In August, several car companies have started a new round of price reductions through limited-time discounts and other methods. Even Li Auto, which previously claimed to not consider price reductions, couldn’t hold out any longer.
Although Li Auto has not officially announced a price reduction, according to reports from multiple Li Auto stores, the current discount policies for Li Auto include a government subsidy of 10,000 Yuan (1,400 US Dollar) in Sichuan region, 5,000 Yuan (684 US Dollar) maintenance fund, and an 8,000 Yuan (1,100 US Dollar) subsidy in Changzhou, Jiangsu. Since Li Auto issues invoices from different locations, the subsidy in Sichuan is equivalent to the national subsidy; the maintenance fund can be directly converted into 5,000 Yuan (684 US Dollar) cash. However, the Changzhou subsidy requires obtaining a license plate in Changzhou. Overall, this translates to a direct discount of approximately 15,000 to 23,000 Yuan (2,053 to 3,147 US Dollar) when purchasing a car. In addition, other policies include ordering a car and receiving a free Switch game console, as well as 20,000 points for immediate vehicle purchase.
At the beginning of August, Li Auto indirectly reduced prices by releasing new car models. On August 3rd, Li Auto launched the Li Auto L9 Pro with a nationwide retail price of 429,800 Yuan (58,800 US Dollar), which is 30,000 Yuan (4,100 US Dollar) lower than the L9 Max. The only difference between the two models lies in their intelligent configurations. The Li Auto L9 Pro comes standard with the Ideal Intelligent Driving AD Pro system, which enables safe and comfortable high-speed NOA assisted driving. On the other hand, the Li Auto L9 Max comes standard with the Ideal Intelligent Driving AD Max system, which allows for NOA assisted driving in all scenarios.
With the advantage of the extended-range new energy policy and precise product positioning for household demand, Li Auto has experienced rapid sales growth in the past two years, currently ranking first among emerging car manufacturers. Data shows that in July this year, Li Auto delivered a total of 34,000 vehicles, an increase of 227.5% compared to the same period last year. Currently, Li Auto offers three models for sale: L7, L8, and L9. Among them, the entry-level model L7 performs the best in the market while sales of the high-end model Li Auto L9 are relatively lower. Additionally, its monthly sales have declined from over ten thousand units since its initial launch.
Although Li Auto‘s monthly sales exceeded 30,000 units in June and July, overall, the month-on-month growth rate of Li Auto is slowing down. Looking at the months of May, June, and July, the month-on-month growth rates were 24.5%, 15.2%, and 4.7% respectively. During the second-quarter earnings conference call, Li Auto projected vehicle deliveries of 100,000 to 103,000 units in the third quarter with an average monthly delivery volume of around 34,000 units, which is basically on par with July. Additionally, due to events such as suing auto repair shops, Li Auto has been continuously discussed in public opinion with ongoing controversies surrounding its actions.
Currently, Li Auto is facing increasingly fierce competition. This year, companies such as Great Wall Motors and Geely have intensified their layout in the 6-seater mid-to-large-sized plug-in hybrid SUV market, attempting to snatch a larger share from Li Auto. Among them, the Blue Mountain launched by Wey has already captured part of the market, and Denza has also introduced the N8. The launch of these products poses a challenge to Li Auto.
Since August, there have been more than 10 car companies in the market trying to defend their market share by lowering prices through different methods. Faced with intense competition, Li Auto faces challenges in achieving significant sales growth. Lin Jiayi, the General Manager of Xuanjia Fund, believes that the month-on-month growth of Li Auto‘s monthly sales may significantly slow down. In terms of advantageous business aspects, the limited space in family scenarios and its temporary moat may not be stable enough. The potential expansion into other businesses is a highly competitive market. Currently, the market is filled with new product price reductions and promotions from joint ventures aiming to maintain their market share. Against this backdrop, Li Auto‘s growth prospects face challenges.