The following is an internal letter sent by Li Auto to its employees, acquired and translated by 42HOW.
Dear Li Partners, Happy New Year.
Since its establishment 5 years ago, in practice and iteration while learning from advanced counterparts, Li Auto has formed its own methodology: Li Business Practice (LBP). Li Auto’s Strategy 2025 is completed in accordance with Li Auto Strategy Analysis (LSA) in LBP. Today, Li Auto’s Strategy 2025 is officially released internally, which helps partners fully understand the future development of the company.
Cognition and Vision - How Do We See 2030
Industry Trends in 2030
1. The Global Background
China aims to bring its total carbon emissions to a peak by around 2030, which will promote the development of the new energy vehicle industry in a positive way. Both the United States and the European Union have put forward higher requirements for future carbon emissions and the timetable for banning the sale of fuel vehicles. In our opinion, the global sales growth of new energy vehicles will exceed the forecasts of most institutions. It is estimated that new energy passenger vehicle sales will account for 60% in 2030, and the figure will be even higher in the Chinese market. New energy vehicles are destined to develop extremely fast in the next decade.
We are optimistic about the growth in sales of new energy vehicles, but at the same time we believe that under the influence of the COVID-19 and global debt, there are uncertainties in the global economy. Based on this, we believe that the global annual sales of passenger vehicles will be between 65 million and 70 million, with no substantial growth. We predict that the global sales of new energy passenger vehicles in 2030 will be about 40 million, and the figure in the Chinese market will reach 20 million.
2. Development of Technology
In the next decade, autonomous driving will develop at the speed of Moore's Law. In 2030, both the on-board computing power and the resolution of sensors will be improved by hundreds of times. Chips with thousands of TOPS (computing power units), cameras with hundreds of millions of pixels, and high-resolution solid-state lidars will all become standard for autonomous driving.
With enough data and sufficient R&D investment, the leading companies of smart electric vehicles can achieve Level 4 autonomous driving. Autonomous driving will become the operating system of smart electric vehicles rather than functional configuration. We believe that by 2030, Level 4 autonomous driving will become the standard configuration of every smart electric car. At that time, users will not purchase a smart electric car without autonomous driving.
In terms of electric technology, the ultra-fast charging technology that can achieve 300-500 km with 10-minute charging will be fully popularized, which makes the charging experience similar to that of refueling. It’ll be a must for the accelerated popularization of electric vehicles. Power generation that is more environmentally friendly, charging networks with energy storage capabilities, and V2G (Vehicle-to-Grid) will form a new commercial value chain. HPC super charging stations will have a return on investment that surpasses gas stations, which will better support the popularization of electric vehicles commercially.
3. Change of the Market
The full popularity of autonomous driving in 2030 will polarize consumer demands for cars.
Some people think that vehicles will become the exclusive space for autonomous driving, and they want to have an exclusive space for themselves and their families. This space has the atmosphere and design they like, with plenty of electricity, super computing power, and the best VR and AR environment. It is a space for entertainment, a space for social interaction, a space for work, and a space for family. The smart electric vehicle will become an exclusive space with more value than a house. We believe that the sales of private smart electric vehicles will not decrease, instead, the output value of each vehicle's entire life cycle will increase substantially.
Some people think that self-driving vehicles are simply tools, which solve the mobility issue from point A to point B and only need to consider efficiency and cost. This kind of competition from the perspective of demand will greatly reduce the cost of mobility, including robotaxis. Autonomous public transportation will even become a free service. Enterprises and governments can obtain benefits through value-added services.
Li Auto will stick to its mission: to create a mobilized home, a happy home, to create an exclusive space of autonomous driving for more families, to create happiness, and to be loyal to our own brand mission.
Industry Challenges in 2030
1. The Challenge of Competition
The competition of traditional fuel vehicles is the competition of industry and machinery. The competition pattern in recent decades has been relatively friendly, more like a football league than a cup match or a knockout match. Even a brand with a small market share can seize market segments through its unique positioning and product features, and survive and develop in a healthy manner.
The final game of the smart electric vehicle competition is about data and chips, which will soon become a knockout match like the FIFA World Cup. Each brand will face the group stage to qualify, and rounds of knockout matches. Similar situation happened in smart phone market in China. In 2020, the top 5 brands accounted for 96.5% of the total market share. The market competition and market share of smart electric vehicles in 2030 will very much likely be the same. Only by gaining more than 25% of the global market can a company has the opportunity to become a leading player in the global smart electric vehicle industry.
2. The Challenge of Energy
The accessibility of charging facilities is still the biggest challenge in the popularization of electric vehicles. The total number of parking spaces that can be installed with private charging stalls is extremely limited, which will hinder more fuel vehicle owners from purchasing smart electric vehicles. Only when charging stations are really as accessible as gas stations can all consumers replace fuel vehicles with smart electric vehicles.
In the next 10 years, Li Auto will choose two parallel routes together: 1. The extended-range electric platform with pure electricity in urban mobility and power generation in long-distance mobility as user value (“power bank”); 2. 400 kW ultra-fast charging high-voltage pure electric platform which is able to achieve 300-500 km range in 10 minutes (“super charger”). Everything we do is from the perspective of user value, to provide energy solutions for free mobility, and to accelerate the popularization of electric vehicles.
