Li Auto urgently needs a new wave of sprint

Author | Chai Xuchen

Editor | Wang Xiaojun

After experiencing a sales slump in the first half of the year, Li Auto urgently needs a boost.

On the evening of May 29, Li Auto released its first-quarter financial report, showing a delivery volume of 92,900 units, with total revenue slightly increasing by 1.1% year-on-year to 25.9 billion; the net profit for the quarter was 647 million, a year-on-year increase of 9.4%, making it the only new force in the industry to achieve profitability for ten consecutive quarters.

Breaking it down, Li Auto's vehicle revenue in the first quarter reached 24.7 billion, exceeding market expectations of 24.1 billion. This was supported by an improvement in the model structure. The proportion of the entry-level L6 decreased, while the share of high-margin Mega/L9/L8 models increased, offsetting the impact of price reductions on older models during the quarter.

Overall, Li Auto's performance in the first quarter was basically in line with expectations, but market concerns mainly focused on its judgment for Q2.

In the Q2 guidance, the implied average selling price per vehicle is expected to decline by 13,000 yuan; at the same time, the sales guidance of 123,000 to 128,000 units implies that sales in May and June will be less than 50,000 (45,000 to 47,000 units). The industry originally believed that after the new version of the L series was launched in early May, the sales in the first full month of delivery could reach 50,000 units, but it seems that the order volume for the L series is significantly below expectations.

The pressure on Li Auto is understandable, as the current market has become increasingly competitive.

Firstly, Li Auto's "comfort zone" has turned into a red ocean. According to data from the China Passenger Car Association, the sales of pure electric and plug-in hybrid vehicles in the first quarter grew by 45% and 63% year-on-year, while the sales of extended-range vehicles only increased by 3.5%, falling short of the market average and far below the growth rate of new energy vehicles.

The market pie is no longer expanding, but competitors are becoming increasingly aggressive, and the benefits of extended-range vehicles are gradually peaking.

Competitors in the same class, such as the Denza N9, Lynk & Co 900, and Deep Blue S09, have good order volumes, which to some extent have taken a share from Li Auto; the directly competing Aito is also continuing to launch the M series facelift, vying for sales. The extended-range family SUV segment that Li Auto prides itself on is facing the pain of diminishing competitiveness.

This year, Li Auto's facelift for the extended-range models mainly focuses on intelligent driving upgrades. Due to the turmoil in the assisted driving industry, Li Auto's generational change has not yet brought in more potential users. However, during the financial report conference that evening, Li Auto's Senior Vice President Zou Liangjun stated, "We are confident that the sales of the new version will return to a monthly sales level of 50,000." Based on current trends, Li Auto may return to high sales in June.

While the growth of the L series is slowing down, Li Auto's second curve—its pure electric series—has begun to show signs of releasing incremental growth.

During the financial report conference, Chairman Li Xiang announced a figure: the newly refreshed MEGA orders have increased by over 150%, far exceeding the previous internal expectation of 50%. After the turmoil in March last year, Li Xiang set a new sales target for MEGA: "We are working hard, and MEGA will soon achieve a stable delivery volume of 2,500 to 3,000 units per month, and this can be sustained." Beyond the flagship, whether the i series pure electric SUV can take over is even more critical.

According to the plan, the Li Auto i8 and i6 will be released in July and September, respectively. With known improvements in range, assisted driving capabilities, and intelligent space capabilities, can the Li Auto i series continue the achievements of the range-extended L series?

This time, Li Xiang revealed the characteristics of the i series: "VLA intelligent driving large model, innovative design, maximum space, minimum energy consumption, satisfactory handling stability and comfort for everyone, and further advancements in charging."

The increasingly expanding mid-to-high-end pure electric market has also become a reason for Li Auto to accelerate its commitment to pure electric vehicles. Zou Liangjun expects that this year, the market capacity for pure electric vehicles priced above 200,000 will reach 2.13 million units, while PHEVs will be around 1.69 million units.

"After the launch of pure electric models, we will enter a larger market space," Zou Liangjun stated, noting that the L series is an "upgrade solution for the existing fuel vehicle ownership group"; the pure electric family represented by the i6/i8 is Li Auto's "upgrade solution for the new energy ownership group." He believes that under the new product matrix, the overall sales growth this year can achieve "twice the overall growth rate of the new energy market above 200,000."

To achieve this goal, Li Auto has positioned channel penetration as the core marketing plan for this year, officially named "Starry Sky."

Zou Liangjun mentioned that in the third and fourth-tier cities of Sichuan Province, such as Zigong and Dazhou, since the opening of Li Auto stores in September last year, they have achieved a market share of 28% for passenger cars above 200,000 in less than six months.

Therefore, this year, Li Auto will further promote the Starry Sky plan in 100 cities to bring new growth to sales. He casually threw out a new flag—through the Starry Sky plan targeting fourth and fifth-tier cities, by 2026, these cities could contribute over 100,000 units in total sales.

It is evident that Li Auto is still striving to squeeze out growth in the red ocean market. This year, more Chinese car companies are choosing to go overseas, hoping to transform the accumulation and sedimentation of the past decade in the new energy industry into global sales.

2025 will also mark the tenth anniversary of Li Auto, making the search for new growth routes an important topic for this organization with a workforce of 40,000. Zou Liangjun revealed that in the coming years, Li Auto will focus on the Asian and European markets, recruiting mature dealers in these regions. He set a goal for the future: to have overseas market sales account for 30% of total sales.

Connecting the aforementioned goals, Li Xiang put forward a bigger vision—striving for an annual revenue of 300 billion.

"Once the range-extended SUVs, pure electric SUVs, and Li Auto MEGA all begin deliveries, it can support Li Auto in achieving an annual revenue scale of 300 billion," Li Xiang stated at the earnings conference. Only after reaching this scale will the new products launched by Li Auto be "more suitable MPVs and sedans" built according to real market demand.

According to Li Auto's first-quarter data projections, this annual revenue of 300 billion requires a sales scale of 1.1 million units to support it. However, in the ever-changing competitive environment, can Li Auto persist in steering towards the shore? The upcoming pure electric and AI strategies will be crucial