Original by New Energy Outlook (ID: xinnengyuanqianzhan)

3690 words, 11 minutes reading time

In the opening week of 2025, Li Auto reclaimed the top sales spot among emerging automotive brands, regaining momentum from its 2024 performance.

Image/Sales Ranking for the First Full Week of 2025

Source/Screenshot from New Energy Outlook

In 2024, Li Auto delivered an impressive 504,500 units and achieved the milestone of its one-millionth vehicle delivered. This accomplishment underscores Li Auto's significant presence in the new energy vehicle market, demonstrating its robust capabilities in product development, supply chain management, and marketing.

However, while Li Auto's sales surged by 182.2% year-on-year in 2023, the growth rate moderated to 33.1% in 2024, marking a notable deceleration. This trend reflects a confluence of factors, including intensified market competition, evolving consumer demands, and product innovation bottlenecks.

Amidst this market landscape, Li Xiang, Chairman and CEO of Li Auto, recently posted a comment on social media that appeared to address the company's 2025 overseas expansion plan, garnering widespread industry attention.

Image/Li Xiang's Post

Source/Screenshot from New Energy Outlook

Industry insiders widely perceive this comment as not only a hint at Li Auto's future development strategy but also an active response to changes in the domestic market. By implementing an overseas expansion strategy, Li Auto aims to tap into broader international markets, seeking new growth opportunities and market spaces.

Nevertheless, the journey towards overseas expansion is fraught with challenges. It necessitates navigating diverse regulations, policies, market environments, and consumer preferences across different countries and regions. Particularly noteworthy is Li Auto's previously uncertain stance on overseas expansion.

Whether Li Auto can successfully capitalize on its overseas expansion hinges not only on its strategy to address external challenges but also on its ability to establish a strong foothold on the international stage, leveraging its technological prowess and brand influence. Time will tell the tale of its success.

1. Li Auto Embarks on Overseas Expansion

After discussing Li Auto's comprehensive transformation into an AI company towards the end of 2024, Li Xiang confirmed the company's overseas expansion plan at the dawn of 2025.

On January 7, Li Xiang shared a short video on social media, stating, "Starting in 2025, you will see more and more Li Auto vehicles driving in various countries with different license plates."

This marked the first time Li Xiang publicly and unequivocally announced Li Auto's overseas expansion plan in such a high-profile manner.

Unlike many other domestic new car brands that have been targeting overseas markets for three years or longer, Li Xiang and Li Auto's senior management have exhibited uncertainty regarding the company's overseas expansion plans, despite Li Xiang's previous assertion that the overseas market is essential for Li Auto.

This uncertainty is evident from the frequent news surrounding Li Auto's overseas expansion over the past three years.

As early as the second half of 2021, media reports claimed that Li Auto had initiated an overseas expansion plan, with the United States as the preferred market, and had formed a team of around 30 people for this purpose.

However, within just six months, Li Auto's overseas expansion plans stalled. Some members of this 30-person team were transferred to the domestic business department, while others chose to depart.

Since then, Li Auto has embarked on a distinct overseas expansion path, differing markedly from its peers, with related topics becoming increasingly less discussed in the market.

In July 2023, Li Xiang, still quite vocal at the time, mentioned in a Weibo post about Li Auto's parallel exports that "Li Auto will not enter the overseas market before 2025 and will concentrate all resources to achieve the 2025 goal." During Li Auto's strategic meeting in October of the same year, Li Xiang's view on overseas expansion became more conservative, stating, "We may seriously consider overseas expansion after 2028 and focus on parallel exports before then."

Image/Li Xiang's Weibo Post

Source/Screenshot from New Energy Outlook

However, just one month after the strategic meeting, LatePost exclusively reported that "Li Auto plans to start overseas expansion in 2024, with the first markets being the Middle East countries of the United Arab Emirates and Saudi Arabia, as well as possibly some North African countries. The first batch of vehicles to be exported overseas will be the Li Auto L9."

Regarding this news, Li Auto neither confirmed nor denied it but chose to remain silent. However, judging from Li Auto's subsequent development path, it did not initiate a true overseas expansion plan in 2024 but continued with parallel exports.

