12 billion USD, NIO, XPeng and Li Auto have reached a similar market capitalization.

NIO, Li Auto, and Xpeng now have comparable market capitalizations, all falling within the $12-13 billion range.

Over the past few years, the three companies have taken turns leading the pack. At one point, NIO's market value neared $100 billion, surpassing BMW and General Motors, and was more than three times that of Li Auto and over twice that of Xpeng at the time.

Li Auto's strong growth cycle began in 2022. By tapping into the untapped extended-range SUV market with its L9, L8, and L7 models, rising sales drove its stock price upward, reaching $47 billion in 2023 — equivalent to the combined market value of NIO and Xpeng, which were mired in difficulties back then.

After the poor reception of its G9 model in 2022, Xpeng's market capitalization dropped to a low of $4 billion. It gradually recovered following Volkswagen's investment and the launch of the MONA M03. At the end of last year, backed by its investments in autonomous driving and robotics, Xpeng overtook both Li Auto and NIO to become the most valuable of the three.

Today, their market caps all land in the same bracket. As of the U.S. stock market close on July 10, Xpeng was valued at roughly $12.5 billion, Li Auto at about $12.2 billion, and NIO at around $12 billion.

The three companies, each having taken distinct paths, have arrived at the same point in the capital market.

Unfortunately, this is no grand meeting at the peak — all of them have lost 70-80% of their value from their respective all-time highs.

Li Auto: A Financial Ledger

Li Auto was not favored by the capital market in its early days. The key to turning the tide was proving one thing: we can make profits.

In the fourth quarter of 2020, relying on its Li ONE model and extreme cost control, Li Auto became the first among the three to achieve quarterly profitability, recording a Non-GAAP net profit of approximately 120 million yuan, and its market capitalization subsequently rose to $35 billion.

In 2023, after the launch of the L9, L8, and L7, monthly sales of all three models exceeded 10,000 units, pushing Li Auto's market value to around $47 billion, surpassing the combined value of Xpeng and NIO during that period.

That year, Li Auto delivered a total of 376,000 vehicles, posted a net profit of 11.81 billion yuan, and its vehicle gross margin exceeded that of Tesla. After the annual report was released, the near-perfect performance drove its market capitalization up again to around $46 billion.

Four days later, the MEGA was launched.

This pure electric MPV, priced at roughly 560,000 yuan, underperformed due to controversy over its exterior design, with stable monthly sales reaching only a few hundred units in 2024. Within five trading days after the new model's launch, more than $10 billion of Li Auto's market value vanished.

If the MEGA was an accidental stumble, the events of the following two years were more like a recurring tragicomedy: the L6 stepped in to support 2024 deliveries with a lower price tag; the i8, which shared a similar design with the MEGA, flopped; it was not until the i6 took over that Li Auto finally scored its first hit in the pure electric vehicle market.

Li Auto once boldly claimed it would sell 1.6 million vehicles in 2025, but ultimately only delivered a quarter of that target. As confidence in sales eroded, its stock price declined. While the L6 and i6 still underpin Li Auto's core sales volume, its once-impressive financial results no longer shine. In 2025, Li Auto's revenue fell 22.3% year-on-year, and net profit plummeted from 8 billion yuan to 1.1 billion yuan, a drop of over 85%.

As its financial performance became less compelling, Li Auto began to tell stories centered on AI and embodied intelligence. In early 2023, Li Auto internally formalized its goal of becoming an AI company. Over the following two years, related initiatives included: continuously advancing intelligent driving technology toward more cutting-edge paths, evolving from dual-system end-to-end solutions to VLA; training the in-vehicle large model MindGPT; launching the mobile app Li Auto Assistant based on the same model, extending its services beyond the vehicle; developing AI glasses called Livis; independently developing the in-vehicle operating system Galaxy OS; and self-developing the intelligent driving chip "Mahe M100".

When the new generation of the L9 was launched this year, Li Auto directly labeled it an "automotive robot" and "the pioneering work of embodied intelligence". At last month's Livis Day, Zhan Kun, head of Li Auto's foundational model team, clarified this year's target: to align its overall intelligent driving capabilities with Tesla's FSD V14 by the fourth quarter.

However, the capital market has not fully embraced this narrative. For one thing, Li Auto's core business remains vehicle sales, and its AI investments are not yet substantial enough to offset the slowdown in its fundamentals. For another, in terms of R&D expenditure ratio and time of market entry, Li Auto lags behind Xpeng. Embodied intelligence is still in the narrative stage, with little tangible progress to show.

Over the past year, Li Auto has seen at least 8 senior executives depart from key roles in intelligent driving, chips, and product development — the very people who were supposed to turn the new vision into reality.

