To Achieve Year-Over-Year Growth of 20%, Li Auto Has Three Major Options

By 2026, Li Xiang has become more pragmatic.

On March 12, Li Auto announced its Q4 2025 financial report and full-year 2025 financial report.

Data shows that in 2025, Li Auto achieved annual revenue of 112.3 billion yuan and a net profit of 1.1 billion yuan, becoming the only domestic new energy vehicle startup to surpass 100 billion yuan in revenue for three consecutive years and to be profitable for three years in a row. As of the end of 2025, Li Auto’s cash reserves reached 101.2 billion yuan, ranking first among domestic new energy startups.

Looking ahead to 2026, Li Auto Chairman and CEO Li Xiang is full of confidence. He stated that 2026 is the year for the delivery of the third-generation platform products. The company is confident in this year’s product and technological competitiveness. However, considering the increasing market competition, the number of new vehicles in the mid-to-high-end market over 200,000 yuan this year will be greater than the combined total of previous years. He also noted that the overall market growth this year will be limited.

“Considering these two factors, our goal for this year is to achieve over 20% year-over-year growth compared to last year.”

In 2025, Li Auto delivered a total of 406,300 new vehicles. Based on this, the sales target for 2026 is 480,000 units.

The 480,000 units is not a high number, and it is even the lowest sales goal Li Auto has set in the past three years. Compared to previous years, Li Auto has become particularly pragmatic in 2026, no longer emphasizing high targets or high growth, but focusing more on product updates, overall sales and service organization improvements, and longer-term R&D investments.

Currently, Li Auto, which urgently needs a victory, is preparing for the new year with full ammunition, ready to face upcoming challenges.

Adopting the Li Auto Direct Sales Model: Implementing Store Partner System

The sales target of 480,000 units is not high, but in today’s environment of increasing product homogeneity and fierce competition, it remains a challenge.

At the earnings conference, Li Xiang said that the most important factor to achieve over 20% YoY growth is to manage the sales system well.

In the early days of new startups, most used Tesla’s direct sales model for marketing channels. But in recent years, many automakers have introduced dealerships outside their direct sales systems to increase touchpoints in lower-tier markets and expand market scale, such as Leapmotor and Xpeng.

Unlike these companies, Li Auto still insists on direct sales.

Li Auto believes that maintaining a direct sales model ensures service quality, unified nationwide pricing policies, clear and transparent processes, and the highest efficiency. In 2025, Li Auto merged its original sales regions of 26 provinces into five major zones: East, West, South, North, and Central, and dismantled the original sales middle platform, requiring each zone to be self-sufficient. However, this led to uneven resource allocation and management difficulties.

Li Xiang has publicly reflected on Li Auto’s sales system multiple times. He believes that the biggest problem in the first half of 2025 was managing the direct sales system with dealer management methods, which is fundamentally different from the direct sales model Li Auto has always adhered to.

“The core of the direct sales system is store-centric management, and store management should be our own responsibility,” Li Xiang emphasized at the March 12 evening earnings call.

For the past seven months, Li Auto has been exploring how to improve store opening quality, manage stores well, motivate store managers, and empower teams effectively. The company has developed a unique direct sales model—store partner system—focused on results, measured by sales volume and per capita output.

Before implementing specific store management policies, Li Auto first optimized its existing stores by phasing out underperforming locations and closing those in declining commercial districts.

“This year, our channel strategy emphasizes quality over quantity,” said Ma Donghui, President of Li Auto. “New stores will prioritize top shopping malls and high-quality auto cities, consolidating sales efforts from secondary retail locations with declining traffic into more promising markets.”

On March 1, the company officially launched the “Store Partner” system, which decentralizes decision-making and profit-sharing to store managers to stimulate team engagement and vitality. This includes autonomous customer acquisition, store operation, and team management.

Under this system, stores become the basic operating units, and excellent store managers shift from traditional sales roles to true “operators” of their stores.

Ma Donghui added that under this system, store manager evaluations will shift from simple sales targets to responsible for operational results, treating the store as their own business. “We hope this mechanism can fundamentally solve issues like blind store expansion and external outreach. Future store site selection will involve store managers throughout, with responsibilities and rights linked to individuals, improving store management quality from the source.”

Additionally, the company will support frontline teams through financial backing and digital tools.

Li Xiang emphasized during the earnings call, “In today’s environment where most car sales systems are unprofitable, we aim to cultivate a large number of store managers earning over one million yuan annually, with top performers earning two to three times industry average, ensuring stable order volume and deliveries in the high-end vehicle segment.”

Range Extenders Undergoing Major Upgrades, Pure Electric Models Ensuring Delivery

To reach the sales goal of 480,000 units, besides upgrading sales channels, Li Auto’s most important task in the first half of the year is to successfully upgrade the L9.

This is the first major upgrade since the L9’s launch, and Li Auto has invested heavily in this effort.

Li Xiang defined the new L9 as a “embodied intelligent flagship SUV,” with a key breakthrough being a fundamental reconstruction of autonomous driving technology, upgrading perception, decision-making, and execution dimensions.

