Li Auto: the first Tesla chaser to turn a profit
Li Auto has hit the headlines with its new Mega MPV
Nascent but highly profitable Beijing firm is moving from range-extenders to EVs, starting with a striking super-MPV
The most eye-catching launch at the Guangzhou motor show last week was a slippery, 5.3-metre-long electric MPV called the Mega.
The car sharply divided opinion with its truncated nose and aero-optimised ‘wind blade’ that fused the body with the C-pillars to wrap around the back end.
It was the brainchild of Li Auto, a Chinese ‘new energy vehicle’ start-up that has steadily become the most successful of the fast-followers of Tesla, beating the likes of Nio, Xpeng, Lucid, Rivian, Fisker and Zeekr to post profits in the past two quarters.
In fact, so successful has Li become that in October it outsold Tesla in China with 40,423 wholesales (sales to dealers) against 28,626, according to figures from sales aggregator Bestsellingcarsblog.com.
The sheer chutzpah of the Mega was even more surprising, given that Li has so far built its reputation and sales growth on a range of elegant but somewhat bland large SUVs.
However, by using an electric drivetrain, Li triggered an even more seismic shift in its brand direction by switching away from the plug-in hybrid strategy it has used to entice premium buyers into said SUVs.
China is awash with new electric or electrified brands, but Li, Xpeng and Nio stand out for being independent of the large automotive conglomerates, many of which are state-owned.
Li was started in 2015 by entrepreneur Li Xiang, for whom the company is named, after he made a name (and fortune) for himself building Autohome, a Chinese equivalent of Autotrader.
The company was keen on environmental technology but eased into the EV space by first adding a small combustion engine to extend the range of the battery.
Its first car, the Li One SUV, used a 1.2-litre turbocharged petrol engine to achieve the range needed for it to be pitched at affluent, outdoorsy city families.
Since then, the One has been superseded by the 7, 8 and 9, SUVs each measuring more than five metres long and boosted by a 1.5-litre engine. The battery element, however, is far from token: the pack in the 7 measures 42.8kWh to give a claimed pure-electric range of 130 miles.
The Mega, however, moves Li into a pure-electric era. On the company’s upbeat third-quarter earnings call to analysts, Li Xiang spoke of “three breakthroughs” that the Mega and all subsequent Li EVs would offer customers, the first of which was ultra-rapid charging.
The Mega includes a 103kWh battery pack with a range of 435 miles, according to reports, and a claimed charging speed of 520kW means that it could theoretically add 311 miles of range to its CATL Qilin 5C cells in just 12 minutes.
Li lacks Nio’s network of battery-swapping stations or Tesla’s peerless charging network, but it's building its own ‘5C’ charging network with the speeds capable of delivering on the CATL battery’s promise.
The company said it wants to establish 300 highway 'supercharger’ stations by the end of the year in China. Tesla claims to have more than 1600 in the country already.
The other "breakthroughs" Li has made are promised to result in class-leading interior space and class-redefining design. “We will be bringing a design language from decades down the road,” Li Xiang told analysts of future Li EVs, which will include saloons.
Otherwise, Li offers what most its Chinese peers do, including high-tech, multi-screen interiors and enough seating flexibility to use the vehicle as an occasional camper.
Level-two-plus autonomous driving enhanced with lidar is another feature, reducing the driver’s need to keep their hands on the wheel (although there's no 'eyes off' level-three capability yet).
Li has sold more than 500,000 vehicles since it started business in 2019, of which 284,647 were delivery in 2023. That puts it ahead of Nio’s tally of 399,549 by the end of September.
The two are often compared because Nio was created in 2014, the year before Li, and competes in the same premium ‘new energy’ SUV market.
What's perhaps most impressive about Li, given its youth, is that the Beijing-based company makes money. In the third quarter this year, it posted an operating profit equivalent to £262 million – its second quarter of profitability.
By contrast Nio, lost the equivalent of £766m in the second quarter (it has yet to report for the third quarter).
The market has responded in kind. As with many others, Li is listed on the Nasdaq stock exchange in the US, but unlike its peers, its share price has strengthened over time, not collapsed.
As of 21 November, Li was the world’s 11th most valuable listed car maker, with a market capitalisation of $42 billion, placing it above Ford and General Motors.
The big difference in strategy between Li and its competitors is that so far the company has been content to keep its focus on Chinese sales. In fact, it recently said it wouldn't consider exports to markets like Europe until 2028.
Li had previously said that its vehicle range wasn't really suited to European tastes. That’s definitely true of the Mega, which will cost the equivalent of more than £60,000 (above even Li's three-row SUVs) and targets a market that almost solely exists in China.
For the medium term at least, that’s where Li cars will remain.