Li Auto lowers its annual sales goal for 2024 for the second time in a row, Chinese outlet LatePost reports. Initially, this automaker aimed to sell 800,000 units in 12 months this year. After the unsuccessful launch of the Li Mega, the sales target was lowered to 560,000 – 640,000 units. The planned sales goal was now sliced to 480,000 cars in response to Li’s market performance and strategy switch. Li Mega is the company’s first all-electric car, as Li Auto has previously focused on EREVs only.
Li Auto is a well-known Chinese high-end EREV manufacturer that launched in 2015. It shook the Chinese market in 2023 by selling over 376,000 units. In 2024, Li jumped into the EV segment with the all-electric minivan Mega. This MPV marked the start of the transition from hybrids to electric cars. However, its launch wasn’t successful, leading to a drastic change in Li’s strategy and two sales goal adjustments in a row.
What are Li Auto’s problems?
Last year, Li’s model line comprised three lookalike EREV crossovers: L7, L8 and L9. According to the brand’s representatives, they have followed the marketing model of the Apple iPhone, offering suitable products for each customer group. However, Li’s ambition was to enter the BEV market as well. According to Li Xiang, founder and CEO of Li Auto, they have decided to enter the all-electric segment because fast charging technology blocked the range anxiety of potential buyers.
As a result, Li Auto announced its strategy of switching to the electric cars segment. Li planned to launch at least two all-electric models in 2024 and three more EVs in 2025. They have also set an ambitious annual sales volume goal of 800,000 units. However, their first EV (Li Mega) launch turned into a huge disappointment.
The Mega (see specs) started sales in March 2024 at 559,800 yuan (77,350 USD). Li Auto reported it planned to sell approximately 8,000 units of Mega monthly. However, they sold 3,229 units in March and only 1,145 cars in April. The reason for the failure is an underestimation of the harsh EV market. The Mega appeared to be too expensive. At the same time, the sales volume of Li’s EREV line started to decline due to the rise in the customers’ demand for Aito M7 and Aito M9 SUVs. Another reason was Mega. According to Li Xiang, this huge MPV didn’t leave space in the stores for the Li L8 model.
For clarity, in April 2024, Li sold 25,787 units. Sales data by models as follows:
- Li L7 – 10,666 cars (down 1% M-O-M)
- Li L9 – 6,560 cars (down 23,7% M-O-M)
- Li L8 – 5,035 cars (down 21.2% M-O-M)
- Li L6 – 2,381 cars (launched in April)
- Li Mega – 1,145 cars (down 64.5%M-O-M)
As a result, Li Auto lowered its annual sales goal from 800,000 units to just 560,000 – 640,000 cars. On May 21, Li announced the launch postponement of its second electric car for 2025. This move indicated the massive strategy switch as Li decided to once again rely more on EREVs. And the postponement of the Li’s EV has lead to another annual sales goal adjustment since the estimated sales volume of that postponed electric SUV reached 10,000 units per month.
A new sales goal
As mentioned, the Li’s latest 2024 sales goal is 480,000 units, down 40% compared to the initial 800,000 cars. Worth mentioning the Li Auto sold 141,207 cars in first five months of the year. It means they have 338,793 more cars to deliver in next seven months. It means Li needs to sell at around 50,000 cars monthly. For comparison, its sales volume reached 35,020 units in May.
Judging by Li’s current sales volume, 50,000 per month is still quite an ambitious target. However, Li Xiang is confident with the brand’s sales volume. He underlined that the company is currently satisfied with L7, L8, and L9 sales performance and has no plans to reduce prices in the future. Mr. Li also mentioned that the launch of the Li L6 crossover in April was “a huge success”. This is why Li Auto still seeks to sell around 480,000 cars this year.
Investors and customers were drawn to LI Auto early on. But that was before they realized that the feisty start-up was building something other than an “all electric EV”.
After building and selling EREVs, exclusively (with both fossil fuel engine and an e-motor), Li Auto overestimated its ability to find a niche in the established Battery Electric Vehicle (BEV) market, with what is a radically designed MPV, the Meta.
It kind of reminds me of Ford’s effort to compete with then Japanese intruders, with the radically designed Taurus back in 1982.
Personally I admire Li’s courage to break from the herd, with a novel MPV design.
Li Auto is one of the only three EV makers that made money, others are burning money. This showed that Li Auto is a very cautious company. The fact that Li Auto refused to cut price also showed that it want to protect its image as premium auto company. Whether this will succeed or not, to be honest, is questionable since other EV makers are cutting prices and they have good EV cars too.