Li Xiang needs to learn how to play in a difficult situation (or "against the odds").

At least a year and a half ago, Li Xiang, the founder of Li Auto - an entrepreneur who became famous at a young age, drove extremely aggressively in the early years, and was once regarded as one of the "post - 80s" entrepreneurial leaders - left an impression in the public opinion field mainly as a person with an unyielding personality and not afraid to scold or confront others.

Not to mention the distant past, just in recent years, there have been quite a few well - known scenes where Li Xiang lashed out.

When there was an opinion in the industry saying that extended - range electric technology was "backward technology", he couldn't help but publicly curse, "Damn it, a bunch of people doing lousy technology keep blabbering at us all day...". When netizens questioned that Li Auto always targeted domestic competitors, he was also merciless, saying, "The meager sales of many competitors are nothing to worry about. Are they suffering from persecution mania...", and so on.

However, Li Xiang is a bit different now.

After the failure of Li Auto's first pure - electric model, the MEGA, in March last year, Li Xiang reduced the frequency of his voice on social media platforms, and his words became a bit milder. To some extent, this was also a requirement of the company. Latepost previously reported that after the MEGA encountered an opinion storm last year, Li Auto strengthened the control over the founder's voice on public channels.

This year, Li Xiang has further restrained his edge.

One week before the release of Li Auto's second pure - electric model, the i8, on July 29th, Li Xiang finally opened a personal account on the short - video platform Douyin. He played with his old memes, hoping that netizens would "listen to him to the end". He also said that he would be very happy if netizens played with his memes. He also shared his weight - loss experience and said that he would learn to shoot short - videos to make his appearance more natural.

Photo/ The homepage of Li Xiang's personal Douyin account

On another social media platform, Weibo, Li Xiang also reflected on his previous "paternalistic" tone being too strong and said that he was adjusting his way of expression recently.

No matter what you think, at least in terms of "making friends with users", Li Xiang has become another apprentice of Lei Jun - although Li Xiang doesn't admit it. He specifically mentioned that now, as long as he says "thank you", some friends think he is learning from Lei Jun. "Actually, from another perspective, the car owners who have voted with nearly 400,000 yuan of real money deserve my sincere gratitude for their support at critical moments..."

Not to mention that Li Xiang's change is in line with the trend of corporate founders and executives creating personal IPs to build a brand promotion platform for their own enterprises. Just considering Li Auto's current situation, such a change is also needed.

It needs to improve and even reverse the public opinion influence caused by active or passive reasons and get closer to users. Li Xiang's decision to step down and shoot short - videos is an example of this, and inviting the comedy star Yue Yunpeng to promote the i8 is also to some extent for the same purpose.

It urgently needs to gain a firm foothold in the pure - electric market. In the first half of this year, pure - electric vehicles accounted for 63.6% of the total sales of new - energy vehicles.

However, from the failure of the MEGA last year to the various storms since the release of the i8 recently, Li Auto's room for error has been continuously compressed.

In this situation, under the complex market competition situation and the eagerness to break into the pure - electric market with the i8 and i6, the only goal for Li Xiang's change and Li Auto's change is to win the pure - electric battle and hold on to the extended - range hybrid market.

01

From the i8 to the i6, Two Crucial Battles for Li Auto

Since its establishment ten years ago, most of Li Auto's sales have come from extended - range hybrid models. Currently, except for the Li Auto MEGA launched in March last year and the latest Li Auto i8, all its on - sale models are extended - range hybrid models.

This route selection, combined with its relatively clear positioning for family users, is the core reason for Li Auto to reach the leading position in the market - it is one of the most successful new - energy vehicle enterprises in the past decade. In 2023, it became the first domestic new - energy vehicle startup to achieve annual profitability and has continued to make profits ever since.

However, Li Auto obviously cannot stay in its past comfort zone for a long time. Layout in the pure - electric field is an inevitable path.

Whether in terms of sales volume or sales growth rate, the market performance of pure - electric new - energy vehicles was better in the first half of this year. According to data from the China Association of Automobile Manufacturers, from January to June, the cumulative sales volume of pure - electric models reached 4.415 million, a year - on - year increase of 46.2%, while the cumulative sales volume of plug - in hybrid models was 2.521 million, a year - on - year increase of 31.1%.

Photo/ The official Weibo of the Passenger Car Association

Moreover, compared with last year, the sales growth rates of these two types of new - energy vehicles have reversed - in 2024, under the retail caliber, the cumulative sales growth rate of pure - electric models was 22.6%, while that of plug - in hybrid models was 76.9%.

Li Auto's first pure - electric model, the MEGA, was launched in March last year under such circumstances. However, due to the public opinion storms regarding its appearance and pricing, the MEGA's sales deviated significantly from Li Auto's expectations. Li Auto set an annual sales target of 80,000 for the MEGA, but in the two months after its launch, it only sold 3,229 and 1,145 units respectively.

Li Xiang later reflected that the reason for the MEGA's failure was that Li Auto misjudged the rhythm of the pure - electric strategy and wrongly regarded the "from 0 to 1" stage (commercial verification period) of the MEGA as the "from 1 to 10" stage (rapid development period) for operation.

This failure also directly led to Li Auto switching the promotion strategy of its pure - electric models from "aggressive" back to "conservative". According to the original plan, 2024 would be a product - rich year for Li Auto. In addition to the MEGA and the 2024 version of the L series, new models of Li Auto also included the L6 and three pure - electric models. At the earnings conference on May 20th last year, Li Xiang said that except for the MEGA, other pure - electric models would be postponed to 2025 for launch.