Since then, market discussions have intensified, with many media outlets claiming to have obtained internal information from Li Auto, seemingly taking the lead in grasping the dynamics of Li Auto's overseas expansion plans. These included reports such as "Li Auto slows down overseas expansion and focuses resources on seizing the domestic market" and "Li Auto has established a first-tier overseas expansion department, headed by Wang Jin, who reports to Zou Liangjun, Senior Vice President of Li Auto Sales and Service."

However, none of the above content regarding Li Auto's overseas expansion received a definitive response from Li Auto until Li Xiang's social media post earlier this year.

Regarding Li Auto's finalized overseas expansion plan, an owner of the Li Auto L9 candidly stated that everyone in their owners' group is eager to see Li Auto succeed in overseas markets, "It's undoubtedly pride-inducing to witness an independent brand's image soar in the international market, but for car owners, driving a car from a global brand brings even more prestige."

Image/Li Auto L9

Source/Screenshot from New Energy Outlook

However, industry insiders are not as optimistic as car owners.

Zisu (pseudonym), an industry insider with a deep understanding of Li Auto, bluntly stated that Li Auto's overseas expansion strategy has been uncertain even during the company's strongest growth phases. Now, as domestic competition in the new energy vehicle market intensifies and Li Auto encounters growth challenges, it is accelerating its overseas expansion, which inevitably raises questions about whether Li Auto is urgently seeking new growth avenues.

"But the challenges of overseas expansion are even greater, given the vast differences in regulations, policies, and consumer demands across different countries. Li Auto's performance in the domestic market in 2024 was not entirely satisfactory. Whether this is the optimal time to venture overseas is debatable," Zisu further remarked.

2. Is the Time Right for Overseas Expansion?

As mentioned earlier, the significant shift in Li Auto's attitude towards overseas expansion is closely tied to the challenges it faces in maintaining growth rates and the increasing domestic pressure.

At the beginning of 2024, Li Auto held a grand launch event for its first pure electric vehicle, the Li Auto MEGA. However, subsequent sales of the Li Auto MEGA fell short of the launch event's expectations, dealing a setback to Li Auto's sales performance.

Image/Li Auto MEGA Launch Event

Source/Screenshot from New Energy Outlook

Following the disappointment with its pure electric product, Li Auto postponed the launch of other pure electric models and repeatedly revised its previously set annual sales target of 800,000 units downwards. In March 2024, Li Auto revised its full-year sales guidance to 560,000 to 640,000 units. By the second-quarter earnings call, Li Auto's confident annual sales target had slipped again to 500,000 units.

While Li Auto did achieve this target, the difficulties encountered during the process are evident.

Apart from its own product setbacks, market competition is another factor that cannot be overlooked in Li Auto's declining sales growth rate.

In 2024, extended-range electric vehicles became the darlings of domestic new energy vehicle brands, with automakers that previously dismissed them launching extended-range electric models one after another. Particularly with Zero Run's sudden rise in 2024, Li Auto's direct competitors shifted from AITO to both AITO and Zero Run.

Despite such fierce competition, Li Auto still achieved its first million sales since the brand's establishment in 2024. However, given realistic factors, Li Auto's next million sales may not materialize soon, making the quest for a larger market a necessity for the company.

Image/Li Auto Achieves Million Sales

Source/Screenshot from New Energy Outlook

In fact, industry insiders were not surprised by Li Xiang's sudden announcement of the overseas expansion decision.

In the past two years, although Li Auto has not established overseas factories or cooperated with dealers like many other domestic brands, parallel exports have always existed, and the vehicles exported overseas have received positive reviews.

As early as July 2023, Li Xiang revealed that "in the first two weeks of this month, more than 200 vehicles were privately exported, mainly to Central Asia and the Middle East."

By the beginning of 2024, this number had grown to a scale of 3,000 vehicles. Li Xiang disclosed on his personal social media platform that Li Auto's annual parallel export volume could exceed 30,000 units.

Beyond the numbers, overseas users have also sung high praise for Li Auto's products. A German consumer, upon learning that the selling price of the Li Auto L7 is 50,000 euros, remarked candidly, "I'm shocked. Its quality is excellent, and products of the same level would sell for at least 100,000 euros. If this car is launched in Europe in 2025, I will pay close attention to it."

In addition to building a certain reputation in overseas markets, Li Auto's recent series of actions have also been seen as paving the way for its overseas expansion.

