the internal focus has shifted more towards user satisfaction. "It's not that we don't make mistakes or have fluctuations. When defining a product, whether to sit in the office comparing competitors or to go out and engage with users makes a difference."

"Our internal findings show that when we can clearly articulate the value of (products/technologies) to users, the cohesion among departments like R&D, supply chain, and product line is extremely strong. However, if configurations are added due to competition, internal disagreements can easily arise," Liu Jie stated.

Therefore, products like MEGA Home are crafted in this manner and are one of the core elements that attract loyal family fans.

It is worth mentioning that a leading new energy vehicle company previously revealed to Wall Street Insight that Li Auto's models have stable sales capabilities, while most other manufacturers need events like press conferences to generate marketing buzz. Engaging with family users to "fine-tune details" may be the reason behind this.

However, the family market and extended-range SUV segment ignited by Li Auto are seeing an increasing number of competitive products entering the fray, and pure electric vehicles have become key for Li Auto to initiate the next phase of growth. Yet, the first pure electric model, the i8, will not be launched until July this year, and insiders close to Li Auto have revealed that the internal sales expectation for pure electric models this year is only less than 100,000 units.

Such a measured plan does not seem to align with the typical approach of this new force dark horse. How does Li Auto think about this; when will the pure electric series take over the current L series as the main force?

Below is the transcript of the conversation with Liu Jie, President of Li Auto's product line, and Tang Jing, President of the first product line:

Question: Today, MEGA launched the refreshed version. Does MEGA have any new marketing strategies compared to last year? Liu Jie: Over the past year, we found that the core consumer group for the Li Auto MEGA remains family users, who generally own or have previously used MPVs. Therefore, we launched the Li Auto MEGA Home, mainly considering families that often travel with elderly and children, providing them with a more convenient and experience-filled space.

Since last year, we have focused more on NPS, which is user satisfaction. Whether meeting users offline or continuously developing more comfortable and convenient accessories, we are committed to enhancing the user experience. This year, the Li Auto MEGA will continue to focus on user satisfaction, just like last year, rather than marketing.

Q: Over the past year, what is the biggest experience and lesson learned internally after MEGA?

Tang Jing: It still comes back to focusing on user value. For MEGA users, we pay attention to existing users and satisfaction, continuously improving the product, and while developing MEGA Home, we also think about what users really need.

For example, the seat rotation function we are currently working on does not mean we need to rotate it to 180 degrees first. Our starting point is to rotate it to 45 degrees to solve the problem of elderly getting in and out of the car, and then think about what other problems can be solved, such as being able to see the children playing in front at 90 degrees. Our thought process focuses on user value and user experience, surpassing the focus on competition and what others are doing.

Liu Jie: It’s not that we don’t make mistakes or have fluctuations from time to time. When defining a product, whether to sit in the office comparing competitors or to go out and talk to users is a very different approach.

After the product line team was newly formed last year, Old Tang took his team to the front line to chat with users, so the MEGA Home special family edition was actually created together with the users. Users do not directly ask for a rotating seat; they will say that when they buy this car today, what problems do they still need to solve.

For example, as Li Xiang mentioned at the press conference, for MPVs to make the seats more comfortable, the armrests on both sides are fixed, which makes it difficult for elderly people to get out from the side; they have to stand up first and then get out. Many users told us a particularly typical scenario where they take elderly people to the hospital for treatment or check-ups. They feel that in terms of seating comfort and floor height, MEGA is the first choice, but when they actually arrive at the hospital, they find it not so convenient to help the elderly get in and out of the car.

Qin Zhi, a partner of Li Xiang during his time at Autohome (and also a MEGA user), said, can you provide a version without the outer armrest? Li Xiang also shared this story at the press conference, which is why we later developed the 45-degree rotation.

I only bought one child safety seat for my family, and it was really painful to install the child safety seat on the original MEGA. The high armrests on both sides made it difficult, and the child safety seat is relatively large, getting stuck on both sides. It was hard for me to exert force while leaning in. So when the seat rotates 45 degrees or 90 degrees, installing the child safety seat becomes very convenient Later, Lao Tang went to the front line to talk with users. We have the first batch of users who strongly support us after picking up their cars, saying that the MEGA feels similar to the L9 and hope for some time that can allow the whole family to stay together.

Lao Tang came back and pondered how to create a new experience. Eventually, MEGA Home introduced a parent-child seating mode. If one side of the seat rotates 180 degrees, the mother can take care of the child face-to-face, and in this mode, none of MEGA's seven seats will be sacrificed, and getting in and out of the third row will not be affected at all.

