With 2.65 billion yuan, Li Auto has purchased a VIP pass to a battery factory.

On September 4, Li Auto invested 2.65 billion yuan to increase its stake in Sunwoda Electric, acquiring an 11.17% share and becoming its second-largest shareholder.

The biggest perk of this pass isn't just cutting in line on the battery production line.

Li Auto's 'Transformation growing pains'

Previously known as the 'most profitable' among new energy vehicle startups, Li Auto is now paying the price for its ticket to the next round of competition.

Financial data is under short-term pressure, with profitability entering an adjustment phase. In the first half of 2026, Li Auto reported a net loss of 3.981 billion yuan, with its overall gross margin declining from 20.3% in the same period last year to 9.5%. Vehicle gross margin dropped from 19.6% to 7.8%.

In the second quarter of this year, Li Auto's data showed signs of recovery, with the overall gross margin increasing from 7.9% in the first quarter to 11.0%, and vehicle gross margin rising from 6.1% to 9.4%. However, the pace of recovery was not as optimistic as market expectations.

The honeymoon period for extended-range products is over, and the core market faces strong challenges. Data released by the China Passenger Car Association shows that in the first half of this year, domestic retail sales of extended-range passenger vehicles reached 439,000 units, a 19.4% decrease year-on-year.

What's even more daunting is that Li Auto is under attack from both sides.

In the mid-to-high-end market, Hongmeng-backed competitors are launching aggressive offensives; in the entry-level market, Leapmotor is siphoning off price-sensitive customers with its ultimate (extreme) cost-effectiveness. The Li L series remains the mainstay, but its market share is being eroded.

The pure electric transition is in a Ramp-up period (climbing phase), and the product mix urgently needs optimization. While the core market is under pressure, Li Auto's pure electric vehicle business is also in an awkward position.

In the first half of this year, the Li i6 accounted for more than 60% of the brand's sales, but its starting price dropped below 250,000 yuan. Even Li Xiang himself publicly admitted that this is the company's lowest-margin product.

The MEGA hasn't been as fortunate, with ongoing controversies over its appearance. It sold only 2,517 units in the first seven months of this year, failing to capture the high-end market.

On one hand, it's about volume and visibility; on the other, high-end products aren't gaining traction. Li Auto's pure electric transition is stumbling.

The reliance on a single model is hard to break, and supply chain vulnerabilities are exposed. The Li i6's experience is a case in point: in July this year, the model saw a monthly production reduction of 4,000 units due to fluctuations in the supply of headlight parts.

More dangerous than headlights is batteries. Li Auto's battery supply has long been highly concentrated, with production scheduling and technological iterations constrained by top suppliers. While a headlight shortage might cost a few thousand vehicle sales, a battery shortage would bring the entire brand to a halt.

Supply chain vulnerability has become Li Auto's most critical weakness to address.

Spending 2.65 Billion to Buy Influence! What's the Grand Strategy?

Li Xiang's solution is straightforward: the 2.65 billion yuan buys not just shares but the right to cut in line on the battery production line.

Avoiding heavy asset traps, focusing on 'automaker definition + partner manufacturing.' Li Auto isn't building its own large-scale battery cell production lines but instead outsourcing the heavy asset link to Sunwoda. Battery cell manufacturing requires significant investment and has a slow yield ramp-up. Li Auto doesn't want to bear that burden and instead focuses on R&D (R&D) of core technologies like material formulations, thermal management, and BMS algorithms.

Manufacturing is handled by Sunwoda, while technology remains with Li Auto, with clear boundaries between the two. Li Auto avoids the risks of overcapacity cycles and doesn't need to divert attention from its main business, achieving maximum supply chain control with minimal assets.

From 'client' to 'second-largest shareholder,' embedding standards into the production line. Previously, the relationship was cooperative; now it's equity-based. Quality was once constrained by contract terms; now it's locked in through internal meetings.

Li Auto's 2.65 billion yuan investment buys not just shares but also the right to define product standards. Over 8,000 of Li Auto's production line inspection points can be embedded into Sunwoda's manufacturing process before cell production begins.

The cells haven't been made yet, but the standards are already in place—this is the true starting point of the investment. With this foundation, production priority is institutionally guaranteed.

A 'dual-track' supplier system is implemented, reducing reliance on CATL. In Li Auto's battery supply system, CATL hasn't been sidelined but its role has changed. It was once the only choice; now it's an 'important partner.'

Li Auto isn't putting all its eggs in one basket. High-end models and large-scale supply guarantees are entrusted to CATL, while self-developed solutions and non-standard models remain with Sunwoda.

The division of labor is clear: CATL provides the foundation, while Sunwoda fills in the gaps. The scenario where Li Auto is 'held hostage' by a single supplier is becoming a thing of the past.

Paving the way for large-scale integration of self-developed 5C batteries. The 2.65 billion yuan capital increase in Sunwoda comes just before the full-scale integration of self-developed batteries. The new i6 model announced by the Ministry of Industry and Information Technology on September 8 uses Li Auto's self-developed 5C ultra-fast charging batteries.

