Li Xiang "tearfully" bids farewell to Zhang Xiao. The new L7 and L8 will face tough battles next year.

Internal changes at Li Auto are still in progress.

According to LatePost Auto, Zhang Xiao, the president of Li Auto's second product line, will leave the company in the near future.

Public information shows that Zhang Xiao was an early employee of Li Auto. He joined the company in May 2016 as a vehicle product manager. Before that, he worked in model product planning and development management at BMW MINI.

During his tenure at Li Auto, Zhang Xiao was deeply involved in the product definition of models such as the Li ONE and L9 and had a close cooperation with CEO Li Xiang. He also led the product lineup planning for Li Auto's models within the team of Senior Vice President Fan Haoyu.

It can be said that Zhang Xiao and his keen product insight were once Li Xiang's most trusted assets.

Before leaving, Zhang Xiao was in charge of models priced between 300,000 and 400,000 yuan, namely the L7, L8, and i8.

However, Li Auto has just gone through a nerve - wracking third quarter - with declining revenues, a shift from profit to loss, the recall of the MEGA, and the failure of the i8.

The departure of this veteran seems to be a reflection on the strategic mistakes made in the past year and a signal that Li Auto is making room for the major facelift of the L series in 2026, its "ace in the hole."

01  Did the L6 "stab in the back" the i8? Is it a problem with the separate product lines?

Failing in its most proficient area of "configuration definition" was the first and most painful lesson Li Auto learned as it ventured deeper into the pure - electric market.

For a long time, Li Auto's core competitive edge in the industry has not been simply its three - electric technology but its almost mystical product definition ability. Li Xiang and his team pioneered the concept of "standardizing core configurations across all models." By precisely targeting family users, they made the "dad's car" a synonym for a niche market.

However, this logic was clearly misaligned when it came to the second product line, the Li i8, which was under Zhang Xiao's responsibility.

As a key player for Li Auto entering the 300,000 - to - 400,000 - yuan pure - electric SUV market, the i8's initial configuration combination was a "confusing move" in Li Auto's product history. In the past, Li Auto was best at giving users a "greater sense of gain than expected," but with the i8, this generosity turned into a form of stinginess.

The flagship product with a starting price of over 320,000 yuan actually lacked Li Auto's iconic refrigerator in the Pro version and omitted the second - row entertainment screen in the Max version. This deliberate sacrifice to distinguish different grades not only made consumers feel neglected but also directly undermined the product's sense of value.

More importantly, as a model with a starting price of over 320,000 yuan, some versions of the i8 had core configurations that were even inferior to those of the L6, which was priced below 280,000 yuan on average. This self - cannibalization among internal product lines reflects the logical confusion of Li Auto when facing the pure - electric market after establishing product line departments in April 2024.

At that time, Li Auto had just experienced the setback of the MEGA and tried to solve the problem by establishing three product lines, with Zhang Xiao leading the second one. But the reality is that the user logic in the pure - electric market is vastly different from that in the range - extended market.

Li Auto originally hoped that the i8 could replicate the success of the L series, but in practice, it fell into the obsession of "wanting it all": wanting the brand premium brought by pure - electric vehicles while being reluctant to abandon the outdated and strict SKU grading system.

This painful failure in its area of expertise ultimately ended in a disastrous way, with the i8 canceling its low - end configuration and significantly reducing its price within a week of its launch.

Although this move retrieved some orders to a certain extent, the damage to the brand's reputation and the challenge to the ability of Zhang Xiao, the person in charge of the product line, have reached a point that must be addressed.

Zhang Xiao's departure is, to some extent, taking the blame for this "inappropriate product logic" and also marks that Li Auto has begun to realize that simple "hardware copying" can no longer keep it competitive in the deep waters of the pure - electric era.

This lack of focus at the product level actually exposes the challenges Li Auto faces in the integration process after the upgrade of its organizational structure.

In April 2024, in pursuit of more efficient operations, Li Auto divided its models into three independent product lines. In Li Auto's vision, this "three - pronged approach" model would give each product line a high degree of autonomy, achieving a closed - loop from product definition to business operation.

However, when the three product lines charged ahead in their respective fields, Li Auto overlooked a fatal problem: When there is no unified framework for each front line, independent decision - making often turns into internal strife.

The second product line led by Zhang Xiao was still deeply trapped in the old belief that "pure - electric vehicles must have a high premium" when defining the i8 and tried to maintain the price range above 320,000 yuan through strict configuration grades.

Meanwhile, the team led by Li Xinyang, in charge of the third product line, in order to ensure the "blockbuster" status of the L6, extended its core competitiveness downwards, creating a product with extreme cost - performance.

This information asymmetry among products due to organizational silos ultimately led to the embarrassing situation where the L6 "stabbed in the back" the i8.

In the closed - loop logic of the second product line, they believed that omitting the refrigerator and the second - row screen was a reasonable profit - balancing measure. However, from the company's overall perspective, when users found that the experience they could get on the 250,000 - yuan L6 became a luxury on the 320,000 - yuan i8, this "internal strife" became a blow to the brand's consistency.

Zhang Xiao once explained that the original intention of establishing product lines was to make PDT and PCT work together and be jointly responsible for business success. But in actual implementation, what we saw was that each product line went its own way in terms of product definition for the sake of its own financial statements.

In this game where "commercial desire overrides user value," product definition became distorted to fit the price range.

When Li Auto tried to use its successful "family - oriented strategy" in the range - extended field to compete with strong opponents like the NIO LeDao L60 and the Zeekr 7X, it found that it not only lost its configuration advantage but also saw its core "understanding of users" halo fading.

Zhang Xiao's departure is not only his personal exit but also seems to be a public farewell by Li Auto to this old product philosophy of "fighting independently."

