Text / Tianji

How fast can an automaker go from 0 to 1 million vehicles? BYD took 13 years, and Tesla took 12 years. Today, Lixiang Auto has shortened this time to 5 years.

Recently, Lixiang Auto's 1 millionth complete vehicle rolled off the production line at its Jiangsu Changzhou facility. From the rollout of its first product in November 2019 to this point, it took a total of 58 months. This speed broke the fastest record for a Chinese luxury brand to reach 1 million vehicles and made Lixiang Auto the first new energy vehicle (NEV) company in China to reach this milestone.

From the perspective of Jiedian Auto, Lixiang Auto's achievement still holds significant value, even within the global NEV industry. Firstly, the speed at which it was achieved is remarkable. Even if we count from its establishment, Lixiang Auto took just over 9 years to reach 1 million vehicles, significantly less than Tesla.

Secondly, the average price of each Lixiang vehicle in these 1 million is around 300,000 yuan. Since 2023, the total deliveries of the Lixiang L7, Lixiang L9, and Lixiang L8 models have ranked first, second, and third in their respective market segments, and all three models are mid-to-high-end.

Finally, Lixiang Auto has also driven and established a high-quality NEV supply chain. In the past three years, Lixiang Auto has over 400 tier-one suppliers, and its procurement value has more than tripled from 2022 to 2023.

Regarding this achievement, Lixiang Auto's founder, Li Xiang, remains humble. At the rollout ceremony, he said, "It's not Lixiang Auto that's great; it's our country and our era that are great." However, everyone knows that this humility is backed by strength, so what has allowed Lixiang Auto to reach this point?

01 Did Lixiang Auto make the right bet with its extended-range route and family-oriented positioning?

In the development of NEVs, the choice of technical route is crucial, especially for Lixiang Auto. At one time, Lixiang Auto's choice of an extended-range technology route faced much skepticism. In the pecking order of hybrid electric vehicles (HEVs), multi-speed hybrids looked down on single-speed hybrids, which in turn looked down on extended-range hybrids. Lixiang Auto's chosen route attracted much ridicule.

This is where Lixiang Auto's strength lies: its ability to resolutely implement its chosen route with a sense of daring and determination. As it turns out, "those who ignored me then can't afford me now." Lixiang Auto's unwavering commitment stems from its recognition that to succeed in the NEV market, it must address users' biggest pain point: range anxiety, and the extended-range route is the optimal solution for the time being.

It can be said that the extended-range technology route has laid a solid foundation for Lixiang Auto's product competitiveness. Facts have proven that Lixiang Auto has found a better combination and cost-effectiveness amidst various technologies. Beyond its successful technology route, Lixiang Auto's "family-oriented" product positioning demonstrates its keen market insight.

Li Xiang once made a vivid analogy: the Lixiang L9 is equivalent to a three-bedroom apartment, the Lixiang L8 to a standard three-bedroom, and the Lixiang L7 to a spacious two-bedroom. With this positioning, Lixiang Auto has sparked a trend in the industry for "refrigerators, TVs, and large sofas," which have gradually become standard in mid-to-high-end NEVs.

In Jiedian Auto's view, a significant reason for Lixiang Auto's success lies in its deep understanding of family users' core needs for space, configuration, range, safety, etc., truly demonstrating what "user-centricity" means. Moreover, in brand marketing, Lixiang Auto showcases trendy lifestyles like camping, surfing, fishing, and bonfires, deeply embedding the "family" positioning that makes it hard for family users to resist.

In terms of technical details and user experience, centered around the "family" positioning, Lixiang Auto continually innovates in areas such as extended-range electric drive, spacious six-seat layouts, multi-screen voice interaction, intelligent driving, and 5C fast charging, satisfying or even exceeding the needs of Chinese families.

This is evidenced by Lixiang Auto's market performance in reaching 1 million sales. What significance does Lixiang Auto's success hold for China's NEV industry?

