Li Auto Overhauls Strategy as Guidance Disappoints, Pins Hopes on New i6 SUV
Li Auto Inc. is undertaking a significant strategic overhaul, accelerating its product pipeline and simplifying its model lineup as it confronts intensifying competition and a sharp projected slowdown in sales. The Chinese electric vehicle maker is betting on its upcoming i6 pure-electric SUV to regain momentum after issuing a grim forecast for the third quarter.
The company projected third-quarter deliveries to fall to between 90,000 and 95,000 vehicles, a year-over-year decline of 37.8% to 41.1%. Revenue is expected to plummet to a range of 24.8 billion yuan to 26.2 billion yuan, representing a drop of 38.8% to 42.1% from the same period last year. The guidance overshadowed a profitable second quarter.
In an earnings call, Chief Executive Officer Li Xiang acknowledged that the company’s product iteration pace has been too slow, stating it was being "outplayed by rivals." In response, Li Auto is reorganizing its sales system, reducing the number of available configurations for its models, and preparing to launch its new i6 large five-seat SUV in September.
The strategic pivot comes after the company reported second-quarter revenue of 30.2 billion yuan ($4.1 billion), down 4.5% year-over-year, though up 16.7% from the first quarter. Net income for the quarter was 1.1 billion yuan, marking the company's 11th consecutive profitable quarter. Li Auto ended the period with a cash reserve of 106.9 billion yuan.
Acknowledging Setbacks, Accelerating Pace
During the earnings call, management conceded that its recent product strategy had left it vulnerable to faster-moving competitors. "The problem we face is that when we play one card, our peers have already played two," CEO Li Xiang said. "Our iteration speed allowed competitors to see our hand."
To counter this, Li Auto plans to drastically simplify its offerings by "reducing the number of SKUs," a return to the single-configuration strategy that characterized its earlier Li ONE and L9 models. Li said this approach would "maximize competitiveness and provide customers with the best product and value." The company committed to faster iteration at both the platform and product level. "We believe that by 2026, we will have a stronger lead in both vehicle products and AI than we did in the L9 era of 2022," he added.
i6 to Lead EV Push with 'Public Opinion Defense'
The company is placing significant hopes on the Li i6, a pure-electric SUV slated for a September launch and delivery. Li described the vehicle as set to become "the most competitive product in the large five-seat SUV market," touting its unique design, class-leading space, long range, and superior handling. The model will be available in both rear-wheel and all-wheel drive versions.
President Ma Donghui added that the i6 is expected to become a high-volume seller in the company's battery electric vehicle portfolio. Alongside the product launch, Li Auto will implement a new "public opinion defense" strategy to ensure that potential issues are addressed before they escalate, part of what the company calls a more "user-centric marketing approach."
Leaning on In-House Tech Advantage
Li Auto continues to invest heavily in its technological capabilities, highlighting its artificial intelligence and in-house chip development as key differentiators. The company’s recently released VLA (Vision-based Language-guided Autonomy) driving model boasts 4 billion parameters, an improvement President Ma Donghui likened to "upgrading from ChatGPT 3.5 to 4.0." The full version of the VLA system will be rolled out to all AD Max-equipped vehicles via an over-the-air update in September.
Progress on its self-developed chip is also on track, according to Chief Technology Officer Xie Yan. The chip has completed tape-out and is undergoing in-vehicle testing, with plans for it to be deployed in flagship models next year. The company claims the chip's performance in running large language models is double that of the strongest chip currently on the market. "2025 has been the darkest hour for the assisted driving industry, but this is the darkness before dawn," Li Xiang said, positioning VLA as a clear path toward Level 3 and higher autonomous driving.
Global Ambitions and Network Expansion
Li Auto has officially designated 2025 as its "first year" for global expansion as it moves into the second phase of its long-term corporate strategy. This phase, running from 2025 to 2027, focuses on entering global markets and expanding its pure-electric product line. The company has established R&D centers in Germany and the U.S. and is building out its overseas sales and service organizations, with an initial focus on markets in the Middle East, Central Asia, and Europe.
Domestically, the company continues to expand its charging infrastructure, which now includes over 3,100 charging stations. While it has begun opening its network to other vehicle brands, Li Auto emphasized that its own customers will continue to receive preferential treatment, including exclusive electricity prices and other perks.