Chinese car manufacturer Li Auto: luxury at a budget price

Inhaltsverzeichnis

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Episode three of a ten-part series in which heise/Autos looks at the Chinese car market. There, Chinese electric car producers - some of them strongly supported by the so-called Communist Party - are just warming up in order to soon roll up the domestic and international markets with a lot of momentum and a colorful bouquet of state-of-the-art cars. This is likely to have consequences for German car manufacturers, whose largest single global market has been China for several years.

On the one hand, this will foreseeably change the picture on German and European roads, but it will also have repercussions for German producers and their sales in China, the world's largest single market.

Of three prestige electric car brands in China - Nio, Xpeng and Li Auto - Li Auto slipped into the role of the problem child in 2022. In August 2022, the company sold just 4571 cars. Chinese newspapers focus very much on these figures. At the beginning of each month, the sales of the three manufacturers from the respective previous month are compared very closely. Between jubilant arias and doomsday mood, sometimes just four weeks pass.

Li Auto differs from the competition because the manufacturer relies on a range extender. The large battery is kept alive by a small gasoline engine in an emergency. The brand thus appeals to different customers than Xpeng and Nio. However, the slumping sales figures had no technical background. The portfolio was simply tiny for a long time. Strictly speaking, it consisted only of the Li One. A large SUV that has already been delivered since April 2020.

Number 1: An SUV with hybrid drive

The Li One costs the equivalent of about 45,000 euros. To put the price in perspective: A BMW X5 starts at 82,000 euros in China, while an Audi Q5 costs around 55,000 euros. In the Li One, two electric motors (100 and 140 kW) guarantee propulsion, while a 1.2-liter three-cylinder supplies the battery, which alone only allows a range of 180 kilometers. After two and a half years on the market, the model ran out of steam.

Special feature Range Extender

The L9 has pushed sales figures up again. This is the brand's new flagship, a luxurious full-size SUV. The technology is similar to that of the Li One. Two electric motors (125 and 200 kW) drive the car, while a four-cylinder gasoline engine fills the battery. The car would travel 215 kilometers on electric power alone. Once the battery is charged and the tank is full, it should travel about 1300 kilometers, at least according to Li Auto. Cost: 63,000 euros. As soon as the vehicle was available, sales climbed to 11,531 cars. An increase of 152 percent compared to the previous month.

German competition outperformed

The Germans are not much of a competitor because they are too expensive: the comparable BMW X7 and Mercedes GLS cost between 168,000 and 190,000 euros. Chinese customers have long since been unwilling to pay such a premium just to drive a German make. Especially since Chinese manufacturers have long been leaders in many areas of electromobility.

Tesla is taking these problems seriously. In October 2022, the American manufacturer lowered its prices for the Model 3 by five percent (to the equivalent of 36,000 euros). The Model Y became nine percent cheaper (now available in China from the equivalent of 43,000 euros). Mercedes also significantly reduced the prices of its two electric cars EQE and EQS in China.

The L8 is expected to be Li Auto's final sales booster. But it won't reinvent the wheel either. Two electric motors, a range extender, 1300 kilometer range. But with somewhat more restrained dimensions. From November, the slightly smaller SUV will be available from 54,000 euros.

Diligent money collectors

The fact that Li Auto has the means to launch new models at such a pace at all - after only an SUV had to fly the flag for years - is due to its IPO. In the summer of 2020, the Corona pandemic and a trade war between the U.S. and China were raging. Nevertheless, the automaker managed to raise $1.2 billion on the stock market during this phase. The fact that the parent company is officially headquartered in the Cayman Islands does not seem to bother investors and shareholders. The IPO in Hong Kong in 2021 raised a further 1.7 billion euros.

The money should enable very ambitious goals. In 2021, Li Auto was able to sell just 90,500 vehicles. In 2022, it should have been around 120,000 cars. This year, according to an older plan, there should be 2.2 million units. A utopian plan. But at least it shows that Li Auto is aiming high and can be a threat to German manufacturers.

Earn money with subscriptions

Like the other major electric car producers in China, Li Auto is also focusing on making money with digitalization. The software of the cars, the artificial intelligence of the driving assistance systems and entertainment apps are considered core competencies of the brand. As such, Li Auto offers a premium subscription that includes various service packages, streaming services and other apps for the vehicle. "Li Auto's top priority is to become a leader in autonomous driving technologies and contribute to building an electric vehicle ecosystem that can drive the future of e-mobility," said Mingming Huang, one of the shareholders, at the IPO in New York.

(fpi)