Li Auto aims to be NO.1 smart electric vehicle maker in China by 2025

Beijing (Gasgoo)- Li Auto aims to be NO.1 smart electric vehicle maker in China, according to the startup’s 2025 Strategy announced on February 22. In an internal letter, Li Xiang, the company’s founder, chairman and CEO, said that its target for 2025 is to obtain 20% market share in the world’s largest auto market.

Expectations for 2030

In the next 10 years, the new energy vehicle (NEV) industry is expected to see fast growth as China strives to reach carbon emission peak by 2030 and Europe countries have set stricter standards for emissions. According to Li Auto’s forecast, the segment will have much higher growth rate than those predicted by most institutes and will account for 60% of the global passenger vehicle sales by 2030.

However, the world economy, affected by COVID-19 and other factors, may continue to face uncertainties. Based on this expectation, Li Auto predicts that global sales of passenger vehicles will be about 65 million units while global sales of NEVs will be up to 40 million units, half of which will be from China.

Li ONE; photo credit: Li Auto

The CEO said in the letter, autonomous driving segment will experience development at the rate of Moore’s Law. By 2030, all smart electric vehicles will come standard with L4 autonomous driving, which will become the operating system of smart electric vehicles.

Besides, charging will be much more convenient with the development of ultra-fast charging technologies. And an all-new business value chain will be formed with new environment-friendly forms of power generation, charging network with energy store capability and V2G.

With the wide application of new technologies, customers’ demands are expected to become polarized. Some will expect their vehicles to be private space for themselves and their families while others just take vehicles as means of transportation to take them from one place to another. To Li Auto, smart electric vehicles will be more valuable private space than house. It is the company’s mission to build a mobile and happy home for customers.

Along with opportunities, there will be various challenges in auto industry. First, competition will become increasingly intense. The CEO said that in the traditional internal combustion vehicle era, a brand can survive and grow as long as it has its unique positioning and distinct product portfolio. But smart electric vehicles will be totally different. Data and chip will be vital for the competition. Only with at least 25% market share may a vehicle company become a smart electric vehicle leader across the world.

The second challenge lies in energy. Currently, limited availability of charging infrastructure is the biggest obstacle in popularizing electric vehicles. Consequently, customers will not prefer electric vehicles over traditional ones unless charging stations are as accessible and convenient as petrol stations. So in the next 10 years, Li Auto will adopt two powertrain roadmaps: EREV (extended-range electric vehicles) system and high-voltage battery electric vehicle platform, to meet different demands for different conditions.

The third challenge is the company’s structure. In smart electric vehicle era, the industry needs smart organization. The fast growth of the segment requires the way to manage a company should be totally different.

Against the above background, Li Auto is ambitious to become NO.1 player in the global smart electric vehicle market by 2030.

Efforts by 2025

In the letter, Li Xiang said from 2015 to 2020, the company went from zero to one. Like most startups, lack of resources and investment is the problem, so striving for survival is the company’s core target at this stage. But it managed to deliver the Li ONE, which was the top-selling new energy SUV model in China last year.

In the next five years, Li Auto will grow from one to ten with strong development momentum. The main challenge during this period is to be a leader by sales among smart electric vehicle brands in China and a contender for leadership in the global market.

Li Auto predicts that China will sell more than 8 million smart electric vehicles in 2025. If a company wants to be a leader in the segment, it needs to gain at least 20% market share. That means the company’s sales need to exceed 1.6 million units in 2025.

But that is a huge challenge. According to data from the China Association of Auto Manufacturers, the country’s annual NEV sales reached 1.367 million units in 2020 while Li Auto said it delivered 32,624 Li ONEs during the whole year. So there is an enormous gap.

In order to accomplish the ambitious target, Li Auto must have solid reserves of talents and fund to maximize product value.

In the next 5 years, Li Auto will enlarge its customer base to more family users who wants their own mobile home. Thus the company will offer much more premium smart electric vehicle models, which will be built on its second-generation EREV platform X, or one of its two battery electric vehicle platforms, Whale and Shark.

In the future, the startup will continue to develop SUV models with a full-size premium electric SUV to come in 2022. Afterwards, the company plans to expand the product portfolio with mid-size and compact SUV models.