Li Auto and Sunwoda Establish a Joint Venture, "Li Auto Brand" Batteries to Be Installed in Cars Next Year | Exclusive from 36Kr
36Kr Auto has learned that Li Auto and battery manufacturer Sunwoda will establish a joint venture with a 50:50 capital contribution ratio. Currently, the joint venture has been filed and publicly announced by the Shanghai Market Supervision and Administration Bureau. According to the public announcement information, the two joint - venture parties are Beijing Li Auto Co., Ltd. ("Beijing Li Auto") and Sunwoda Power Technology Co., Ltd. ("Sunwoda Power"). The joint - venture enterprise will mainly engage in the production, manufacturing, and sales of lithium - ion power batteries for electric vehicles.
Announcement
36Kr has learned that the registered name of the joint venture is Shandong Li Auto Battery Co., Ltd., which will be used to produce the self - developed power battery products of Li Auto. "Next year, Li Auto's self - developed power products will be installed in vehicles."
People familiar with the matter told 36Kr that the battery project jointly created by Li Auto and CATL is referred to as joint development within Li Auto. In the cooperation with Sunwoda, Li Auto has taken the lead in the design of battery products, processes, and materials, and it is called self - developed batteries within Li Auto.
According to 36Kr, currently, the scale of Li Auto's battery R & D team is about 200 people. Industry insiders who have contacted Li Auto's senior management revealed that Ma Donghui, the president of Li Auto, pays great attention to the progress of the self - developed battery project and reviews the project progress basically every two weeks.
Another industry insider revealed that Li Auto fully focuses on 5C ultra - fast charging batteries in battery R & D. It conducts in - depth self - research in chemical systems, structural design, and BMS core algorithms and makes decisive investments. "Li Auto and Sunwoda have a large number of battery R & D projects in progress. After calculating the costs required for each R & D project with Sunwoda, Li Auto will make a decisive investment."
Industry insiders analyzed that after establishing a battery joint venture with Sunwoda, it is more justifiable for Li Auto to call its self - developed batteries "Li Auto Batteries". Even "the battery nameplate can be Li Auto Batteries".
Li Xiang, the chairman and CEO of Li Auto, has also publicly divided the supply - chain collaborative innovation model into three categories:
Self - research and self - production: It conforms to Li Auto's value proposition and strategy, and there are no mature suppliers in the industry for production, such as range extenders, electric drives, and intelligent - related components.
Self - research and contract manufacturing: It conforms to Li Auto's value proposition and strategy, and there are mature suppliers in the industry for production, and even the quality of their products is better than Li Auto's self - produced ones.
External procurement: It does not meet Li Auto's value proposition and strategic needs, but the market and suppliers are mature enough, such as bumpers, rear - view mirrors and other components.
Li Auto Batteries are the products of Li Auto's self - research and self - production model. Previously, Li Auto has also established similar corporate entities for core components such as electric drives and silicon carbide, such as Huixiang and Sike.
Although power batteries have been widely mature and popularized, they still account for 30% - 35% of the total vehicle cost. It is a key part that any automobile enterprise must focus on in its supply - chain layout.
Just today, Li Auto announced the signing of a 5 - year strategic cooperation agreement with CATL. Establishing a battery joint venture with Sunwoda is also the mainstream choice for automobile enterprises to ensure cost control and supply security by conducting multi - point battery layout after reaching a certain scale.
Li Auto: Eager for Pricing and Customization Rights
For Li Auto, managing the supply chain by establishing a joint venture is a method that traditional automobile enterprises have long tried and proven effective. Li Auto has applied this strategy quite maturely.
For example, Huixiang, jointly established with Inovance United Power, and Sike, jointly established with Hunan Sanan Semiconductor, have played a key role in the customized development of key components such as electric drives and silicon carbide chips.
Now, establishing Shandong Li Auto Battery Co., Ltd. in a joint venture with Sunwoda generally follows the same logic: by establishing a joint venture, Li Auto can obtain customized and stably supplied core components while reducing the investment risk of suppliers.
Automobile enterprises often need some customized components to pursue product differentiation, and Li Auto is no exception. For example, Hesai Technology once customized an ATL lidar for Li Auto i8.