Tang Jing: If we look at competition, it’s easy to form a mindset where if others create zero gravity, I will create zero gravity too; if others do rotation, I will do rotation as well. But the real need of users is to have both zero gravity and rotation without having to make a trade-off. The reality is that users see some rotating seats in the market and have two choices: either choose zero gravity or choose rotation, but they can only pick one.

Liu Jie: We found internally that when we can clearly articulate the value of (products/technologies) to users, the cohesion among departments such as R&D, supply chain, and product lines is extremely strong. Everyone will say, “This thing is so valuable to users.”

When we say we need to have this configuration because of competition, it’s actually very easy for internal disagreements to arise. For example, one colleague might say they want this configuration, while another might say, “Why this one? I think this is more important, and others have it too,” leading to very poor cohesion.

The challenge of developing rotating zero gravity seats is very significant, but because Lao Tang took the R&D colleagues to meet users, he explained very clearly to them why users need this, and ultimately they overcame the challenges together.

Tang Jing: This is a true story. After the first evaluation with Li Xiang, he felt that the foot space was inadequate. That night, around 10 PM, I made two special calls with the project leader of R&D and the head of seating, asking, “Do you all think the rotating zero gravity seat is good?” The idea is good, but if the turntable is too large, then the foot space will be unacceptable, and this product cannot be delivered.

I believe we have the opportunity to create a product we can be proud of. If we complete this product and truly deliver the world's first seat that has both zero gravity and rotation, you will be proud of it, and you can proudly tell your family and children, “This is a product you made!”

Question: What is the plan for the i series this year?

Liu Jie: I believe everyone will ask why the first pure electric SUV, the Li Auto i8, was only launched in July this year. In fact, we feel a lot of pressure, and many users are very anxious and urging us, but our goal is to create the best product.

The Li Auto i8 has already started trial production in the factory, but the vehicles produced during trial are mainly used for road testing. Although the Li Auto i8 is a pure electric vehicle, the road testing mileage is very long to ensure the best quality.

Since last year, after the launch of MEGA, we have visited multiple cities and found that the main user group for the L series models is families replacing their fuel vehicles. The first type of users who are most looking forward to the i8 are those in coastal areas with a good pure electric atmosphere, and the second type is families with children who primarily use new energy vehicles and have a high intention for pure electric vehicles. They currently own one new energy vehicle For example, Tesla's Model 3 or Model Y, however, as family members increase, they need more space.

But these users are unwilling to give up pure electric vehicles and prefer to replace them with another pure electric vehicle. Currently, there is a lack of suitable products in the market for them. Therefore, the main target user group for the Li Auto i8 is families with children, who are the main users of pure electric vehicles and have a high intention to purchase pure electric vehicles.

First, the Li Auto i8 is a six-seat model, which is a necessity for many families with children. A six-seat vehicle can be used as a two-row seat vehicle, but a two-row seat vehicle cannot be used as a six-seat vehicle.

Second, the Li Auto i8 is a pure electric SUV, but its shape is particularly different from traditional SUVs. We hope it has the size of a mid-to-large vehicle and spacious interior space, so its shape is unique. Although the length of the Li Auto i8 is 5085 mm, this vehicle can still have a relatively good energy consumption performance when fully loaded. This is why the shape of the Li Auto i8 is different from that of fuel or range-extended SUVs. When you experience it, you will find that getting in and out of the Li Auto i8 is extremely convenient, even more so than existing high SUVs and low sedans.

Third, the Li Auto i8 will come standard with a 5C supercharging battery and all-wheel drive. When there are more passengers during family outings, all-wheel drive is not just for off-road use; more importantly, it can improve driving safety, which is very important for dealing with rainy and snowy weather.

In terms of interior space, especially vertical space, the Li Auto i8 performs comparably to the L9, which is why it is said that the Li Auto i8 is a new form of SUV.

In addition, regarding the pure electric series and range-extended series, sales will still follow a direct sales model and will not be sold through sub-networks, similar to Apple. In Apple retail stores, whether it is the cross-category Watch, Pad, Mac, MacBook, or iPhone, they are all sold and experienced in Apple brand stores. We insist on One Brand, not Two Brands.

We have indeed gained some insights from the sales process of the Li Auto MEGA. After reviewing, we found that MEGA was sold simultaneously in stores nationwide, with each store required to showcase it and arrange experiences. However, the final transactions were mainly concentrated in first-tier cities and new first-tier cities, especially those with a good pure electric environment, such as Shanghai and Beijing.

