EV-Maker Li Auto Dispels Rumors of Exclusive Uzbekistan Sales Network, Clamp Down on Russian Exports

Li Auto Inc., a Chinese electric vehicle (EV) manufacturer, has denied establishing any official dealership or sales channels in Uzbekistan. This clarification came after an image circulated online suggesting that Li Auto was signing a sales agreement with an Uzbek dealer named Yas Auto. The company confirmed that the image and the associated claims were false [para. 1][para. 3].

The rumors had also suggested that Li Auto would restrict parallel exports of its vehicles to Russia via Uzbekistan starting May 1, and would disable the onboard systems of cars exported through unofficial channels. These rumors have been debunked by Li Auto's statement, which provided reassurance to parallel exporters who profit significantly from re-exporting Chinese-made vehicles through grey market channels [para. 2][para. 4].

Despite not officially exporting overseas, Li Auto’s vehicles have found their way into markets outside China, such as Central Asia and the Middle East, often ending up in Russia. This discrepancy between delivery numbers and mainland registrations was first noticed by Li Xiang, the founder and CEO of Li Auto, in July last year. By the end of the year, it was found that up to 3,000 vehicles per month were being re-exported at peak times [para. 7][para. 8].

The exit of Western automakers like BMW and Mercedes-Benz from Russia following its invasion of Ukraine created a vacuum that Chinese-made vehicles have filled. Li Auto’s high-end SUVs became particularly popular in Russia due to this shift in market dynamics [para. 9][para. 10].

Parallel exporters have capitalized on this opportunity throughout 2022 and 2023, making substantial profits by selling these vehicles at higher prices due to their scarcity in Russia. The cost savings from using low-tariff routes through Eurasian Economic Union (EAEU) countries are significant; for instance, re-exporting a $44,000 car through EAEU can save about 2 million rubles ($21,600) compared to direct shipment [para. 11][para. 12].

However, there are challenges with grey market imports in Russia; these vehicles are not adapted for the Russian climate and lack local after-sales services. In response to these issues and potential concerns from overseas customers regarding service support, Li Xiang announced plans in February to establish a direct sales channel in the Middle East for better control over software maintenance and spare parts supply [para. 13][para. 14].

Despite speculation about entering the Russian market directly, industry insiders believe that Li Auto is unlikely to do so soon. Therefore, its cars may continue reaching Russian consumers through parallel exports [para. 15].