Li Auto has always regarded ultra - fast charging as one of the core product features of its pure - electric models. Therefore, it is imaginable that Li Auto's demand for customized power batteries is even greater than that for lidars.
However, giant enterprises like CATL seem to be hardly impressed by Li Auto's customized development fees. Applying technology to more customers' models to spread R & D costs can maximize the input - output ratio. Therefore, Li Auto's demand for obtaining differentiated technologies through customized development can only be realized through Sunwoda.
Li Auto and Sunwoda establish a joint venture to reduce procurement costs. Whether it is to obtain technological product differentiation or to ensure battery supply stability through multi - point layout, it is a natural choice.
Sunwoda: Binding Big Customers with ODM Model
Sunwoda, the joint - venture partner selected by Li Auto, is an enterprise that entered the power - battery field from the consumer - battery sector. According to Sunwoda's prospectus submitted to the Hong Kong stock market, consumer - battery business still accounts for more than 50% of the enterprise's revenue.
Its formal cooperation with Li Auto began in 2017.
In 2022, Li Auto increased its capital investment in Sunwoda's power - battery business subsidiary, Sunwoda Automotive Battery, by 400 million yuan, with a subscribed capital contribution of 204 million yuan. Since then, Li Auto has become both a customer and a shareholder of Sunwoda Automotive Battery, holding a 3.22% stake.
According to Chen Hui, the general manager of Sunwoda's Li Auto Division, Li Auto originally only planned to invest 200 million yuan in Sunwoda. It was Li Xiang, the CEO of Li Auto himself, who proposed at the investment decision - making meeting to increase the investment to 400 million yuan.
In 2023, Sunwoda specially established a division for Li Auto, with a scale of about 1300 people. Chen Hui told 36Kr Auto that by the end of June this year, the scale of the division had expanded to about 1700 people.
This year, Li Auto has increased its procurement share of Sunwoda's power batteries to 30%.
In terms of data, Chen Hui, the general manager of Sunwoda's Li Auto Division, once told 36Kr Auto that as early as the establishment of the Li Auto Division, Sunwoda planned to connect its own data to Li Auto's system;
By the end of 2023, Sunwoda had fully connected with Li Auto's Lianshan system at the original data level. Sunwoda's manufacturing data and warehouse - management inventory data are all connected with Li Auto in real - time;
In 2024, Li Auto's vehicle data was connected to Sunwoda's system, and the two began to jointly establish a power - battery early - warning model.
Looking at the cooperation history between Sunwoda and Li Auto, the cooperation between the two parties has been deepening continuously, which has laid a business foundation for the establishment of the joint venture today.
For Sunwoda, establishing a stable strategic alliance with a leading automobile enterprise like Li Auto means that its future power - battery shipments are guaranteed to a certain extent. In addition, the 50:50 equity ratio will also upgrade Sunwoda from a pure supplier to a community of interests that can share profits with Li Auto.
According to Sunwoda's Hong Kong stock market prospectus, as of the end of March this year, Li Auto contributed 5.8% of Sunwoda's revenue and was one of Sunwoda's top five customers.
Currently, models such as Li Auto L6, Li Auto L7 Air, and Li Auto L8 Air are all equipped with Sunwoda power batteries. The power batteries of Li Auto i6 will also be supplied by Sunwoda and CATL. After the establishment of the joint venture, Li Auto may tilt more procurement shares towards Sunwoda, and the expansion of shipment scale will undoubtedly improve the gross profit margin of Sunwoda's power - battery business.
One of Sunwoda's strategies to leverage the power - battery market share is cost - effectiveness.
In addition to trading price for volume and competing for market share among the giants, as a second - tier battery factory, Sunwoda also needs to adopt an ODM - like approach to bind big customers.
Before Li Auto, Sunwoda had also established joint ventures with automobile enterprises such as Dongfeng and Geely. In addition, 36Kr Auto has also learned that Sunwoda is trying to bind more automobile enterprises it cooperates with by establishing joint ventures. In the future, Sunwoda may get a larger share of the new - energy vehicle market through this path.
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