Gasgoo Munich- Li Auto Chairman and CEO Li Xiang said during the company's second-quarter 2026 earnings call on August 26 that batteries developed under the automaker's own brand would gradually be introduced across its entire model range starting in the second half of this year. Following its development of proprietary chips, batteries are becoming another important part of Li Auto's efforts to deepen vertical integration.
Mr. Li expects batteries and chips to become two of the most important technological barriers in the embodied intelligence industry over the long term. He stressed that developing these technologies internally does not imply that suppliers' existing products are inadequate. Instead, he argued that companies entering the embodied intelligence era need direct control over critical technological capabilities.
Beyond chips and batteries, Li Auto plans to make electric powertrain technologies and related product capabilities another focus of its next stage of development.
New-gen Li L8; image source: Li Auto
Li Auto's battery development has already progressed to series production. The all-new Li L8, launched in June, uses the company's self-developed ultra-fast-charging battery. Public information indicates that Li Auto develops and manufactures the battery pack in-house, while the cells are designed by the automaker and produced by a manufacturing partner.
Li Auto also established a battery joint venture with Sunwoda in October 2025. Compared with relying solely on external procurement, this approach is intended to give the automaker greater control over product definition, supply security and costs.
The push for greater in-house development comes as Li Auto faces financial pressure. Second-quarter revenue fell 15.1% year over year to RMB 25.667 billion, while the company recorded a net loss of RMB 1.705 billion, compared with a profit a year earlier.
Vehicle gross margin declined to 9.4% from 19.4% in the same period last year, while overall gross margin fell to 11.0% from 20.1%. Although both figures improved from the first quarter, they remained below the 15% to 20% range that Li has described as a healthy gross margin.
Li Auto President Ma Donghui said cyclical price fluctuations in key upstream raw materials and components had weighed on margins this year. In the short term, the company plans to mitigate cost pressure through long-term purchasing agreements and more precise operational management. Over the medium to long term, it aims to achieve structural cost reductions through full-stack in-house development and a more self-controlled supply chain.
In-house development, however, does not automatically translate into lower costs. Batteries and chips require substantial investment and long development cycles, meaning their potential cost and technical benefits depend on achieving sufficient deployment scale.
Li Auto delivered around 98,300 vehicles in the second quarter, down 11.5% year over year. With sales under pressure and research and development spending remaining high, the company will need to demonstrate whether its proprietary batteries and chips can improve margins, strengthen product differentiation and generate sustained economies of scale.