3. The Challenge of Organization
Traditional industrial organizations cannot match the development needs of smart electric vehicles. In the era of smart electric vehicles, smart organizations are needed.
Traditional fuel vehicles operate in a relatively controllable world. Planning, process, and control are the most effective management models, and powerful industrial enterprises and industrial organizations also emerged. After the purchase of a traditional fuel vehicle, it hardly changes after 3 years. But as for a smart electric vehicle, it is growing almost every month, which means that both the management method and the demand for talents are completely different.
Human beings are the most advanced intelligent creatures on earth. The operating mode of human intelligence is consist of: 1. Perception; 2. Decision-Making; 3. Execution; 4. Feedback. Specific to a product, an organization and its partners, how to effectively apply the operating mode of human intelligence to build management and operation system for a product and organization is a compulsory course for every smart electric vehicle enterprise.
Vision 2030 of Li Auto
Create a mobilized home and become the world's number one smart electric vehicle enterprise.
This is an unprecedented vision and goal of a Chinese enterprise, but we have the responsibility to make a difference and make great achievements under such a general trend. Although the traditional automobile industry has been in development for more than 100 years, the competition of smart electric vehicles will basically be settled in 2030.
We hope that through the struggle of all our partners, a truly great event will be achieved in the best 10 years in our life and the 10 ten years in the industry. Live this 10 years into the most proud 10 years of our lives and leave no regrets.
Market and Strategy - What We Will Do in 2025
Time Frame in 2025
The period from 2015 to 2020 is the period from 0-1 for Li Auto. Like most start-ups, our resources and funds are relatively scarce at this stage, so survival and hematopoietic ability are the core goals of enterprise development at this stage. We delivered the Li ONE, experienced complete product, R&D, supply chain, production, sales, and organizational tests, and achieved the No. 1 sales volume of new energy SUVs in China in 2020, with the most basic survival and self-sustaining capabilities.
The period from 2021 to 2025 is the stage from 1-10 for Li Auto, that is, the stage of rapid development. The iconic challenge is that we have to become the leading enterprise in the sales of China's smart electric vehicle brands and get the ticket to the competition of leading enterprises in the global market. It is estimated that more than 8 million smart electric vehicles in 2025 will be sold in China, so gaining a market share of more than 20% is a necessary condition for becoming a leading enterprise in China.
This is a huge challenge. We must maintain ample reserves of talents and funds, take user product value as the goal, take technology research and product development as the core driving force of the company, and invest the most resources in research and development and talent reserves. No shortcuts.
User Profile in 2025
From 2015 to 2020, we have selected a precise user group, built a value system around this group of users, and implemented it in products and services. This precious user group has distinct characteristics:
First, they are generally family users with children, and the three generations often live together. They chose Li ONE as their second car in addition to Mercedes-Benz, BMW, and Audi, or to replace their Volkswagen, Toyota, and Honda. The design of Li ONE fully considers the needs of every family member including the host, hostess, elders and children. A good driving experience, the ability to continue to grow, the co-pilot screen, the second row electric seats, the third row aisles, and the huge trunk are all designed for this group.
Second, they generally have charging conditions and have very clear long-distance driving needs (such as self-driving tours). More than 70% of car owners have independent parking spaces and installed household chargers, and more than 20% of car owners have stable public charging conditions in the company or community. Almost all driving in the urban area is pure electric, which is environmentally friendly and the cost of car use is low. The range extender power generation is the best long-distance charging solution to experience, so there is no anxiety during long-distance driving and you can travel freely. They buy and use Li ONE as a pure electric vehicle that can be driven for long distances.
Looking forward to the next 5 years, we will expand the coverage of user groups: a wider range of household users, any users who want to have their own "home". Focusing on the core mission of creating a mobilized home, we provide a richer range of smart electric vehicles, including multiple products on the second-generation extended range electric X platform, multiple products on the high-voltage pure electric Whale platform, and multiple products on the high-voltage pure electric Shark platform. Adhere to the brand positioning of luxury smart electric vehicles, widely covering the price range of RMB 150,000 to RMB 500,000 so that more people can have high-quality mobilized homes.
- User: Household user
- User Needs: exclusive space for autonomous driving
- Price Range: RMB 150k-500k
- Brand Positioning: luxury smart electric car
- Brand Mission: to create a mobilized home, a happy home.
Strategic Goals for 2025
Strategic goals must be measurable, and market share is the core of our strategy. Only when we obtain more than 20% of China’s smart electric vehicle market share in 2025 and become a recognized leading enterprise, will we have sufficient reserves of talent, technology and capital to participate in more intense global market competition in 2030.
The Strategic Goals of Li Auto in 2025:
With a market share of 20%, Li Auto aims to be the number one smart electric vehicle enterprise in China.
Key supporting element one: The comprehensive technical capability of leading product development and technological R&D with user product value as the core.
Key supporting element two: the market share as the core, leading sales service, production, and supply chain business capabilities.
Key supporting element three: with intelligent organization as the core, strategic resource support capabilities are composed of leading talents, data, and funds.
Only when the overall strength reaches its peak, can there be a real chance to win the World Cup of smart electric vehicles.
I hope that every partner of Li Auto can read the 2025 strategy carefully and implement the core goals and requirements into specific work so that their business decisions and work results can better support Strategy 2025 of the enterprise. Let us welcome the most exciting and challenging ten years to come, and be proud of them.