How can an unmet ideal stop YU7?

The overwhelming orders for the Xiaomi YU7 after its release have given all car manufacturers a huge shock.

On June 26, the Xiaomi YU7 was officially launched, with a starting price of 253,500 yuan. In just three minutes, the number of firm orders exceeded 200,000, and within one hour, it soared to over 289,000. After 18 hours, the number of locked - in orders surpassed 240,000. This achievement not only far exceeded the performance of the Xiaomi SU7 during the same period but also set a new record for new energy vehicle sales.

On weekdays, there is a continuous stream of customers visiting Xiaomi car stores. Image source: Zimubang

The shockwave of the Xiaomi YU7 is starting to spread rapidly.

On June 27, Li Auto issued an internal announcement, announcing an organizational structure adjustment: The original "R & D and Supply Group" and "Sales and Service Group" were integrated into the newly established "Intelligent Vehicle Group", which is responsible for the strategic and operational closed - loop of Li Auto's intelligent vehicle business; President Ma Donghui will serve as the head of the Intelligent Vehicle Group and report to Chairman and CEO Li Xiang.

Li Xiang said in an internal letter that after the establishment of the Intelligent Vehicle Group, through end - to - end operation and in - depth collaboration in R & D, supply, sales, and service, it will more effectively support value creation, value transfer, and operational closed - loop for users, and build a leading edge for Li Auto in the next stage.

Integrating R & D, supply, sales, and service into one division and entrusting it to Ma Donghui is obviously to prepare for the upcoming tough battle in the pure - electric SUV market.

In the second half of the year, Li Auto will launch two pure - electric SUVs, the i8 and the i6. These two models are crucial to Li Auto's pure - electric strategy. Among them, the Li Auto i6 is positioned at a lower level, and its price range is likely to overlap significantly with that of the Xiaomi YU7, and the two will face a head - on confrontation.

In this situation, Li Auto actively chose to change its strategy, attempting to improve operational efficiency and combat capabilities by streamlining and adjusting its internal organizational structure.

However, the designs of Li Auto's two pure - electric products have been finalized, and it is difficult to make technical and product - level adjustments based on the YU7. Facing the impact of the YU7, Li Auto can probably only adjust the pricing of its two new models.

On the day of the Xiaomi YU7's release, Li Auto's Hong Kong - listed shares rose slightly by 0.81%, and fell by 1.78% the next day. As of the close of the Hong Kong stock market on June 30, Li Auto was priced at HK$107, more than 20% lower than its 52 - week high of HK$138.3.

A

Li Auto took defensive measures before the launch of the Xiaomi YU7.

On June 23, Li Xiang posted on Weibo to wish the Xiaomi YU7 a great success and also mentioned his own 6 - seat SUV, the Li Auto i8, which is set to be launched in late July.

Li Xiang said that compared with the sporty orientation of the Xiaomi YU7, the Li Auto i8 is a family - oriented SUV, which takes better care of the travel experience of the whole family. Lei Jun also responded friendly, saying, "Thank you, Li Xiang. I wish the Li Auto i8 a great success! Xiaomi and Li Auto will jointly promote the development of pure - electric vehicles in China."

Image source: Li Xiang's Weibo

In another Weibo post, Li Xiang indirectly talked about the competitive relationship between the i6 and the YU7. He said, "We hope to provide an additional car - buying option for family users who are interested in buying a Mercedes - Benz GLC, BMW X3, or Audi Q5. Do you think they will be replaced by the '67Y' models?" Here, the "67Y" refers to the Li Auto i6, Xiaomi YU7, and Model Y.

Judging from the exposed vehicle parameters, the advantages of the Li Auto i8 over the YU7 mainly lie in its body size and interior layout: it has an extra row and an extra seat, providing more space.

According to information from the Ministry of Industry and Information Technology, the body size of the Li Auto i8 is 5085*1960*1740mm, with a wheelbase of 3050mm, which is between the Li Auto L8 and L9. In contrast, the size of the Xiaomi YU7 is 4999*1996*1608mm, with a wheelbase of 3000mm.

