Li Auto invades the backyard of BBA

Li Auto, which has always had an ambiguous attitude towards expanding overseas and prioritized focusing on the domestic market, has finally pressed the fast-forward button for going abroad, with its first stop being the backyard of BBA—Germany.

On January 17, Li Auto held the opening ceremony of its German R&D center in Munich, marking its first overseas R&D center and a significant step towards globalized research and development.

At the beginning of January this year, Chairman Li Xiang stated in his social media circle, "Starting in 2025, Li Auto vehicles will increasingly appear on roads around the world, bearing different countries' license plates and traveling in various corners of the world."

"Facing 2030, an excellent Chinese technology company certainly cannot only serve Chinese consumers," said Liu Jie, President of Li Auto's product line, to Wall Street Insights. "We also need to see if we have the capability to serve overseas markets, which is an ability upgrade we will face sooner or later."

Clearly, globalization has become the next target for Li Auto to capture incremental growth and is one of its actions to attempt to surpass BBA.

It is worth mentioning that going abroad has always been one of Li Auto's important strategies, but internal decision-making has been wavering. In July 2023, Li Xiang stated that they would not enter overseas markets before 2025. Three months ago, Li Auto's attitude changed again, and an overseas department was established internally.

Evidently, going abroad is an unavoidable topic for Chinese car companies under the fierce competitive landscape in the domestic market.

Since the "MEGA incident," Li Auto's pure electric products have faced more uncertainties, and its sales target for 2024 has been revised down from 800,000 to 500,000 units. Ultimately, Li Auto met its target, but with domestic competitors launching increasingly fierce attacks and the high-end market facing challenges in accepting pure electric products, it remains uncertain whether Li Auto's pure electric series can deliver more incremental growth next year.

According to data from the Passenger Car Association, in 2024, the market share of pure electric vehicles in the 300,000 to 400,000 yuan and above 400,000 yuan segments is only 5.2% and 1.9%, respectively.

This means that in the current accelerated elimination race, Li Auto must find ways to safeguard its growth rate, and going abroad may be a new growth curve. New markets mean more growth but will also impose new capability requirements on Li Auto. Establishing an R&D center overseas is a necessary step.

Li Auto stated that the German R&D center will leverage advantages in talent and technology exchange.

In terms of technology development, the German R&D center will collaborate with the Chinese R&D team to complete next-generation technology research in four major areas: forward-looking design, power semiconductors, intelligent chassis, and electric drive; in design, the German R&D center will work with domestic design teams to create groundbreaking automotive designs.

Breakthroughs in pure electric technology are one of the key focuses, with the core being power semiconductor hardware. Li Auto stated that it has already developed the first generation of SiC (silicon carbide) power modules domestically, and in the future, the R&D teams in China and Germany will continue to develop the next generation of power semiconductor technology to enhance the driving efficiency and performance of the entire vehicle On the other hand, Li Auto believes that intelligent drive-by-wire chassis is an inevitable path to achieving AI automotive technology. The German R&D team will support Li Auto's R&D work at its headquarters in China, assisting in the next-generation research of cutting-edge chassis technologies such as drive-by-wire braking, drive-by-wire steering, and fully active suspension.

In addition, in terms of product strategy, the German R&D center will also help Li Auto gain insights into the European market and establish development and testing capabilities based on European automotive regulations, localizing to meet user needs. Meanwhile, in the second half of intelligence, the German R&D center will support Li Auto's development in the field of artificial intelligence.

From zero to the millionth delivery, Li Auto has initially established a foothold in the new force circle, but this is not its entire ambition. In the future, only by becoming one of the few giants in the industry can it hope to survive until the end. The establishment of the German R&D center will become an important piece in Li Auto's puzzle of pure electric, AI, and overseas strategies.

The grand blueprint has been basically drawn, and expectations have been fully raised. However, to truly gain market recognition, Li Auto must fulfill its commitments one by one. Perhaps next year's new energy market will see more confrontational dramas unfold. The most exciting year in the automotive industry is about to arrive