On March 21, Li Auto‘s CEO, Li Xiang, issued an internal letter reviewing the company’s recent business operations. He acknowledged missteps in the rollout of the company’s latest MEGA model, a flagship electric vehicle, admitting to a misjudgment in the strategic pacing.
Li Xiang reflected on the transition from the initial commercial validation phase of the MEGA model (the 0-to-1 stage) to the high-speed development phase (the 1-to-10 stage), stating that the company had mistakenly rushed the process. This rush not only affected the MEGA model’s performance but also had a knock-on effect on the sales of the L series models. The sales team, he noted, had significantly reduced time and energy to dedicate to the L series customers due to the chaotic pace of the MEGA rollout.
In response to these challenges, Li Xiang announced a strategic shift in sales. The company plans to abandon its previous all-encompassing sales strategy, instead focusing on large retail centers in top-tier cities for product experiences and test drives. Li Auto also plans to accelerate the construction of supercharging stations in these cities. Once the company effectively navigates the initial commercial validation stage, it intends to expand its promotion to more cities and larger user groups.
Despite the lukewarm reception of the MEGA model post-launch, with sales underperforming expectations, Li Xiang remains optimistic. He addressed the company’s previous overemphasis on sales volume and expressed a commitment to lowering sales expectations. The new focus, he stated, would be on healthy growth, improving user value, and enhancing operational efficiency.
Li Xiang’s confidence is not without merit. Li Auto‘s 2023 financial report showed impressive figures. The company reported a total revenue of 123.85 billion yuan, a year-on-year increase of 173.5%, making it the first Chinese new car-making force to exceed an annual revenue of 100 billion yuan. The company also reported a net profit of 11.81 billion yuan, marking a significant milestone of comprehensive profitability since delivery. The annual delivery volume stood at 376,000 units, a year-on-year increase of 182.2%.
In the first two months of this year, Li Auto has already delivered 31,200 units in January and 20,300 units in February, demonstrating a promising start to the year despite the recent challenges.
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