02  The L series is getting a major facelift, and a leadership change is made for victory

If the failure of the i8 was a setback in a local battle, then the "first loss" in the third - quarter financial report and the pressure - laden guidance for the fourth quarter are red alerts for Li Auto.

In the past nearly three years, Li Auto has almost been the only new - energy vehicle startup in China labeled as a "financial high - achiever."

While its peers were struggling with the problem of "losing tens of thousands of yuan for each vehicle sold," Li Auto, thanks to its precise positioning in the range - extended market, had long maintained a steady single - vehicle gross profit margin of 20%, a vital line.

However, the first - ever negative performance in the third quarter of 2025, with a net loss of 624 million yuan, was like a thunderclap, shattering Li Auto's market myth of "always making profits."

Although from a financial perspective, this loss was largely dragged down by the 1.1 - billion - yuan loss provision for the MEGA recall, which was a non - operating "accident," when looking beyond the noise, the market was truly chilled by the loosening of its business fundamentals.

In the third - quarter report, Li Auto's R & D investment and sales expenses did not decrease due to sales fluctuations but instead showed an aggressive growth trend.

This also indicates that Li Auto has once again entered a dangerous "investment period": the depreciation of the pure - electric platform, the rapid expansion of the 5C super - charging network, and the computing power competition in end - to - end intelligent driving models are all mercilessly devouring the profits painstakingly accumulated by the range - extended L series.

What makes investors even more uneasy is the still - not - optimistic business guidance for the fourth quarter given by Li Auto's management, which also reveals that Li Auto is facing a growth bottleneck with both internal and external challenges.

At the earnings conference call, Li Auto's expected delivery volume for the fourth quarter was only between 100,000 and 110,000 vehicles, and the estimated total revenue was between 36.5 billion and 39.2 billion yuan. This figure is far lower than the market's previous general expectation of 138,000 vehicles and even seems rather "cautious."

It should be noted that this commitment was made against the backdrop of the upcoming accelerated delivery period of the new pure - electric vehicle, the i6. Behind this caution lies the fact that the basic market of Li Auto's L series is facing an unprecedented "encirclement."

On the one hand, competitors such as Wenjie and Leapmotor are pressing hard on the range - extended vehicle track, forcing Li Auto to offer continuous terminal discounts to secure orders. This "price - for - volume" strategy has directly led to a decline in the average selling price (ASP) of each vehicle.

On the other hand, although the upcoming i6 is expected to boost sales volume, its pricing strategy of "lower price for gasoline version than electric version" is actually a double - edged sword. Given that the battery cost and R & D amortization have not yet been reduced on a large scale, the single - vehicle gross profit of the i6 is significantly lower than that of the L series.

The combination of these two factors means that the 20% gross profit margin line, which Li Auto has long regarded as a lifeline, will be at risk of being breached in the fourth quarter and even the first quarter of 2026.

Li Auto is being forced into a cruel game of "sacrificing current financial profits for future survival space," and every penny invested in R & D is testing the patience and confidence of investors.

However, the market had already anticipated the "failures" in the third and fourth quarters. The real turning point for Li Auto lies in the "major facelift of the L series in 2026," which was personally set by Ma Donghui.

At the third - quarter conference call, an analyst from Bank of America also asked about the major facelift of the L series in 2026, and Ma Donghui responded.

He clearly stated that the 2026 facelift will completely abandon the "sly strategies" that have been criticized by the market in the past year and return to a simplified SKU model. This means that Li Auto has finally realized that in the luxury market above 300,000 yuan, the practice of dividing grades by cutting core configurations is like self - harm.

In addition, the promise of "maximizing the core experience across all models" is essentially about regaining the product dignity of Li Auto at its early stage - ensuring that every user who buys an entry - level model can enjoy the same "refrigerator, color TV, and big sofa" and core safety and intelligent driving experience as the flagship model.

The strategy of standardizing 5C super - charging technology across all models in the technical dimension is Li Auto's attempt to launch a "dimensionality - reduction attack" on its opponents in terms of energy anxiety. By sharing the same high - standard charging network for both range - extended and pure - electric vehicles, Li Auto is trying to strengthen its brand image as the "leader in range - extended vehicles."

This strategic correction is actually a comprehensive reflection and a fresh start after the failure of the i8.

Therefore, Zhang Xiao's "departure" as the head of the second product line at this moment seems more like an organizational reshuffle before a battle.

As a veteran of Li Auto's product system, Zhang Xiao represents the "era of product managers" who pursued the ultimate configuration combination and precise cost control. However, in the upcoming tough battle in 2026, Li Auto needs not just a product manager who understands user pain points but an executor who can thoroughly implement Ma Donghui's principle of "maximizing technology and reshaping the organization."

Li Auto must ensure that the new - generation L series can redefine "luxury" through generational upgrades at the technical level (such as end - to - end intelligent driving, 5C fast charging, and the iteration of the three - electric system) when facing the design language that has caused aesthetic fatigue.

For Li Auto at this moment, this is not just a simple management of the vehicle's life cycle but a movement to reshape the soul of the organization.

If the setbacks of the MEGA and the chaos of the i8 in 2024 were "growing pains" during the transformation period, then the major facelift in 2026 will finally provide the answer: Is Li Auto just a meteor that crossed the night sky relying on its first - mover advantage, or can it become a real automotive giant that can cross the energy - transformation cycle and truly achieve long - termism?

Zhang Xiao's departure marks that Li Auto is trying to ensure absolute unity of will through a "leadership change before the battle" to face the upcoming and life - determining year 2026.

This article is from the WeChat official account "Hyper - Focus Foci," author: Sean. It is published by 36Kr with authorization.