In the last decade, sales of electric cars around the world have surged. The number of vehicles on the road doubled in 2021 to a new record of 6.6 million, with more now sold each week than in the whole of 2012. Despite strains along global supply chains, sales have kept rising strongly in 2022, with two million EVs sold worldwide in the first quarter alone.

In China, the growth was even more pronounced as sales nearly tripled in 2021 to 3.3 million, accounting for about half of the global total. The unprecedented adoption indicates that customers are increasingly looking to combat record-high fuel prices that have plagued budgets this year.

Driving a charge to secure a lucrative chunk of China’s New Energy Vehicle (NEV) market is the emerging brand, Li Auto. Specializing in premium smart EVs, the company is pioneering the commercialization of extended-range electric vehicles (EREVs). The company’s first model, the Li ONE, is a large premium SUV equipped with a range extension system and advanced smart vehicle solutions. With volume production beginning in November 2019, it has gone on to deliver over 124,000 Li ONEs by the end of 2021.

As one of the most competitive SUV models in China, it has been well positioned to capture the huge growth opportunity of the SUV segment; offering users the performance, functionality, and cabin space of a large premium smart SUV, while being priced closer to compact alternatives.

Riding the local and global industry momentum, the company is delivering record sales while forecasting for the growth to continue. Its ambitious targets include being the number one smart electric vehicle maker in China, seeking to obtain a 20% market share with sales in excess of 1.6 million units by 2025.


In 2015, Li Auto was created by Li Xiang, whose previous success included Autohome, the automotive sector of the popular Chinese retail and advertising platform, PCPop. After being one of the first celebrities to obtain the very first Tesla’s delivered to China, Li was inspired to bring NEVs to the country. Operating alongside several high-profile partnerships with suppliers like Bosch, BorgWarner, Panasonic, and Valeo, the first Li One deliveries began in 2020.

When deliveries started in the middle of the covid-pandemic, the Li One made a slow commercial start, however, the car quickly grew on the Chinese audience, and sales continued to accelerate, even in the face of competitors adopting the company’s design principles.

Growing excitement at the company’s prospects saw Li Auto debut on the Nasdaq after raising over a billion dollars in one of the largest IPOs in the U.S. by a Chinese company since Tencent and fellow EV maker, NIO.


Founder Li Xiang continues to oversee the company as chief executive officer and chairman of the board, maintaining responsibility for the overall strategy, product design, business development, and management. Including his success at the dual-listed Autohome where he served as its president from 1999 to 2015 to make it the leading online destination for automobile consumers in China, Li has over 20 years of founding and managing internet technology companies in China. He is also on the board of directors of several private companies.


Li Auto is carving out a unique market in the Chinese EV landscape, particularly versus some polarising alternatives like the country’s low-speed electric vehicles (LSEVs). Despite being comparatively cheap, requiring no license to drive, and enjoying great popularity in some regions because they are condoned by local authorities, they are not actually legal on most roads. In contrast, the Li ONE is a large, six-seat SUV equipped with a range extension system and advanced smart vehicle solutions which offers a combination of long-range, high performance, efficient energy consumption, and flexible power supplies.

While the One is not a fully electric car, but a plug-in hybrid, range-extended EV like the Chevrolet Volt, the combined petrol-electric range for the vehicle is over 1000kms, far exceeding its Chinese competitors and largely addressing range anxiety. Achieving a New European Driving Cycle range of 1,080 kilometers, its lithium-ion battery pack is also capable of supporting a purely electrically powered range of 188 kilometers. While its EREV powertrain can deliver enough power and torque to propel the 2.3-tonne vehicle from zero to 100 kilometers per hour in 6.5 seconds.

The vehicle’s flexible power supplies mean it can achieve a full slow charge in around six hours, while 30 minutes of fast charging can boost the car’s charge status from 20% to 80%. In addition, with refueling, it can operate even when consumers have no access to charging infrastructure.

The company plans to launch its second model, a full-size premium smart extended-range electric SUV in 2022, and more extended-range electric models afterward, in addition to High Power Charge (HPC) Battery Electric Vehicle (BEV) models starting from 2023.

Li Auto has developed its own integrated online and offline platform to interact directly with users, from sales leads to user reviews. It generates leads through three channels including retail stores, media platforms, and user word-of-mouth, subsequently converting these leads to registered users in the Li Auto system, via the official website, the Li Auto App, and a WeChat mini-program.

The system automatically establishes a user behavior model and through data analytics, constantly optimizes the sources of sales leads, product presentation, and sales processes. At the same time, through user engagement within the online system, Li Auto encourages owners to voluntarily promote vehicles to generate high-quality sales leads, leading to higher conversion efficiency and lower user acquisition costs.