Xpeng: A Call Option

If Li Auto's valuation logic is rooted in its financial ledger, Xpeng's is more like a call option.

In August 2020, Xpeng listed on the New York Stock Exchange as the largest global IPO in the new energy vehicle sector. In less than three months, its market capitalization surged to $50 billion. At the same time, Tesla's stock price was skyrocketing, and Xpeng's P7 coupe, developed as a competitor to the Tesla Model 3, achieved strong sales and positive reviews after its launch. The self-developed assisted driving system XPILOT 3.0 also made its mass-production debut on this model.

Xpeng is the most Tesla-like of the three companies. It was the first to achieve full-stack in-house R&D, the first to deliver tangible results in intelligent driving, and the first to invest in Robotaxi and humanoid robots. In the second half of this year, Xpeng's first batch of mass-produced Robotaxis will begin carrying passengers, and its humanoid robot IRON is also scheduled for mass production in the fourth quarter. When the robot was unveiled last November, it drew massive attention — its highly human-like walking gait even led some to suspect it was a person in a costume.

Xpeng's investments in autonomous driving and robotics predated the current capital boom by several years, and it has already made tangible progress, making its story more credible than many peers. That said, without a solid sales base and sufficient cash flow to fall back on, a valuation built on vision alone can easily collapse.

In 2022, after its flagship SUV G9 flopped at launch, Xpeng launched a major organizational restructuring. Amid sluggish sales and internal turmoil, negative news piled up, compounded by unfavorable macroeconomic conditions, pushing its stock price into a downward spiral. By early 2023, its stock had fallen more than 80%, and its market value dropped below $10 billion — the most severe pullback among the three firms.

It was two fortunate partnerships that ultimately pulled Xpeng out of the quagmire. First, it secured investment from Volkswagen and licensed its technology to the German automaker. On the day the news broke, Xpeng's stock price surged 26.7%. Almost every subsequent disclosure of partnership details drove a 3-5% rally. Second, Xpeng acquired the MONA series from Didi, and the first model under that line, the MONA M03, recorded monthly deliveries exceeding 10,000 units for 11 consecutive months, forming the backbone of Xpeng's sales. In the six months after the MONA M03's launch, Xpeng's stock price jumped nearly 300%, pushing its market capitalization above $20 billion.

Over the following year, Xpeng's years-long investments in autonomous driving and robotics caught the attention of investors, sending its stock to new highs. In November 2025, at its annual AI Day, Xpeng announced three major pieces of news: the debut of the new-generation humanoid robot IRON, the imminent mass production of its Robotaxi, and Volkswagen becoming the first external paying customer for its Turing chip and second-generation VLA model.

The string of announcements drove Xpeng's stock up more than 16% in the following week, pushing its market capitalization to roughly $24.9 billion — an eight-month high that overtook both Li Auto and NIO. Morgan Stanley promptly raised its target price for Xpeng and later named it its top pick for the 2026 Chinese auto industry.

Xpeng still has a long way to go to meet the capital market's high expectations. In 2025, Xpeng's vehicle gross margin stood at 12.8%, lower than NIO's 14.6% and Li Auto's 17.9%. While rising sales and revenue from the Volkswagen partnership briefly returned Xpeng to profitability in the fourth quarter of last year, it slipped back into losses in the first quarter of this year. Xpeng needs more hit models and higher-margin market segments.

Not long ago, Xpeng launched the second model in the MONA series, the L03 — a global vehicle scheduled to launch in Germany in July this year. For the capital market, globalization means Xpeng's growth story does not have to be limited to the fiercely competitive domestic market. In 2025, Xpeng delivered more than 45,000 vehicles overseas, a 96% year-on-year increase. He Xiaopeng, Xpeng's CEO, has set a target of 1 million overseas sales by 2030, which he expects will contribute over 70% of the company's profits.

From autonomous driving and robotics to globalization, each of these areas holds enormous potential. But for Xpeng today, all these grand ambitions and the company's entire cash flow still hinge on a compact vehicle priced at 100,000 to 150,000 yuan.

NIO: An Unrecognized Vision

Like Xpeng, NIO is also essentially selling a call option. But the underlying asset here is not the autonomous driving and embodied intelligence that the capital market favors — instead, it is NIO's controversial battery swapping model, premium services, and diversified business portfolio.

Its core story has never changed since its founding: building mid-to-high-end smart electric vehicles and delivering an exceptional charging experience and services to users. That should have been compelling enough, but without sufficient sales volume to back it up, it has not created a competitive moat — instead, it has imposed a heavy financial burden.

No matter what NIO talks about, the capital market seems to only focus on three things: how many vehicles it sold, how much money it lost, and how long it can keep operating before running out of cash.

