Recently, Li Auto has established a first-tier overseas department. As the first domestic new energy vehicle company to achieve profitability, Li Auto has not only solidified its position in the domestic market but also set its sights on overseas markets. In recent years, "going overseas" has become the hottest buzzword in China's auto industry. Domestic new energy vehicle brands have successively launched their "Great Voyage" plans. New-energy vehicle startups, represented by NIO and XPeng, and traditional automakers such as Geely and BYD are staging a "stormy sea" spectacle. As Europe and the United States raise trade barriers, will Li Auto's overseas venture be smooth sailing?

Produced by | Heyan Yueche Studio

Written by | Cai Jialun

Edited by | He Zi

1806 words in full text

3-minute read

Among the earliest domestic new-energy vehicle startups that took root in the Chinese market, Li Auto is the only one that has not officially ventured overseas. Previously, Li Auto's products were sold in the Middle East, Russia, and other regions through parallel imports. However, as the overseas expansion trend of domestic independent automakers continues to surge, Li Auto has also begun to focus on overseas markets. Due to the high barriers erected by the European market towards Chinese electric vehicles, the Middle East and Central Asia will be important sales regions for Li Auto in the future.

△Li Auto's Great Voyage Plan Takes Shape

Why Did Li Auto Delay Its Overseas Expansion?

Currently, domestic new energy vehicle brands actively seeking overseas strategies fall into two camps: one is represented by BYD, which has dominated the domestic new energy vehicle market for many years and aims to expand its territory and occupy more international markets, thereby building a global brand like Volkswagen or Toyota; the other is represented by low-profile brands like NIO, which perform poorly in the domestic market and actively explore international markets to seek survival. Li Auto's situation differs from both categories. It only recently achieved profitability last year and has been deeply rooted in the domestic market. This year, it has been fiercely competing in the domestic market with Wenjie, eager to expand its product line. However, it encountered setbacks in its pure electric vehicle layout this year and is finally setting sail for overseas markets to find new growth points.

After all, going overseas is a necessary path for Li Auto. At an earnings call four years ago, Li Xiang firmly stated, "The overseas market is a market that Li Auto must enter." In 2021, Li Auto established a dedicated team responsible for overseas markets, including talents in marketing, brand strategy, data analysis, and other areas. At that time, Li Auto set its sights on the United States, but this dream was not realized. Since then, Li Auto's management has repeatedly expressed the company's emphasis on overseas markets, and its overseas expansion plans have continued to improve.

For an ambitious and forward-thinking smart electric vehicle company, becoming a global automaker is Li Auto's ultimate dream. It is now considering entering overseas markets; otherwise, it may be too late among many "competitors."

△Going Overseas is a Necessary Path for Li Auto

Taking Intense Competition Overseas

The global wave of electrification has brought tremendous opportunities to domestic independent brands. At this crucial strategic juncture, domestic new energy automakers are expanding overseas in all aspects. According to data from the China Association of Automobile Manufacturers, from January to September 2024, China exported 3.633 million passenger vehicles, a year-on-year increase of 28%. Among them, 928,000 were new energy vehicles, accounting for one-quarter of the total. Domestic brands are bringing the intense competition in the domestic new energy market overseas. As the first tier of Chinese companies going overseas, SAIC Motor and Chery have become the best-selling Chinese brands in the Middle East and Russia, with a large number of factories established overseas. Meanwhile, Chery has established a sound sales and service network in some developing countries and emerging markets. BYD follows closely behind, investing significant financial, material, and human resources in the past two years to build factories in Thailand and Indonesia. It has also successfully entered the European market on its own and maintains an upward trend despite the increased tariffs imposed by the European Union on China. In September, BYD ranked 15th in pure electric vehicle sales in 15 European countries. Among new-energy vehicle startups, XPeng and NIO have long embarked on overseas expansion strategies and continue to accelerate their overseas business expansion.

More Chinese automakers have moved beyond the traditional model of exporting complete vehicles and are taking the entire industrial chain overseas. Many foreign brands once actively cooperated with domestic enterprises to form joint ventures, but now the situation has reversed. Some domestic automakers have begun to establish talent chains, industrial chains, and supply chains as important prerequisites for territorial expansion, ultimately realizing a closed loop of creation, production, and sales in overseas markets. To avoid tariff increases like those imposed by the European Union, localized production in overseas markets has become a major trend for Chinese automakers.

△BYD Expands Its Territory in the Thai Market

Will Li Auto Experience "Culture Shock" Overseas?

However, going overseas is not just about selling cars. Looking closely at Li Auto's development history, it has always closely adhered to the concept of family travel, deeply loved by many parents. Can Li Auto continue to tell its story overseas? Will it experience "culture shock" after going overseas? These are questions that Li Auto is contemplating internally. Meanwhile, the choice of region is also crucial. If Li Auto chooses the European market, it will face high tariff barriers from the European Union. Li Auto's cost-effectiveness may not be guaranteed, and European consumers may not be interested in Li Auto's "refrigerator, TV, and big sofa" features. Brand image and service standards are even more important. Li Auto will primarily focus on the Middle East and Central Asia, but these markets are not simple. Many Chinese automakers are flocking to these regions, but few are recognized.

△Will Li Auto's Product Strength Be Recognized in Overseas Markets?

Commentary

For Li Auto, rushing to go overseas may disrupt its development pace. It has not yet solidified its position in the domestic pure electric vehicle market. In terms of core technology, Li Auto's intelligentization process is not fast, and it has not yet understood the true needs of overseas markets and its own positioning. Regarding its overseas expansion plan, Li Auto may need to consider more comprehensively and prepare more adequately.

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