China EV price war: Tesla rival Li Auto says cheapest model yet to ‘bring you happiness’, will launch next week

Leading EV players are either offering price cuts or are unveiling cheaper models to cater to budget-conscious consumers: Shanghai analyst
The mid-sized, five-seater Li L6 SUV will be priced below 300,000 yuan (US$41,470), carmaker says

Electric & new energy vehicles

Daniel Renin Shanghai

Published: 6:00am, 9 Apr 2024

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Li Auto, Tesla’s nearest rival in mainland China, plans to launch a new, more economical model aimed at families amid a price war in the country’s electric vehicle (EV) market.

The mid-sized, five-seater Li L6 sport-utility vehicle (SUV) will be priced below 300,000 yuan (US$41,470), the carmaker said, adding that it will unveil prices during a launch event on April 18.

The SUV, which will come equipped with extended-range battery technology, will be the cheapest model developed by the Beijing-based carmaker yet. The L6 will “bring you happiness”, Li Auto said in a statement on the microblogging site Weibo on Monday.

“All EV builders are aware of weak market sentiment,” said Tian Maowei, a sales manager at Yiyou Auto Service in Shanghai. “The leading players are either offering price cuts or are unveiling cheaper models to cater to budget-conscious consumers.”

Li Auto is redoubling efforts to bolster sales in a cutthroat market. The carmaker, one of China’s top EV marques last year, has set a lofty delivery target of 800,000 units for 2024, which translates to a 127.5 per cent surge year on year.

In the first three months of this year, it has delivered a total of 80,400 units, an increase of 52.9 per cent from the same period a year ago.

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Last year, Li Auto reported a year-on-year jump of 182 per cent after handing over 376,030 vehicles to mainland customers. The company broke its monthly sales record for nine consecutive months from April to December.

At present, Li Auto, founded in 2015, trails only Tesla in China’s premium EV segment. The US carmaker handed more than 600,000 Shanghai-made Model 3s and Model Ys to mainland buyers last year, an increase of 37 per cent from 2022.

Li Auto’s three larger SUVs, L7, L8 and L9, all of which use extended-range battery technology, have been well received by wealthy mainland families. The L7, currently Li Auto’s cheapest model, starts at 301,800 yuan.

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These SUVs also come fitted with small internal combustion engines that generate additional power during traffic jams. Li Auto also assembles and sells the pure-electric multipurpose vehicle Mega on the mainland.

Concerns about a slowing economy and lower wages are deterring mainlanders from buying big-ticket items such as cars.

BYD, the world’s largest EV builder, has spearheaded a new round of price reductions since February, with some domestic rivals such as Xpeng and Zeekr following suit. Over the past weeks, BYD has slashed the prices of nearly all of its cars by 5 to 20 per cent, as competition escalates in the country’s overcrowded EV market.

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Cui Dongshu, general secretary of the China Passenger Car Association, said in February that most carmakers are likely to continue offering discounts to retain their market share, a trend that could reshape the domestic market.

For instance, strong sales of smartphone vendor Xiaomi’s first production model SU7, which has attracted more than 40,000 orders since presales started on March 28, is exacerbating a price war that is squeezing the profit margins of most players in China.

The SU7, with a driving range of 700 kilometres, sports a starting prices of 215,900 yuan. Xiaomi CEO Lei Jun admitted at the launch ceremony that the company was selling the cars at a loss based on current prices.

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