In contrast, the audience range for the Li Auto i8 is broader. In terms of resource investment and focus, we may concentrate more on first and second-tier cities and coastal areas, where the pure electric vehicle usage environment is relatively good. We will focus our investment and provide users with key experiences. Relatively speaking, in northern and western cities, users may pay more attention to range extension. We will also ensure experiences for the Li Auto i8, but we may not make every city and every store the same. We will invest resources according to local conditions, which is the sales planning for the Li Auto i8 Q: Why was the i8 released first?

Liu Jie: Although the L9, L6, and MEGA have greater exposure on stage today, the core strength still lies in the L7 and L8 models priced at 300,000 to 400,000 yuan.

The most important users of the i8 are families' primary vehicles, and it may be a replacement model for users of new energy vehicles in the price range of 150,000 to 250,000 yuan. For these users, the Li Auto i8 is a necessity.

The Li Auto L8 precisely meets the needs of families with children. These users may be unwilling to upgrade to models priced above 400,000 yuan but still require a six-seater vehicle, so the L8 is also a necessary model. Ultimately, the i8 must first satisfy the needs of families' primary vehicles.

Q: It seems that Li Auto's expectations for pure electric vehicle sales are not aggressive. When will the pure electric i series be able to catch up with the L series in scale?

Liu Jie: It's not a matter of catching up. Last year, we set the sales target for MEGA early on, but such externally announced sales targets have no real value for users; they are just corporate goals. Therefore, starting from the i series, we hope to focus more on user value. In the future, we will have three clear product series: the L series, the i series, and MEGA.

Regarding the sales of the i series, we believe that the i8 and i6 are the first two pure electric SUV products. From the user's perspective, we still have a lot of solid work to do. For example, users currently have no concept of the experience of Li Auto's pure electric SUVs. Although MEGA users are enjoying the Li Auto supercharging, that is a very small group. The awareness of the convenience of charging provided by Li Auto among pure electric users cannot be compared to the large-scale pure electric user bases of Tesla and Nio; we are still far behind.

Therefore, from the very beginning, we hope to focus on user value in the i series. There are certainly internal sales targets, but we want to communicate these sales targets to consumers. Internally, we hope to become a top-tier pure electric brand within three years, steadily improving around pure electric products, pure electric experiences, and pure electric services.

When we first launched MEGA last year, we talked about 5C supercharging, which we thought was excellent. However, when we actually interacted with users, they had no idea about it. They asked, "Can you show me where there is a 5C supercharger near my home?" Users couldn't perceive this, which is one issue.

Secondly, when we were developing the range extender, we didn't emphasize charging route planning enough. MEGA users said our charging route planning wasn't done well, so we have been iterating on that since last year. Additionally, when users arrive at the charging station, whether the charging station's drop-down lock and plug-and-charge are convenient enough has also been continuously upgraded. These are things we must solidly work on.

We often say internally: "Eat nine buns, one at a time. Just because you are full after eating nine buns doesn't mean you can skip the first eight." Although many companies talk about user value, whether they can truly implement the user needs and feedback they receive and continuously improve based on positive user feedback is a significant test of the team's long-term, meticulous cultivation ability Releasing a technology is not difficult, but there is still a long way to go from releasing a technology to whether it is ultimately usable for consumers. This is why we do not frequently mention the sales of Li Auto i8 and i6.

Q: Will Li Auto's pure electric series have a core label?

Liu Jie: If today’s target is family users as the main vehicle, it needs to have no shortcomings, rather than relying on a single point to explode.

If today’s target is a group of young, individual car users, they purely need to consider their own needs and think it looks cool and stylish before they can buy it; for family users, the key is that when purchasing a car, they are not making the decision alone. They have opinions from their spouse, elders, and even the children at home need to be asked if they like it.

Because of the relationship with users, we do not overly believe that we can rely on a single point to explode, but rather strive to do our best in all aspects that users care about. There are certain trade-offs in this process; for example, because we are positioning for family users, although we standardly equip four-wheel drive, we will not aim for three-second acceleration.

You will also see that in Li Auto's SUV models, although we have six seats, we will not sacrifice the functionality of other seats. There is no absolute right or wrong; it is just our choice.

Q: Li Auto L6 Pro is equipped with laser radar as standard. How does Li Auto make trade-offs in this regard?