However, since the battery capacity of pure - electric models is larger than that of extended - range models, the price of the Li Auto i8 is expected to be slightly higher than the 321,800 yuan of the L8. Compared with the Xiaomi YU7, which is priced between 253,500 and 329,900 yuan, the price of the Li Auto i8 is one level higher.

It is actually the Li Auto i6, the "little brother" of the i8, that truly shoulders the heavy responsibility of competing with the Xiaomi YU7.

Before the Xiaomi YU7 press conference, the Li Auto i6 also completed its application with the Ministry of Industry and Information Technology. It is a 5 - seat mid - to - large SUV, with a body size of 4950*1935*1655/1670mm, slightly shorter and narrower than the Xiaomi YU7, but with an advantage in body height; its wheelbase is 3000mm, the same as the latter.

Similarly, the price of the Li Auto i6 will also be higher than the 249,800 yuan of the Li Auto L6. This also means that its price will overlap significantly with that of the Xiaomi YU7.

The pressure on Li Auto is self - evident as the YU7 has received a large number of orders just after its launch.

The only two new models of Li Auto this year are the Li Auto i8 and the Li Auto i6. The i8 is positioned slightly higher than the YU7, but wavering customers may be attracted to Xiaomi. The competition between the i6 and the YU7 is more direct, as they are both mid - to - large 5 - seat pure - electric SUVs with similar prices.

Both car manufacturers announced their product plans for pure - electric SUVs a long time ago. Li Auto completed the application for its two pure - electric SUVs before the launch of the YU7, perhaps hoping to divert some potential buyers of the YU7 by leveraging Xiaomi's huge popularity.

Xiaomi's car production capacity is still ramping up. The current delivery cycle of the YU7 is more than 30 weeks, even more than a year. Not all potential consumers are willing to wait. Moreover, the policy of exempting new energy vehicles from purchase tax in China will expire next year. If the policy is not extended, the car - buying cost for consumers will increase by about 20,000 to 30,000 yuan, which will also pose a challenge to the continued popularity of the YU7.

From a product perspective, the Xiaomi YU7 is not perfect. There is still room for improvement in terms of interior space, comfort features, and intelligent assisted driving. This is exactly Li Auto's "comfort zone".

Li Auto is no stranger to the strategy of differential competition. Previously, by adhering to the positioning of family cars, Li Auto withstood the successive attacks of the Wenjie M7 and Wenjie M9. However, in the face of Xiaomi's stronger brand influence, it remains to be seen whether the Li Auto i6 can follow the original "script".

B

On the same day as the announcement of the organizational structure adjustment, Li Auto also lowered its quarterly delivery forecast.

Li Auto said in an announcement that it was adjusting its sales guidance for the second quarter, expecting to deliver approximately 108,000 vehicles in the second quarter. Previously, in its first - quarter earnings report, Li Auto had given a delivery volume guidance of 123,000 to 128,000 vehicles. Now, it seems that Li Auto is likely to fail to reach the previously expected minimum threshold.

In the first quarter of this year, affected by factors such as the Spring Festival off - season, Li Auto only delivered 92,800 vehicles. In the second quarter, the delivery volume improved. It delivered 34,000 vehicles in April and 40,000 vehicles in May. However, based on the company's latest official sales guidance, the delivery volume in June may only be 34,000 vehicles.

Li Auto said in the announcement that with the successive launches of two pure - electric SUVs in July and September, the company's sales curve is expected to return to an upward trend. This prospect is not only based on the attractiveness of new products but also on the improved operational efficiency after the upgrade of the sales system. It is estimated that the subsequent product launch schedule will provide sufficient impetus to drive the delivery volume back to stable growth and ultimately reach a higher level.

Li Auto i6. Image source: Li Xiang's Weibo

Li Auto has adjusted its sales target more than once this year.

At the beginning of this year, Li Auto set an annual sales target of 700,000 vehicles. In May, Li Auto lowered its annual production target to 640,000 vehicles, including 520,000 extended - range vehicles and 120,000 pure - electric vehicles.