For instance, in the Middle East, Li Auto is accelerating cooperation with local energy companies to build charging stations, providing more convenient charging services and alleviating consumers' anxiety about energy replenishment. Amidst the second half of the new energy vehicle market, where intelligent competition has intensified, Li Xiang announced with great fanfare the company's strategy to comprehensively transform into an AI-centric enterprise, honing two core products around artificial intelligence: "Li Auto Classmate" and autonomous driving.

It is worth mentioning that in October 2024, Contemporary Amperex Technology Co. Limited (CATL) launched a new battery brand called "Xiaoyao" specifically tailored for extended-range hybrid electric vehicles. Subsequently, Li Auto took the lead in becoming the first vehicle brand to adopt the Xiaoyao battery, implying a powerful alliance aimed at capturing market share.

This battery boasts a range of over 400 kilometers and supports 4C ultra-fast charging, enabling a 280-kilometer range replenishment in just 10 minutes.

From this perspective, Li Auto's decision to venture overseas at this juncture appears well-timed, capitalizing on favorable conditions.

3. The Battle for Global Leadership

As the founder of Li Auto, Li Xiang has always been perceived as an ambitious entrepreneur.

In the "Li Auto AI Talk" interview towards the end of 2024, Li Xiang did not hesitate to mention that running Autohome was the biggest regret of his life.

"In the mobile internet era, we chose a very vertical field. Although we did well, to a certain extent, we may have missed the forest for the trees. So when choosing my third entrepreneurial venture, it was crucial for me to choose a forest and become the biggest in that forest, regardless of the difficulties I might face. I will definitely not just be a tree anymore," he said.

Image/Li Auto AI Talk Interview

Source/Screenshot from New Energy Outlook

Therefore, overseas expansion is not merely another path for Li Auto to seek sales growth but also a vital route to realizing its founder's vision.

However, expanding into overseas markets is no mean feat.

Since 2024, multiple domestic brands, including Chery, Changan, Geely, NIO, Xpeng, and Zero Run, have successively launched more models in Europe.

Yet, while sales have been underwhelming, the financial pressures to bear have been substantial.

Particularly since 2024, Europe and the United States have successively increased tariffs. The United States has announced that tariffs on Chinese electric vehicle exports to the United States will increase from 25% to 100% in 2024.

Image/U.S. Increases Tariffs on Chinese Electric Vehicles

Source/Screenshot from New Energy Outlook

Meanwhile, the European Commission has imposed a five-year anti-subsidy tax on electric vehicles imported from China, with tariffs ranging from 17% to 35.3% that Chinese automakers need to pay.

Of course, there are always more solutions than difficulties. To win this critical battle of overseas expansion, Li Auto has been actively adopting diverse strategies.

Previously, Zou Liangjun, Senior Vice President of Li Auto, announced that the company would uphold the direct sales model for its overseas endeavors and establish a dedicated after-sales service network spanning Central Asia and the Middle East. Nonetheless, some media outlets have reported that Li Auto's overseas expansion strategy entails recruiting local dealers due to the considerable challenges associated with establishing a direct sales system. The company intends to sell vehicles in markets where its presence has already been validated.

Concurrently, Li Auto is intensifying its efforts in product localization and after-sales service. For instance, it tailors specific models to overseas markets based on local conditions, and it augments investment in research and development to drive innovation in intelligent and battery technologies, thereby enhancing product competitiveness and user experience.

Zisu believes that Li Auto's overseas expansion strategy has progressively transitioned from the "trial" phase to the "deep cultivation" phase. Judging by its strategic layout and actions in markets like the Middle East and Central Asia, these regions exhibit a high level of acceptance towards new energy vehicles and vast market potential, showcasing a strategic vision and foresight.

Furthermore, Li Auto recognizes that overseas expansion is not merely about selling cars but also involves deeply comprehending local market demands and consumption habits. Consequently, the company has conducted targeted product design and functional optimization. This approach will mitigate the issue of its products being "unsuited to local conditions" in overseas markets and bolster their market adaptability and competitiveness.

However, whether Li Auto can achieve overnight success hinges on its ability to adeptly address challenges in diverse markets, thereby swiftly elevating brand recognition and market share. The answer to this question will unfold in 2025.