Liu Jie: The reason we chose to standardize laser radar is a very important one: nighttime safety. Cameras are similar to human eyes; visual recognition has limitations at night or in poor visibility conditions, so laser radar plays a major role in this aspect.

We also demonstrated emergency avoidance at night; continuous emergency avoidance in dual lanes cannot be achieved without laser radar. In the past, without laser radar, nighttime AEB could only reach about 80 kilometers per hour, which is basically the limit of the camera. Before we standardized laser radar, we had already pushed the visual algorithm to its limits for nighttime AEB recognition, which is why we standardized laser radar this time.

Q: Now that both Pro and Max models have laser radar, will this lead users to prefer the Pro model?

Liu Jie: We are not particularly worried about this. The choice between versions is entirely based on user needs.

The Pro model is indeed the sales mainstay of L6, but for L7 and L8, the sales proportion of AD Max models has already exceeded 70%, which includes Max and Ultra versions; the proportion of L9 AD Max models has reached over 80%.

So we are not particularly worried that after standardizing laser radar, users will buy more Pro models. We must believe that AD Max advanced driver assistance can bring value to users. If users choose between Pro and Max solely based on whether laser radar is equipped, it indicates that our product is not well done.

Q: What do you think is the biggest difference in product development this year compared to last year and the time of ONE? What is Li Auto's top priority in product development now? Liu Jie: First, let's look at what hasn't changed. From ONE to today, we have always focused on family users. There are now many brands in the market claiming to focus on family users. We have also experienced some confusion in the middle, but we believe we must ultimately return to the essence of family users: safety, convenience, and comfort.

Tang Jing: The three words serve a significant purpose; they allow us to focus our discussions. Otherwise, engineers might treat product development as just a task. I believe it is essential for all engineers, all product managers, and everyone to focus on our family users. Are we creating products that are safer, more comfortable, and more convenient for them? This is what differentiates us from other brands and products.

Liu Jie: We once added "smarter" after safety, convenience, and comfort, but later we thought it wasn't quite right. We are not pursuing intelligence for the sake of intelligence. What value does the capability of intelligence and AI ultimately bring to users? Is it making users more convenient, more comfortable, or safer? So, in the end, it still comes down to these three words. Intelligence is not merely for the sake of presence; it is a means, and I believe that hasn't changed.

What has changed? The biggest change is that we have more products. We now have four models in the L series and MEGA, and there will be i series products in the second half of the year, including 5-seater, 6-seater, MPV, and SUV, targeting different family users.

For example, you might think L6 and L7 are very similar, just differing in budget, but that's not the case. 50% of L6 users are families of three, while 50% are married couples without children or families about to get married. There is also a small portion of older couples, so they are completely different from L7. About 70-80% of L7 users are families of three. The biggest challenge for us is that we cannot generalize family users; each product targets different family users.

Is it useful to move the second-row swivel seats to L9? Not really. Because at that stage, families are not heavy MPV users, and they don't necessarily have the demand to use an MPV to pick up elderly people and children.

Many friends ask us why MEGA didn't change its exterior this time. In fact, we didn't change the interior design either. The reason is that we found there is no need to seek presence in many areas; users like MEGA's appearance. If we changed the design, those who didn't like it wouldn't suddenly like it just because of the change; they would only think, "Look, they must have had problems, which is why they changed it."

Tang Jing: To accommodate the experience after the seats rotate, we adjusted the angle of the air vents to be larger. We made new molds for this; although they look the same, after adjusting them slightly larger, they can also blow air when turned upside down.

Liu Jie: How can we, under intense competition, avoid being driven by anxiety, fear, insecurity, or our inner desires, and instead focus on doing every detail well around our family users? I believe this is the most challenging aspect at present and should be our top priority Because any company may see that another company has released a new technology, they feel the need to follow suit. But are users really satisfied after adopting it? Will users actually use it? Do users truly love using it? This poses a significant challenge for everyone involved in product development, as people around you will ask why you haven't adopted this new technology. This is our biggest challenge; we need to clearly explain internally why we are pursuing this initiative, which is currently the top priority in product development.

Q: The term "household users" is relatively vague. After all, the demographic structure is changing. What do these four words mean in terms of product form or functional configuration this year?

Liu Jie: The population is indeed changing. For example, there are fewer families with two children now, so the demand for five-seater cars has increased, while the demand for six-seater cars exists but is definitely a necessity. Changes in demographic structure are a long-term process, typically on a 5-10 year cycle.

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