In Depth: Li Auto Pins Its All-Electric Hopes on New SUV

Li Auto Inc., a Beijing-based electric vehicle (EV) manufacturer founded in 2015, is making a renewed bid to enter China’s highly competitive pure electric car market with the launch of its SUV, the Li i8. This follows the disappointment of its previous attempt with the Mega multipurpose vehicle (MPV), which failed to meet expectations[para. 1]. Li Auto originally found success with its extended-range hybrids, distinguishing itself as the first among Chinese new-energy vehicle (NEV) startups to post an annual profit in 2023, thanks to vehicles that use both electric motors and internal combustion engines to ease “range anxiety” for consumers[para. 2][para. 3].

The move to pure EVs was driven by China’s rapidly growing interest in such vehicles, which made up over 60% of NEV sales in China in the first half of 2024. Li Auto’s Mega MPV was launched in March 2024 with high hopes, promoted as offering fast-charging capabilities. However, due to the company’s limited network of only around 300 supercharging stations at launch (compared to over 3,000 now), sales fell significantly short, averaging just 1,100 units per month against a target of 8,000[para. 4][para. 8][para. 10]. Criticism focused on the vehicle’s design and accusations that the company inflated expectations[para. 5]. Following this failure, Li Auto delayed new model launches, including the i8, and re-evaluated its strategy, ultimately deciding to treat its pure EV MPV and SUV lines as distinct products and to use customer feedback to guide improvements[para. 12][para. 13].

Li Auto eventually launched a revamped MPV, the Mega Home, in April 2025, which helped boost the Mega product line’s monthly sales to around 3,000[para. 15]. Learning from customer preferences, the i8 lineup was trimmed to a single high-end six-seat model[para. 16]. However, the i8’s launch in late July 2025 was marred by controversy when a crash-test video aired by Li Auto showed the i8 sustaining minimal damage in a collision with a Chenglong heavy truck, which was heavily damaged. The video, which failed to obscure the truck’s branding, sparked backlash from Chenglong and public concern about both brands’ safety, resulting in Li Auto’s stock dropping by 8% on Nasdaq between July 29 and August 1[para. 17][para. 18][para. 20].

Technologically, the i8 marks a significant shift for Li Auto, equipped with a proprietary intelligent driving system based on a vision-language-action (VLA) large model. This smart-driving platform leverages reinforcement learning, aiming to increase the system’s miles per intervention (MPI) — distance between necessary human interventions — to 1,000 kilometers within a year, up from 300 kilometers achieved in the last year[para. 22][para. 26]. To support such technological advances, Li Auto plans to invest 6 billion yuan ($836.6 million) in AI research and development and ultimately transition into an AI-focused company[para. 28]. The company maintains a gross margin around 20% to fund these ambitions, reporting 20.5% for Q1 2025[para. 30].

Despite these efforts, Li Auto remains a minor player in China’s NEV market, holding just 2.9% of market share in the first half of 2025, ranking ninth behind giants like BYD (30.9%), Geely (12.5%), and SAIC (8.8%)[para. 34][para. 35]. Moreover, Li Auto saw a 42% quarter-on-quarter drop in both quarterly sales and revenue in early 2025, and an 82% plunge in net profit to 647 million yuan[para. 37]. Yet, company executives are optimistic, projecting further growth as more than 6 million NEVs are expected to be retired soon, with pure EVs likely favored as replacements. Li Auto plans to launch its third pure electric model, the i6, later in 2025, and is offering trade-in subsidies for its original Li One SUV owners[para. 38][para. 39].