On the decision-making front, Li Auto is shifting from traditional video-based imitation of human driving to a VLA (Vision-Language-Action) model. Li Xiang said the new system aims to enable AI to understand physical world laws through language, then make decisions based on that understanding, rather than merely replicating behaviors from visual data. Coupled with hardware evolution from 2D cameras to 3D visual transformers (from “2D cameras + lidar” to 3DViT for spatial perception), this move will push autonomous driving toward a true understanding of the physical world.

On the execution side, the new L9 will feature the world’s first mass-produced full-line control chassis, integrating steer-by-wire, four-wheel steering, electronic mechanical brakes, and an 800V fully independent active suspension system. This architecture allows the large model to directly output control commands, bypassing traditional MCUs, reducing sensor input-to-vehicle response latency to about 200-300 milliseconds, significantly improving responsiveness.

As a flagship, the L9 Livis priced at 559,800 yuan will be equipped with the world’s first mass-produced full-line control chassis and 800V active suspension system, powered by two self-developed Mach 100 chips (automotive-grade 5nm process), with computing power five to six times that of the previous platform. CTO Xie Yan said Mach 100 not only offers significant performance improvements but also has cost advantages, with chip material costs lower than external procurement.

The new generation L9’s competitiveness will be rooted in technological barriers. During the earnings call, Li Xiang emphasized, “The success of the L9 upgrade will directly determine the upper limit of the entire L series. If the previous L9’s competitiveness mainly came from precise product definition, the new L9 will build core competitive barriers at the technological level.”

“2026’s major redesign of the L series focuses on certain technological upgrades, delivery certainty, and user value, to calmly respond to market uncertainties,” Ma Donghui added.

In addition to making a comeback in the range extender field, to ensure a 20% YoY sales increase in 2026, Li Xiang said the company must also ensure successful delivery of pure electric models, including the i8, i6, and the upcoming i9 in the second half of the year.

Ma Donghui announced recent market and delivery progress for the i8 and i6. He said orders for the i8 have steadily rebounded, with daily orders in early March up 180% compared to January, ranking first in NPS among mid-to-large SUVs. The i6 has also overcome its most difficult capacity ramp-up phase, with supply chain bottlenecks fully resolved and stable deliveries now underway. Monthly delivery capacity for the i6 will reach 20,000 units, with existing orders expected to be efficiently fulfilled within 1-2 months.

Regarding the widely discussed pure electric battery strategy, Ma Donghui added that by 2026, all Li Auto models will be equipped with batteries from two brands: Li Auto’s own and CATL (300750).

“We remain committed to open cooperation with industry-leading partners. From vehicle performance needs, we lead the design of battery solutions, and ensure quality at every level. Regardless of the supplier, the performance, quality, and safety of the batteries must meet our unified ‘Li Auto standard,’” Ma emphasized.

Continuing R&D Investment in AI to Strengthen Technological Moat

“2026 is a critical year for Li Auto’s evolution into embodied intelligence,” Li Xiang stressed during the earnings call.

In 2025, the company’s R&D investment reached 11.3 billion yuan, with 50% allocated to AI-related projects. Facing intensified competition in the new energy vehicle market, Li Xiang said the company will continue to maintain high R&D spending to build a technological moat and transition from smart electric vehicles to embodied intelligent enterprises, establishing a competitive advantage for the next phase.

In response to analyst questions, he predicted that this year, Li Auto’s R&D expenses will remain around 12 billion yuan, with about half dedicated to AI, including self-developed chips, computing infrastructure, and ongoing investments in intelligent assisted driving and AI products like Li Xuexue.

He also noted that automotive and AI R&D are interconnected; the core of R&D investment is to develop AI capabilities integrated into existing business models. “All our R&D efforts are integrated; AI R&D is not a separate business unit.”

To boost AI research, Li Auto restructured its R&D teams in January, breaking the previous division by business unit and product line into three major systems: “Organs System” (data sets, chips, OS), “Brain System” (perception, pre-training, post-training, reinforcement learning, infrastructure), and “Software Core” (application layer, intelligent agents, skills, and memory modules), as well as “Hardware Core” (energy, drive, controllers). The goal is to enable cross-product reuse of core technologies. Li Xiang revealed that after the restructuring, the autonomous driving team’s model iteration cycle shortened from two weeks to one day, a 14-fold efficiency increase.

Regarding the current focus on embodied intelligence, Li Xiang said, “We will invest 100% in the vertical integration of embodied intelligence technology; but in terms of actual business and product deployment, we will proceed cautiously and explore continuously.”

He believes that embodied intelligence shares commonality in systemic technology, such as reasoning chips, operating systems, and underlying data and training systems. For new projects, Li Auto prefers to incubate products through startups and entrepreneurial teams to avoid excessive spending.

In the past decade, Li Auto achieved millions of market share and hundreds of billions in revenue through precise product definition. In the next decade, the company will focus on deepening AI capabilities and layout of embodied intelligence, continuously raising its technological moat.