Thus, the already - released Li Auto i8 and the Li Auto i6, which is expected to be released next month, have become two crucial models for Li Auto to continue to break into the pure - electric market:

Both of these two models are SUVs. The i8 is a mid - to - large six - seat SUV with a more high - end positioning, while the i6 is a mainstream pure - electric SUV in the industry with a lower positioning than the former and is expected to undertake a higher sales task. On August 20th, the Li Auto i8 will officially start delivery.

With the lesson of the MEGA last year, the importance of the i8 is self - evident. A secondary - market investor who has long paid attention to Li Auto told the media, "If the i8 fails again, Li Auto's pure - electric route will be proven wrong."

But unfortunately, the i8 has been plagued by continuous storms since its release.

Li Auto priced the i8 based on the configuration and pricing logic of the previous L8 series, making distinctions between Pro, Max, and Ultra versions in terms of the refrigerator, TV, and intelligent driving, which led to dissatisfaction among some consumers.

Subsequently, just one week after its launch, the i8 "listened to the advice" and unified the three different configuration versions of Pro, MAX, and Ultra into the Max version and lowered the price at the same time.

In addition, the collision video of the i8 and a heavy - duty truck shown at the i8's launch event also put Li Auto in an opinion storm.

Now, in terms of the degree of harm, the storms the i8 has encountered are far less serious than the failure of the MEGA last year - the problems exposed by the Li Auto i8 are not fatal in themselves. They mainly reflect Li Auto's mistakes in configuration - pricing, marketing strategies, etc. Fortunately, the company responded quickly and took effective remedial measures in time.

The i8 itself is not a high - volume model. According to data from the Passenger Car Association, in the first half of this year, the sales volume of new - energy SUVs in the 300,000 - 400,000 - yuan price range was 220,000, accounting for only 4.1% of the new - energy vehicle market. The market capacity at this stage is limited.

Currently, Li Auto has not announced the number of firm orders for the i8. However, from Li Xiang's public statements, the situation of the i8 is not out of control, and the influence of the initial public opinion is gradually weakening.

Li Xiang said on Weibo that the delivery target for the i8 is to deliver more than 8,000 units in September, with a challenge of reaching 10,000 units. He also said that the Li Auto i8 is in a "existence" competition track, and there is no real competitor in terms of product strength. The decline in Li Auto's stock price at the initial stage of the i8's release has already recovered.

However, the uncertainties Li Auto faces are far from dissipating.

Whether the pure - electric route can succeed mainly depends on the subsequent performance of the i6. Li Auto not only needs to break into the pure - electric market but also needs to maintain its market share in the extended - range hybrid market.

02

Lowering Targets, Adjusting Sales and Service Systems, and Cutting Budgets - Li Auto Has No Comfort Zone

A few years ago, when the competition in the new - energy vehicle market was not fully unfolded, most car companies set relatively optimistic sales targets. At that time, people said that this year would be a crucial node for the initial formation of the market pattern.

For example, Leapmotor set a sales target of 800,000 units for 2025; He Xiaopeng said that XPeng Motors would capture 10% of the market share by 2025; Lei Jun said that Xiaomi Auto would enter the top five in the world from 2025 to 2030; Yu Chengdong stated that Huawei was confident that it could help car companies sell 1 million vehicles by 2025.

All of the above targets are not as aggressive as Li Auto's. In 2021, Li Auto mentioned that its sales target for 2025 was 1.6 million vehicles, aiming to occupy 20% of the domestic market share.

Now, in the face of full - scale competition, it is obvious that everyone misjudged the cycle required for the formation of the market pattern and the speed of sales growth -

Except for BYD, the market shares of other car companies in the industry are highly dispersed. In the first half of this year, BYD captured nearly 25% of the market share.

However, in the past two years, among the new - energy vehicle startups, Li Auto has indeed been one of the companies least worried about sales. Among a group of new - energy vehicle startups, it was the only one that exceeded the annual sales volume of 300,000 units in the past two years.

In 2023, Li Auto delivered a total of 376,030 vehicles, and its annual delivery volume was almost equal to the total delivery volume of NIO from 2021 to 2023. Last year, Li Auto was also the best - performing new - energy vehicle startup, with its annual delivery volume increasing by 33.1% year - on - year to 500,508 units. It also said in its annual report that it "set the fastest record for a luxury car brand to achieve an annual delivery volume of over 500,000 units in the Chinese market".

However, now, the pressure on Li Auto to maintain its previous high - growth sales performance is gradually increasing - as almost all car companies have started to adopt the dual - layout strategy of "pure - electric + plug - in hybrid/extended - range hybrid", Li Auto's advantage in the extended - range hybrid market is being continuously diluted.

The biggest competitor is undoubtedly AITO.

In 2023, Li Auto achieved its best performance since its establishment. However, since then, the threat from competitors has become increasingly serious. In June of that year, Li Xiang posted on the Internet that the AITO M7 had severely damaged the Li Auto ONE. "We have never encountered such a strong competitor, and we were unable to fight back for a long time. Huawei's super - strong capabilities directly led to the collapse of the Li Auto ONE's sales and its early discontinuation."

In the past two years, the redesigned AITO M7 and M9 have also been accelerating the erosion of Li Auto's market share in the mid - to - high - end extended - range SUV market.

From 2020 to 2023, Li Auto's market share in the extended - range SUV market above 300,000 yuan remained stable at over 50%, but last year, this figure dropped to 35.8%, and in the first five months of this year, it dropped further to 27.5%.

Judging from the sales trend of Li Auto in the first half of this year, its weakness in the extended - range hybrid market is becoming more and more obvious.