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

Li Auto Inc., an electric vehicle (EV) manufacturer based in Beijing and founded in 2015, is making its second significant push into China’s intensely competitive pure electric car market with the launch of the Li i8 SUV, following the disappointing performance of its earlier all-electric multipurpose vehicle (MPV), the Mega. Initially distinguished by a focus on extended-range hybrids — vehicles that combined a combustion engine to alleviate range anxiety for drivers — Li Auto emerged as the first among China’s EV startups to post an annual profit in 2023 [para. 1][para. 2][para. 3].

Seeing a surge in pure EV popularity, which comprised over 60% of new-energy vehicle (NEV) sales in China during the first half of 2024, Li Auto introduced the Mega, a luxury seven-seater MPV, in March 2024. However, the Mega’s distinct design was widely mocked, and the company faced criticism and accusations of inflating market expectations. Monthly sales of the Mega averaged only 1,100 units vs. an 8,000 target, leading the company to postpone other pure EV launches, including the i8 [para. 4][para. 5][para. 7][para. 8][para. 9].

After a year’s delay, Li Auto released the i8 on July 29, 2025, positioning it as a high-tech SUV with a self-developed intelligent driving system and an expanded charging network of 3,000 supercharging stations nationwide, a significant jump from the 300 stations available when the Mega launched [para. 6][para. 11]. CEO Li Xiang conceded that the company was still a newcomer in the pure EV market. Following the Mega's poor sales and feedback from customers, Li Auto restructured its strategy—making the Mega a separate product line, refining the i8’s tail design, and engaging directly with MPV owners to gather input for improvements. By April 2025, a new Mega version—the Mega Home—boosted overall monthly sales of the Mega line to nearly 3,000 units [para. 10][para. 12][para. 13][para. 14]. Customer feedback also led Li Auto to streamline the i8 lineup to a single, higher-spec, six-seat model after initial orders confirmed market preference [para. 15].

Nevertheless, marketing missteps ensued. A widely circulated crash-test video showing the i8 colliding with an 8-ton Chenglong truck raised safety concerns, as the truck’s cab was heavily damaged—provoking a strong response from the truck manufacturer and leading to an 8% drop in Li Auto’s Nasdaq shares in the days following the i8’s launch [para. 16][para. 17][para. 18].

On the technology front, the i8 debuts Li Auto’s ambitious “vision-language-action” (VLA) model, advancing its smart driving system. The company claims this architecture will, in a year, allow the system to travel 1,000 kilometers per intervention—up from 12 km to 300 km with the previous system. CEO Li announced a substantial investment of 6 billion yuan (about $837 million) into AI and robotics development, aiming for Li Auto to evolve into a full-fledged AI company, provided it can sustain a gross margin of about 20%—a threshold recently met according to its Q1 2025 earnings [para. 19][para. 20][para. 21][para. 22][para. 23][para. 24][para. 25][para. 26].

Despite its technological advances, Li Auto’s market share lags behind dominant players. In the first half of 2025, BYD held 30.9% of China’s NEV market, Geely 12.5%, and SAIC 8.8%, while Li Auto ranked ninth at 2.9%. The company’s deliveries fell 42% quarter-on-quarter in Q1 2025, with net profit dropping 82% to 647 million yuan. Still, the company remains optimistic, planning to launch another all-electric model, the i6, later this year, targeting car upgrade cycles and rolling out old-for-new subsidies for its earlier hybrid models [para. 27][para. 28][para. 29][para. 30][para. 31][para. 32][para. 33].