On April 22nd, Li Auto announced that the 2024 models of Li Auto‘s L7, L8, L9, and MEGA will adopt a new pricing structure, with new and pending customers eligible for the updated prices. Li Auto will also provide cash rebates to owners who have already received their 2024 models of Li Auto‘s L7, L8, L9, and MEGA.
Compared to previous prices, all four products have seen price reductions. The L9 series has been reduced by 20,000 yuan, while the L7 and L8 prices have been lowered by 18,000 to 20,000 yuan, and the MEGA price has been reduced by 30,000 to 52,980 yuan.
The 2024 models of L7, L8, L9, and MEGA were launched on March 1st this year. Shortly after, Li Auto announced adjustments to the naming of the 2024 models of L7 and L8, changing from Air, Pro, Max to Pro, Max, Ultra respectively. The 2024 model of L9 Max was also renamed to L9 Ultra. Compared to the previous models, the starting prices of the 2024 L7 and L8 have been reduced by 18,000 yuan each.
In 2023, Li Auto achieved a delivery volume of 376,000 vehicles, leading among new car manufacturers with just the L series of products. With the launch of MEGA, Li Auto initially aimed to deliver between 100,000 to 103,000 vehicles in the first quarter of this year. However, following a public relations crisis with MEGA, sales fell short of expectations. On March 21st, Li Auto (LI.NASDAQ/2015.HK) announced that due to lower-than-expected sales orders, the company now anticipates delivering between 76,000 to 78,000 vehicles in the first quarter of 2024, a reduction of 24,000 to 25,000 vehicles from the initial guidance.
Behind Li Auto‘s price reductions lies an intensifying market competition. BYD initiated price reductions at the beginning of the year, sparking an industry-wide trend. Following Xiaomi‘s entry into the automotive market, more car manufacturers, including WENJIE, began lowering prices. Additionally, following setbacks with MEGA, Li Auto‘s sales growth faced challenges.
In recent months, Li Auto‘s sales have been surpassed by WENJIE. In the first quarter, Li Auto sold 80,400 vehicles, a 52.9% year-on-year increase, slightly lower than WENJIE’s 85,800 vehicles. Retail data shows that the highest-selling model in the first quarter was the L7, with 32,800 units sold, followed by L8 and L9 with 24,000 and 20,900 units sold respectively.
Additionally, Li Auto recently launched the fourth product in the L series, the L6, with a starting price of 249,800 yuan. This is Li Auto‘s most affordable product yet, breaking the price threshold to below 250,000 yuan for the first time. The L6 shares a design language with the L7, L8, and L9, with similar dimensions but with minor configuration differences. Industry experts suggest the L6 may compete directly with the L7, contributing to recent price adjustments. Li Auto reported over 10,000 orders for the L6 within 72 hours of its release.
On March 21st, Li Auto CEO Li Xiang stated in an internal memo that the main issues faced by Li Auto in March were related to MEGA’s pace, mistakenly treating MEGA’s phase from 0 to 1 (business validation period) as if it were from 1 to 10 (high-speed growth period), and an excessive focus on sales desires, leading to a decline in user value and operational efficiency.
Recently, Li Auto underwent internal adjustments and on April 3rd released an announcement for the “Upgrade of Matrix-type Organization 2.0 Targeting a Billion-dollar Scale,” involving multiple organizational structure adjustments. In this restructuring, Li Auto aims to address the issue of a lengthy value delivery chain to avoid complex processes that could lower decision-making quality and efficiency.
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