Li Auto is following Huawei's lead by giving out year-end bonuses.

A 100,000-word article Tesla must win

Author: Chai Xuchen

Editor: Huang Yu

Li Auto, which made a strong impact on the automotive industry with its sales throughout last year, has once again showcased its substantial year-end bonus as the Spring Festival approaches.

Recently, insiders close to Li Auto revealed that the year-end bonus for 2023 will vary based on individual performance and department, generally ranging from 4 to 8 months' salary. Li Auto employees also disclosed that this year's year-end bonus will amount to 8 months of basic salary, with some employees receiving an additional 1 to 1.5 months of departmental coefficient rewards. The magnitude of this bonus is equivalent to "working for one year and receiving an extra year's salary."

In comparison, employees of GAC GROUP, SAIC Motor, Geely, and other automakers have reported receiving bonuses equivalent to 1 to 2 months' salary. Even employees at internet giants like ByteDance, known for their high compensation packages, envy Li Auto's generous gesture.

In February of last year, Li Auto hired former Huawei Global HRBP Director Li Wenzhi as the head of the CFO office. One month later, Li Auto upgraded its performance management tool from OKR to PBC, which stands for Personal Business Commitment.

Under the new assessment system, performance is divided into five levels: O, E, M, I, and F, corresponding to Outstanding, Exceeds Expectations, Meets Expectations, Improvement Needed, and Fail, respectively. The performance cycle has also been reduced from four times a year to two times, and the assessment ratio has changed from the previous "262" to "271," with the proportion of employees rated as M increasing to 70% and the proportion of I/F decreasing to 10%.

Some Li Auto employees have stated that their performance rating for 2023 is double E (first and second half of the year), and they will receive an 8-month year-end bonus plus an additional 0.5 months based on the departmental coefficient. Other employees with a double M rating have said they will receive a 4-month bonus.

Based on the inferred "271" assessment ratio, approximately 20% of Li Auto employees are expected to receive bonuses of around 8 months, while about 70% will receive year-end bonuses of 4 months or more.

The high year-end bonuses are directly related to Li Auto's impressive performance.

Last year, Li Auto's annual sales increased by 182.2% YoY to 370,000 units, surpassing competitors such as Nio and XPeng. The average transaction price also exceeded Audi and approached BMW, reaching 376,000 yuan. In the first three quarters, the net profit reached 6.046 billion yuan, making Li Auto the fastest-growing new force in the industry.

The discussion surrounding the year-end bonus has attracted attention, and Li Auto Chairman Li Xiang responded by saying, "We should not only learn from Huawei's processes but also from its profit distribution. If we exceed our targets in 2023, we will distribute more bonuses. If we fail to achieve our goals in 2022, we will distribute fewer bonuses. We must have clear rewards and punishments."

He also mentioned the maintenance of organizational strength: "The lack of clear rewards and punishments is the main reason for organizational inefficiency and simply tires out employees. Growth, achievements, and rewards are all indispensable."

In this regard, Huawei has always been a model for rewarding and stimulating "high output" with its generous incentives. The key is the company-wide employee stock ownership plan, which distributes dividends based on profits. Insiders have revealed that the year-end bonus for 2023 is expected to be in the hundreds of thousands.Offering high rewards is an important measure to motivate employees internally and attract talent externally.

At the end of last year, there was a trend on social media platforms such as Xiaohongshu (Little Red Book) where flight attendants switched careers to become car salespeople at Li Auto, mainly due to the high salary offered by Li Auto. Some top salespeople had the opportunity to earn a monthly income of 100,000 RMB, while the average income for salespeople in second-tier cities was around 20,000 RMB. This may be Li Auto's "bright strategy" to improve sales performance.

According to headhunting companies, Li Auto's salary package currently exceeds that of some internet companies. Even for campus recruitment offers, core research and development positions such as autonomous driving algorithms, chips, and R&D offer high monthly salaries of 30,000 to 40,000 RMB.

Behind the generous year-end bonuses is Li Auto's hope to motivate employees and rally the entire company to achieve its goal of selling 800,000 vehicles this year. Li Xiang is also prepared for a market-disrupting battle, deploying a product lineup of four extended-range models and four pure electric models, heavily investing in intelligence, and aiming to become the best-selling luxury brand in China.

However, compared to last year, Li Auto will face exponentially higher challenges in 2024.

After seeing the potential of the consumer market, everyone wants a piece of the pie. Models that sell well for Li Auto are being imitated and studied by competitors, while weaknesses are being magnified and attacked. Competitors armed with autonomous driving, spacious interiors, cost-effectiveness, and distribution channels are all vying for market share.

Among them, "old rival" Aito surpassed Li Auto by nearly 2,000 units in January and became the monthly sales champion among new forces. Behind them are many other competitors such as XPeng, Nio, and Zero Run, launching multi-faceted attacks. In the upcoming consumer market, it may be difficult for Li Auto to dominate alone, and it also faces challenges in transitioning to a pure electric vehicle track.

Therefore, at this critical juncture of upward assault, Li Auto must ensure unity and confidence throughout the company in order to have a chance of achieving its goals.

Now that the knockout stage has entered a challenging phase, this is a crucial year for Li Auto to achieve a class leap and prepare for organizational reforms and performance improvements in order to join the "trillion yuan club". Li Xiang openly states that during this stage, any negligence could result in devastating consequences.

In the hopeful and challenging year of 2024, Li Auto must not falter.