Li Auto reflects on its pain

Author | Chai Xuchen

Editor | Wang Xiaojuan

The new force car company Li Auto, which was the first to achieve profitability, has delivered a report card that has turned from profit to loss.

On the evening of November 26, Li Auto released its third-quarter report, showing a net loss of 620 million yuan during the period, directly ending its streak of 11 consecutive profitable quarters. In comparison, Li Auto made a net profit of 2.8 billion yuan in the same period last year, and there was still a profit of 1.1 billion yuan in the second quarter of this year.

In fact, the market had already anticipated this financial report from Li Auto, as the "darkest" financial data was due to significant fluctuations in sales. Li Auto's monthly sales have dropped from a peak of over 50,000 units at the end of last year to around 30,000 units currently, facing downward pressure both year-on-year and month-on-month. During the third quarter, although the pure electric i series was launched, the performance of the i8 was mediocre, and while the i6, which bore the sales burden, had a surge in orders, its production capacity faced bottlenecks.

This year's Q3 is the first quarter of Li Auto's second decade of entrepreneurship, and starting under such pressure is indeed not easy.

Facing the fourth quarter, Li Auto's guidance is again below expectations. Even with the contribution of about 30,000-40,000 incremental units from the i6 and i8 pure electric models, the overall sales guidance only increased by 7,000-17,000 units month-on-month (only 100,000-110,000 units, lower than the market expectation of 138,000 units), implying an average monthly sales of only 34,000-39,000 units in November and December.

It is worth noting that this is still under the condition of Li Auto increasing discounts on the L series. This seems to indicate that the sales of the L series models will continue to decline compared to the third quarter.

In the past two years, Li Auto has built a moat in the 300,000-500,000 yuan SUV market by precisely targeting family users, refining the extended-range experience, and adopting a relatively restrained pricing strategy. However, since the second half of last year, this moat has been rapidly dismantled by competitors such as Leapmotor, Aito, XPeng, and Lynk & Co.

Li Auto did not anticipate that this hunting would come so quickly. Chairman Li Xiang admitted, "Now when we play a card, our peers play two cards. Our iteration frequency is equivalent to our peers watching our cards and playing with us."

The challenges also come from the market level, as Li Auto's moat in the extended-range segment is facing challenges.

Since June of this year, the market share of extended-range vehicles in the new energy vehicle market has shrunk for five consecutive months, dropping to 7.5% in October. Meanwhile, new car-making forces are accelerating their shift towards pure electric routes, with the proportion of pure electric models in their product structure rising sharply from 49% last year to 74%, while the proportion of extended-range models has decreased from 51% to 26%.

The market landscape has completely reversed, with pure electric becoming the mainstream direction. The L series products, which once achieved monthly sales of over 50,000, have now fallen to around 20,000; the two new pure electric vehicles also face direct competition with models such as Nio ES8, Leap L90, pure electric Aito M8, and Xiaomi YU7. According to the plan at the beginning of the year, the three pure electric vehicles under its brand should be able to achieve a monthly sales scale of 18,000 to 20,000 units, but the completion rate is currently less than 30% Li Auto's pressure has sharply increased, and its stock price has retreated from a high of $32 before the i8 listing to the current $17.8. At the earnings conference on the evening of November 26, Li Xiang candidly admitted that the company is currently facing various challenges such as product cycles, public relations issues, supply chain ramp-up, and policy changes, all of which have impacted delivery and operations.

That evening, he reflected on a series of aspects regarding the company's organization, products, and technology.

"In the past three years, we have worked hard to learn the management system of professional managers, but we have become an increasingly worse version of ourselves," Li Xiang said. Nvidia and Tesla still manage like startups; if the world's strongest companies all adopt a startup management model, what reason does Li Auto have to abandon the approach it is best at?

Clearly, in the future, Li Xiang will return to the front lines of the business more forcefully, with a clear goal of launching a vigorous attack on the narrative of the second curve of artificial intelligence, and he has set a FLAG, stating, "We aim to become the best-performing company in the field of embodied intelligence within three to five years."

However, before the imagination of AI is unleashed, selling cars remains Li Auto's most important task. A month ago, at a closed-door strategy meeting, Li Auto reflected on issues such as declining sales and R&D: the main reason for the loss of the L series' basic market was still due to the slow pace of product rollout. The rhythm of a major platform iteration every four years can no longer keep up with the current competitive speed, and the L extended-range series has seen too little change this year.

Looking back now, it is indeed a moment for Li Auto to change. Fortunately, Li Auto has already begun strategic adjustments, accelerating the product rhythm, shortening the major platform iteration from four years to two years, and breaking away from the previous "nested doll" design approach. Model differentiation will rely on design and definition rather than configuration differences to adapt to the current competition.

On the other hand, to increase the production capacity of its pure electric series, Li Auto President Ma Donghui revealed that starting in November, the i6 will adopt a dual-battery supplier model, with both suppliers meeting the same performance and quality standards. It is expected that by early next year, the monthly production capacity of the i6 will reach 20,000 units. Regarding the much-anticipated major redesign of the L series next year, Ma Donghui stated that they aim to regain the leading position in extended-range products.

In the industry’s view, pure electric vehicles are a battle that Li Auto must win, as the company understands that it cannot go against the trend. This is also a way to accumulate strength for its transformation into a technology company. Ma Donghui expressed confidence in achieving a historic breakthrough in delivery volume next year.

In addition to the stories of pure electric vehicles and AI, Li Auto has another trump card to help it emerge from the trough, which is its organizational capability.

On November 11, Li Auto announced an internal organizational adjustment, officially marking the end of its three-year journey of "learning from Huawei." The deeper reason behind this is that the tactics Li Auto learned from Huawei in the previous phase are no longer suitable for its current situation.

Three years ago, faced with the aggressive attack of Aito, Li Auto, eager to boost sales, decided to "learn Huawei at a pixel level," fully injecting Huawei's PBC (Personal Business Commitment) performance model. In early 2023, Li Auto brought in executive Zou Liangjun from Huawei to implement a racing mechanism across 26 battle zones, with departments competing for resources and market share This high-pressure model once helped Li Auto train the entire organization into a high-execution "combat machine," achieving high sales growth for over a year. However, the side effects soon followed. The significant fluctuations in sales and profits in 2025 proved that the PBC management model had failed.

Currently, Li Xiang personally overseeing human resources and fully returning to the startup model is aimed at re-integrating Li Auto into a rapid-response task force.

Fortunately, Li Auto's "blood bar" is still quite thick, with nearly 90 billion in net cash on hand, and with the upward option of intelligent driving, it still has enough time for strategic adjustments. In the future, there are also a series of new cards to play, including self-developed chips and accelerated overseas expansion.

However, time waits for no one. In the unpredictable competitive environment, can Li Auto persist in steering towards the shore? Whether it can implement the promised strategy will be crucial.

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