The reason for adjusting the sales target is that Li Auto's sales performance in the first half of this year was not satisfactory.

In the first five months of this year, Li Auto delivered a total of 167,700 new vehicles, a year - on - year increase of 18.7%. However, based on the previous annual target of 700,000 vehicles, it only completed 24%; based on the adjusted target of 640,000 vehicles, it only completed 26%.

If Li Auto wants to achieve its annual target of 100%, it needs to deliver 472,300 vehicles in the next seven months, with an average monthly sales volume of 67,000 vehicles. In contrast, Li Auto's average monthly sales volume in 2024 was less than 42,000 vehicles.

In addition to the slower - than - expected sales pace, Li Auto's average selling price has also declined significantly.

In the first quarter, the average selling price of Li Auto's vehicles was 266,000 yuan, a decrease of 36,000 yuan compared with the same period last year and a decrease of 3,000 yuan compared with the previous quarter. The earnings report said that the increase in vehicle sales revenue compared with the first quarter of 2024 was mainly due to the increase in vehicle delivery volume, but was partially offset by the decrease in the average selling price mainly caused by the different product mix.

The intelligent upgrade version launched at the end of May this year is Li Auto's only major move for its extended - range models this year. However, the three - electric systems and extended - range technology of the new model have not been upgraded. Instead, it focuses on intelligent assisted driving, such as using the new - generation Horizon and NVIDIA intelligent driving chips, standardizing the ATL all - weather lidar across the range, adding night - time AEB (Automatic Emergency Braking) and AES (Automatic Emergency Steering) functions, and upgrading the in - car intelligent assistant "Li Auto Mate".

With mediocre performance in overall sales volume and average selling price, Li Auto's financial performance is also under considerable pressure.

In the first quarter, Li Auto's revenue reached 25.93 billion yuan, a year - on - year increase of 1.1% and a quarter - on - quarter decrease of 41.4%. The net profit was 650 million yuan, a year - on - year increase of 9.4% and a quarter - on - quarter decrease of 81.7%; the Non - GAAP net profit was 1.01 billion yuan, a year - on - year decrease of 20.5% and a quarter - on - quarter decrease of 74.9%.

C

Li Auto is facing more than just Xiaomi as a competitor.

In the large - SUV market, many models have emerged this year that compete with the Li Auto L9, such as the Wenjie M9, Lynk & Co 900, Denza N9, and the LeDao L90, which will start pre - sales in early July. These vehicles use different energy - driving forms but all compete with the Li Auto L9.

Li Auto still has cards to play but is currently waiting for the right opportunity.

According to Li Auto's previous plan, in 2025, it aims to have "1 super - flagship model + 5 extended - range models + 5 pure - electric models". Among them, the 5 extended - range models refer to the L9, L8, L7, and L6, and another extended - range model has not been announced. For the pure - electric models, in addition to the i8 and i6, 3 other models have not been announced.

Meanwhile, Li Auto's sales foundation - extended - range vehicles - are at risk of having their market share eroded by competitors.

The most typical example is Leapmotor. Leapmotor is known as the "affordable alternative to Li Auto". The Leapmotor C16 is priced at less than half of the Li Auto L6 but is equipped with a lidar and an 8295 chip. It seizes market share in the 150,000 - 250,000 yuan market (accounting for 37% of the total) with high cost - effectiveness.

From January to April 2025, Leapmotor delivered a total of 128,600 vehicles, surpassing Li Auto (126,800 vehicles) for the first time and topping the sales list of new - energy vehicle startups. According to the latest data released by Leapmotor, it delivered more than 220,000 vehicles in the first half of the year.

Leapmotor's sales volume from January to June. Image source: Leapmotor

In addition, the extended - range technology has entered the 2.0 stage this year. CATL's Xiaoyao Super Extended - Range Hybrid Battery can push the pure - electric driving range of hybrid vehicles to over 400 kilometers and also has 4C ultra - fast charging capabilities; XPeng will launch models equipped with the Kunpeng Ultra - Electric system this year, with a pure -