Li Auto builds and operates its own sales and distribution infrastructure and sells vehicles directly to users to not only improve economic and operational efficiency, but also provide users with superior purchasing experiences. At the end of 2021, the company had 206 retail stores across major cities in China, with locations in selected shopping malls where targeted users are likely to patronize, instead of central business districts or landmark buildings. An additional 84 delivery centers and 48 servicing centers are located across major cities, performing in-person delivery, maintenance, and repairs.


Since its inception, Li Auto has been leveraging technologies to create value for its users. They have invested in in-car technologies to provide a unique experience for families, having developed a signature four-display interactive system, a full-coverage in-car voice control system, and autonomous driving technologies.

Furthermore, its utilization of Firmware-Over-The-Air upgrades has enabled it to introduce additional functionality and improve vehicle performance continuously throughout the entire vehicle lifecycle. The company believes that automotive technologies will continue to evolve, and as new technologies advance it will create more compelling products for users.

Li Auto are investing heavily in HPC BEV technologies which should deliver a superior charging experience, that will be faster, cheaper, and more accessible. Next-generation EV technologies will include high C-rate battery packs, high-voltage platforms, thermal management systems, and a HPC network, that will ultimately provide vehicles to target an even broader market.

Level 4 or “highly autonomous” driving will be the primary operating model for all Li Auto vehicles in the foreseeable future as it focuses heavily on its proprietary technologies. Starting from 2022, all new vehicle models are to be equipped with necessary hardware compatible with in-house developed, future level 4 autonomous driving as a standard configuration.

In addition to the above smart technology, Li Auto is developing Future Intelligent Interactive Systems, which will include next-generation In-Vehicle Perception Systems providing different passengers with varying functions. Fusion Maps will integrate autonomous driving and navigation maps for a more refined experience, while Vehicle Cloud Mesh Networks will enable inter-communication among the vehicle, the cloud, and the mobile application in a distributed grid. Finally, Integrated Vehicle Control and Computing Units will enhance vehicle hardware performance and smart vehicle control.

Li Auto has digitalized its user interactions complementing its direct sales and servicing network to continuously improve operating efficiency. With an integrated online and offline platform, it achieved higher efficiency in sales and marketing than automakers that rely on third-party dealerships to reach customers. In particular, the company has developed a data-driven, closed-loop digital platform to manage all user interactions from sales leads to test drives to purchases and even user reviews, which also significantly reduces user acquisition costs.

Coupled with the ability to generate significant media coverage and leverage social media channels with high-quality content, the company has formed a virtuous cycle from content marketing to sales leads, and in turn to word-of-mouth referrals, enabling continued brand exposure and high-quality potential users at relatively low marketing spending.


While the recent covid pandemic resurgence and associated supply chain interruptions have been challenging for the industry, Li Auto has continued to drive a robust financial performance coming into 2022. The company achieved total revenues of $1.51 billion in the first quarter, representing an impressive increase of 168% over the first quarter of 2021. Vehicle margins also increased to 22.4% up from 16.9% year-over-year, and the company’s cash flow from operations was positive for the eighth consecutive quarter at $270.7 million.

While posting a net loss of $1.7 million, the performance has ensured the continued scale and pace of investments in research and development and the company is forging ahead with plans to commence the deliveries of its second model, the L9 flagship smart SUV, in the third quarter.

Looking ahead, for the second quarter of 2022, the company expects total revenues to be between $972.3 million and $1.11 billion, representing an increase of 22.3% to 39.8% from the second quarter of 2021. However, for the full 2022 year, consensus estimates have total sales increasing an impressive 85% to $7.91 billion, while earnings per share estimates are forecasted to turn positive at a modest $0.02 per share.


The China EV market is highly competitive with well-established names like the leading BYD Co, along with fellow newer start-ups like NIO and XPeng, however, Li Auto’s products appear to be sufficiently distinguished to carve out a loyal market for itself. Despite this, the company’s ambitious target of becoming the number one smart EV maker in China will require it to surge past current leader BYD, which shipped around 584,000 cars last year. It will also have to outrun SAIC-GM-Wuling Automobile Co, whose $5,000 pint-sized EV is a mass-market winner, as well as Tesla, which sold about 320,000 vehicles in the nation in 2021.

The regulatory environment for EVs in China continues to bode well for Li Auto. Currently, Li ONE users can benefit from vehicle-related tax exemptions, including vehicle purchase tax and vehicle and vessel tax, along with local government policies in favor of NEVs in certain cities, such as no quota limitations for vehicle license plate applications and exemption from traffic restrictions. However, with constantly evolving markets, regulatory changes are always a possibility.


Despite continued supply chain and covid headwinds, China EV sales have rebounded after diving earlier this year after local governments responded to a potential slowdown with cash EV subsidies to encourage sales. Li Auto has navigated the period with better than expected numbers in its latest quarter and appears to be heading towards a turning point on profitability. With a growing brand presence and a soon-to-be-released new model, the company looks well-placed to continue its strong momentum.

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