In March this year, General Manager Ma Donghui stated that starting this year, all Li Auto models would uniformly adopt a dual battery supply system featuring Li Auto-branded batteries and CATL batteries.

As the industry leader, CATL cannot prioritize unlimited supply to a single automaker. Li Auto needs a fully controllable supply path, and the 2.65 billion yuan buys exactly that.

Li Xiang's 'Ace in the Hole' Revealed: What Ambitions Lie Behind the 2.65 Billion?

This isn't Li Xiang's first big spend, but the 2.65 billion yuan is different.

Refusing to become an assembly plant, holding firm to the 'product definition rights' bottom line (bottom line). Li Auto's 2.65 billion yuan buys the right to avoid becoming an assembly plant. Since power batteries account for 30-40% of a vehicle's cost, mere procurement and assembly leave automakers with no bargaining power in the supply chain.

Li Auto is doing the opposite: keeping core technologies in-house. Otherwise, no matter how many vehicles are sold, it's just working for someone else.

Using capital to secure production capacity and regain 'scheduling autonomy.' As one of the industry's famous 'Three Fools of New Forces,' Li Xiang was once constrained by chip and battery shortages. Having experienced supply disruptions, he won't hand over scheduling to others this time.

As Sunwoda's second-largest shareholder, Li Auto has a clearer future for next-generation extended-range technology and 5C ultra-fast charging battery iterations.

After all, with influence, Li Auto no longer needs to fight for production capacity or wait in line—it can set its own product rhythm. This may be more valuable than the 2.65 billion yuan itself.

Forcing internal cost reductions and efficiency gains to rebuild profit moats. With declining margins and squeezed profit margins, Li Xiang's choice is to cut costs at the battery level.

By deeply participating in cell manufacturing, Li Auto can eliminate intermediary premiums and reduce the cost of self-developed battery components to some extent. Lower costs mean more pricing flexibility.

Whether Li Auto can withstand the relentless competition from 'rivals' depends on how deep these cost cuts go.

Sending a 'stabilizing' signal to capital markets to rebuild investor confidence. In response to previous stock price fluctuations, institutional rebalancing, and negative sentiment, Li Xiang countered with a bold 2.65 billion yuan investment.

The investment itself is a signal. As of the end of June this year, Li Auto had nearly 87.75 billion yuan in cash on hand, with clear investment directions: battery production capacity, self-developed chips, and intelligent driving models...

Li Xiang is showing the market that Li Auto isn't retreating but doubling down. Whether investors buy it depends on whether Li Auto can deliver results after the 2.65 billion yuan is spent.

The Elimination Round Intensifies: How Will the New Energy Landscape Be Reshaped?

Li Auto's move becomes even more interesting when viewed within the broader industry landscape.

Automakers cross into battery manufacturing, blurring industry boundaries. On September 4, Li Auto invested 2.65 billion yuan in Sunwoda, becoming its second-largest shareholder. On the same day, Xiaomi Auto announced a cooperation agreement with Calb and Sunwoda for 'Dragon Scale Batteries.'

Two new energy vehicle startups acted on the same day with the same goal: to control the battery lifeline.

Batteries are the heart of electric vehicles. Previously, everyone bought off-the-shelf solutions, leaving pricing and scheduling at the mercy of suppliers. Now, automakers need to make their own batteries. Those who remain mere assemblers will be pushed off the table.

'Pseudo-self-development' is exposed, and technological barriers determine survival. Fridges, TVs, and sofas were once killer features for some automakers but are now just entry tickets.

Today, all players can compete on configurations, but when it comes to defining cell formulations, rewriting BMS logic, or iterating intelligent driving models, few automakers dare to step up.

Moreover, consumer expectations are rising. 'Pseudo-self-developed' automakers will struggle to reach the next service station.

The high-end market undergoes a major shakeup, with technology routes becoming clearer. In the high-end SUV market, Li Auto faces pressure from three directions: Hongmeng-backed competitors vying for mindshare, NIO competing on service, and Zeekr and Tengshi competing on cost-effectiveness.

Many interpret this competition as a battle between extended-range and pure electric routes, as if choosing a side guarantees victory. But this is essentially two approaches to the same problem.

High-end consumers don't buy gimmicks—they buy certainty and belonging. What truly retains users is reliable intelligent driving, family comfort, and brand prestige...

Seeking techniques is inferior to seeking principles. The powertrain is just a technical means; uniqueness is the true moat.

The 'meat grinder' era of scale effects and cost-based pricing arrives. Leapmotor has recalculated the cost logic of car manufacturing: 65% self-developed components, with a whole-vehicle BOM cost nearly 10% lower than outsourcing. With the same configuration, competitors price at 300,000 yuan, while Leapmotor can go as low as 150,000 yuan.

It's not participating in a price war but redefining price itself. Automakers that fail to scale costs or integrate supply chains will be eliminated.