02 Redeeming the reputation of new forces and challenging BBA?

Lixiang Auto's success first and foremost demonstrates that China's new energy vehicle startups can compete. Looking back at the development of China's NEV industry, startups without a traditional automaker background were once doubted, and their massive investments of billions of yuan raised questions about whether they would only "lose money while making a noise."

During difficult times in previous years, some startups indeed collapsed, and most found themselves in a quagmire of losses. When would the money-burning stop became a question that the entire startup sector had to face. However, Lixiang Auto's successful turnaround to profitability and rapid achievement of 1 million sales gave hope to the entire startup sector to emerge from this quagmire.

Lixiang Auto proved to the outside world that the startup model can work. For the entire industry, this is undoubtedly a positive signal, which in turn strengthens consumers' trust in domestic auto brands.

From the perspective of domestic auto brands, Lixiang Auto's rapid rise in the domestic market poses a significant challenge to traditionally dominant foreign brands. As mentioned earlier, the majority of Lixiang Auto's 1 million sales come from the profitable mid-to-large SUV market, long dominated by foreign luxury brands represented by BBA (BMW, Benz, Audi).

From this perspective, the rollout of Lixiang Auto's 1 millionth vehicle represents not just the success of a single company but also the success of domestic auto brands.

Moreover, Lixiang Auto has positively contributed to the growth of the local supply chain. Li Xiang once said, "We are proud to use a large number of Chinese local suppliers. If consumers dare to buy Chinese brand cars, we dare to boldly use Chinese local supply chain enterprises.""

From the perspective of China's overall NEV development, the joint progress of the industrial chain is crucial. In recent years, China's NEV industry has become increasingly competitive globally, with its brand influence steadily rising, thanks in part to the support of the local supply chain and regional industrial clusters.

However, after successfully reaching 1 million sales, what lies ahead for Lixiang Auto's future development?

03 From extended range to pure electric, has Lixiang Auto climbed the steepest slope?

In terms of business performance, Lixiang Auto's results are reassuring. Financial reports show that in 2023, Lixiang Auto achieved revenue of 123.85 billion yuan, a year-on-year increase of 173.5%, with a net profit of 11.81 billion yuan, successfully erasing the previous year's net loss of 2.03 billion yuan. This performance not only made Lixiang Auto the first Chinese startup to surpass 10 billion yuan in annual revenue but also the first to turn a profit, making it the youngest company on the Hurun Global 500 Rich List.

Of course, Lixiang Auto's development cannot always be smooth sailing. For instance, the well-known MEGA controversy caused some damage to the brand's reputation. However, Jiedian Auto believes that the MEGA controversy was a short-lived and bizarre marketing crisis that did not significantly impact Lixiang Auto's fundamentals, as evidenced by its sales performance afterward.

Public data shows that in September, Lixiang Auto delivered 53,000 vehicles, a year-on-year increase of 48.9%, setting a new monthly delivery record. For the first time, its domestic sales surpassed those of BBA, making it the top-selling luxury brand in China. In the third quarter, Lixiang Auto delivered 152,800 vehicles, a year-on-year increase of 45.4%.

Looking ahead, with Lixiang Auto's success in the extended-range route and its foray into the MPV market, the launch of pure electric SUVs seems imminent.

Compared to previous years, the price of power batteries has decreased, and the technology has matured. Lixiang Auto also has its brand advantage. Entering the pure electric field at this time comes naturally to Lixiang Auto. Moreover, it has sufficient financial backing for R&D investments.

As of the end of the second quarter of 2024, Lixiang Auto's cash reserves had increased to 97.25 billion yuan. During the May earnings call, Li Xiang stated that the nearly 100 billion yuan in cash reserves and a healthy balance sheet would continue to support Lixiang Auto's focus on user value and R&D investments.

Comprehensively speaking, for the NEV industry, which is still in the "money-burning" stage, "having money in hand gives peace of mind." Lixiang Auto's turnaround to profitability and 1 million sales have created positive market feedback. In the auto industry, where economies of scale are evident, larger sales volumes mean greater cost advantages, continuously strengthening its competitive edge. Going forward, Lixiang Auto, having climbed the steepest slope, faces a smooth road ahead.