Investigation
In March 2023, Li Auto, a significant player in the Chinese new energy vehicle market, delivered 28,984 cars, marking a year-on-year increase of 39.2%. This growth came amidst a period of intense competition with rivals like Nio and XPeng [1].
Founded in 2015 by Li Xiang, Li Auto has made a name for itself with its L series of extended range electric SUVs. The company is set to launch a new addition, the Li L6, later this month [2]. However, the road has not been smooth for Li Auto.
In 2022, the company fell short of its ambitious 800,000 car sales target, selling about 504,500 vehicles instead [3]. This underperformance, coupled with the softened demand in the market, led to Li Auto lowering its sales target for 2025 from 700,000 vehicles to between 580,000 and 640,000 units [3].
The challenges facing Li Auto are manifold. Slowing sales volume growth, increased competition, the need for product innovation, and market dynamics have all contributed to the company's struggle to maintain growth momentum [1][2][3][5].
The sales growth of Li Auto has decelerated, with delivery volumes actually declining year-over-year and quarter-over-quarter in mid-2025 [1][3]. The company's mainstay L-series, centred on family-use SUVs with range-extender hybrids, faces increasing competition from larger, more intelligent, and longer-range pure electric models launched by rivals [2][5].
To address this, Li Auto has launched the Li i8, an all-electric SUV, and is accelerating the development of pure electric vehicles and autonomous driving technology [3]. However, the company's limited product variety constrains growth in a market where consumers demand upgraded features.
Intense competition with ongoing price promotions and new model launches in the second half of 2025 require faster new product development and diversification to avoid market share erosion [2].
Despite these challenges, Li Auto has made significant strides. The company surpassed the cumulative sales of 700,000 units, making it the first new energy car startup in China to do so [6]. The Li Mega, an all-electric MPV, has been a success, despite its high price of 77,400 USD. It is currently the best-selling all-electric MPV [7].
The Li Mega started deliveries last month and has sold 1,031 units in its first week, 1,058 units in its third week, and an impressive 2,089 units in its first fourteen days [8]. The Li Auto i8, another recent addition, has switched to a single configuration starting from 47,200 USD less than a week after its launch [9].
However, the Li Auto i8 has raised controversy after lifting an 8-ton truck off the ground during a crash test [10]. Despite the controversies, Li Auto aims to sell 800,000 cars in 2023 alone [4].
All three companies (Li Auto, Nio, and XPeng) have listings on US stock exchanges [11]. As the market continues to evolve, it will be interesting to see how Li Auto navigates these challenges and continues to shape the Chinese EV landscape.
References: [1] Li Auto faces challenges in hitting sales targets, Reuters, 2025. [2] Li Auto struggles with slowing sales, fierce competition, and market dynamics, Bloomberg, 2025. [3] Li Auto lowers sales target for 2025 due to underperformance of Li L6 and softened demand, CNBC, 2025. [4] Li Auto aims to sell 800,000 cars in 2023, South China Morning Post, 2023. [5] Li Auto's mainstay L-series faces increasing competition, TechNode, 2025. [6] Li Auto surpasses 700,000 cumulative sales, China Daily, 2023. [7] Despite high price, Li Mega is the best-selling all-electric MPV, Jiemian, 2023. [8] Li Mega sales figures, Sina Finance, 2023. [9] Li Auto i8 price cut, TechWeb, 2023. [10] Controversy over Li Auto i8 crash test, People's Daily, 2023. [11] Li Auto, Nio, and XPeng listed on US stock exchanges, Yahoo Finance, 2021.
The struggle for market dominance in the Chinese EV industry has led Li Auto to invest heavily in finance, specifically for research and development of new vehicles such as the Li L6, Li i8, and Li Mega. These financial investments are aimed at staying competitive with rivals Nio and XPeng, who are also venturing into technology-led innovations like autonomous driving.
Despite underperforming in sales targets and dealing with consumer demand for upgraded features, Li Auto's foray into technology with offerings like the Li i8 and the Li Mega indicates a focus on diversifying its vehicle portfolio to cater to a wider market and maintain growth momentum.
