- Li Auto acknowledged its slowdown in action during a strategic meeting, planning to speed up its product release pace and expand its overseas market efforts.
- Li Auto also admitted underestimating Xiaomi, unexpectedly facing heightened competition in China’s auto market due to the YU7 SUV’s strong sales performance.
Li Auto (NASDAQ: LI, HKG: 2015) — which shifted from robust to sluggish sales over the past year — held a three-day closed-door strategy meeting in mid-October to reflect on declining sales, R&D, and product issues, according to a report today by local media outlet 36Kr.
Following the meeting, the company decided to adjust its vehicle lineup, product strategy, and R&D approach, intensify overseas market expansion, and increase investment in AI, the report said.
Li Auto concluded that its previous four-year cycle for major vehicle platform iterations is no longer sufficient to meet current competitive pressures, thus shortening this cycle to two years.
Regarding product design and R&D, the company has decided to enhance differentiation among future models, relying more on design language to distinguish them.
This suggests Li Auto may abandon its family-style product design approach, where one platform dictates one aesthetic, allowing greater exterior variation across different models, 36Kr noted.
The company also acknowledged underestimating Xiaomi (HKG: 1810, OTCMKTS: XIACY), as the strong sales of Xiaomi’s YU7 SUV unexpectedly intensified competition in China’s automotive market, according to the report.
Li Auto’s R&D department is considering establishing an independent system, similar to the architecture division recently formed by Xiaomi EV, to engage in more product innovation, the report said
The company has also reevaluated its overseas expansion strategy, deciding to increase its international focus.
At strategic meetings two years ago, Li Auto determined that overseas market expansion would not be a strategic priority for a relatively long period.
The company believed at the time that serious consideration of overseas expansion might not occur until after 2028, with overseas supply primarily relying on parallel vehicle exports until then.
At this year’s strategy meeting, Li Auto reflected that its biggest mistake was delaying full-scale overseas expansion. It will now accelerate its official overseas deployment pace, according to 36Kr.
Li Auto previously relied on parallel exports to markets like Russia, the Middle East, and Central Asia, with monthly exports peaking at 4,000 units.
However, since the start of this year, Russia and many Central Asian countries have introduced restrictive policies, eliminating the low customs clearance cost advantage for Chinese parallel exports, the 36Kr report stated.
Li Auto’s parallel exports to overseas markets have now dropped to several hundred vehicles per month, according to the report.
Additionally, Chinese authorities are cracking down on the export of new vehicles disguised as used cars, which could completely sever Li Auto’s parallel export channels, the report noted.
Li Auto established a 30-person team in 2021 dedicated to overseas market promotion and strategic analysis, but this team was reassigned to domestic operations by early 2022.
Li Auto’s overseas strategy has remained inconsistent over the past few years.
Its founder, chairman, and CEO Li Xiang said in 2023 that Li Auto would not expand into overseas markets before 2025. However, in February 2024, the company announced plans to expand overseas through a direct sales model, only to shift to a partially dealer-based sales approach by May.
This year, Li Auto has prioritized expanding into the Middle East, Central Asia, and Europe, opening its first overseas retail center in Uzbekistan last month.
Li Auto announced on October 14 that all new models scheduled for release in 2026 will comply with overseas market regulations.
All four of Li Auto’s EREV models saw monthly deliveries plummet over 60 percent, while the i6 and i8 each delivered nearly 6,000 units in October.