NIO was the first of the three to go public, and it has experienced the most dramatic market value swings, with a difference of more than $90 billion between its peak and trough — equivalent to 8 times its current market capitalization.

The trough came in the second quarter of 2019. Persistently low sales and tight cash flow were exacerbated by a recall triggered by battery fires, pushing NIO to the brink: its net loss hit 3.29 billion yuan, and its gross margin plummeted to -33.4%. By October that year, its market value had collapsed to just $1.35 billion, an all-time low. Analysts even began debating whether the company could survive that winter.

The turning point came in April 2020, when the Hefei municipal government injected 7 billion yuan into NIO, resolving its liquidity crisis. In the second quarter, driven by a return to positive gross margins, new vehicle deliveries, Tesla's surging stock price, and loose global monetary policy, NIO's stock began to recover. In early 2021, its market value surpassed that of Ford, BMW, and General Motors, approaching $100 billion — a historic peak that none of the three companies have managed to break since.

After pulling through the near-death experience, NIO resumed projects it had been forced to pause during its darkest days, and also launched in-house R&D for batteries, chips, and smartphones. It also began expanding overseas, building costly showrooms and battery swapping stations in Europe. Each of these initiatives required massive capital expenditure with no short-term returns in sight.

The problem was that sales did not grow in tandem. In 2023, NIO delivered 160,000 vehicles, while Li Auto delivered 376,000 — more than double NIO's figure. NIO's revenue could no longer cover its sprawling R&D and expansion efforts, and its losses widened. Eventually, NIO nearly repeated its 2019 crisis. Even two rounds of capital injections from Middle Eastern investors failed to stop its stock from drifting downward. For most of 2024, NIO's market value was cut in half from its peak the previous year.

After that, NIO was forced to launch a new round of strategic restructuring: it shut down non-core projects related to batteries and smartphones, slowed down overseas expansion, and refocused its resources on its core vehicle manufacturing business. The organizational structures of its three sub-brands were also consolidated.

NIO also adjusted its product strategy and pricing system to be more pragmatic. Following Li Auto's example, it added premium features like large in-vehicle screens, comfortable seating, and extra space — even more spacious than Li Auto's models — to invest in areas that customers can see and experience directly.

These moves led to the launch of two large 6-seat SUVs, the Onvo L90 and the third-generation ES8, with monthly deliveries climbing from 20,000 to 30,000 and then to 40,000 units. At the end of last year, rising sales coupled with expectations of profitability drove NIO's stock to double in the third quarter, lifting its market capitalization from under $10 billion to nearly $20 billion.

That year, although NIO missed its initial sales target, it successfully delivered on its promise of fourth-quarter profitability, recording a Non-GAAP net profit of roughly 730 million yuan. In the first quarter of this year, NIO returned to profitability again. Its market capitalization has since fluctuated within the $10-20 billion range.

After scaling back its non-core business lines, NIO is left with a single priority: selling cars. The capital market's valuation logic for it has become increasingly aligned with that of a traditional automaker, requiring it to continuously prove its profitability. In this framework, NIO's position is the most delicate of the three.

Unlike Xpeng, whose technological ambitions are directly baked into its core narrative and earn it a higher valuation, NIO's fundamentals as a smart electric vehicle maker have long underperformed Li Auto's.

Its vision is grand, but the path to monetization remains unclear, making it unrecognizable by the capital market's standard valuation models.

No matter how the three companies define themselves, the capital market has used its capital votes to lock all their market values within the $12-13 billion range.

What is even more thought-provoking is that all three companies have lost the majority of their value from their respective all-time highs — NIO has lost over 85%, Li Auto more than 70%, and Xpeng over 60%.

In the past, smart electric vehicles enjoyed a scarcity premium, but today, the sector has evolved from a blue ocean to a red ocean, populated not just by NIO, Li Auto, and Xpeng, but also by Leapmotor, BYD, and Geely. As the penetration rate of new energy vehicles exceeds 60%, the capital market's valuation logic for the sector has gradually shifted from high-growth tech stocks to traditional auto stocks characterized by high marginal costs and low profit margins.

Yet Tesla's market capitalization has multiplied 10 times since 2020, making it the most sought-after star in the capital market. What underpins this tenfold surge is no longer just how many vehicles it sells, but the progress of its Robotaxi program, FSD subscription metrics, and the mass production timeline of its humanoid robot Optimus.

NIO, Li Auto, and Xpeng are all moving down that same path. But the road ahead is getting narrower and more treacherous.

This article is from the WeChat public account "Yunjian Insight", written by Liu Yimo, edited by Wang Hailu, and published with authorization from 36Kr.