EV Company Profiles — #2
Li Auto
China EV underdog
Li Auto is not as considered on the Stock Market talks as Nio and Xpeng. Nevertheless, this company is also posting incredible deliveries, specially considering right now they have nothing but one model. Their financial situation might also be the closest one to profit: thus far they have shown the most elevated gross margins on their production, surely better than Nio, and much more of Xpeng with comparable selling volumes. Here the company profile and everything you need to know about the China EV underdog.
The Company
Li Auto was founded in 2015 by CEO and Chairman Li Xiang, for whom it’s called. Initially the company was indeed named Chehejia, but soon the title was changed to show how important its founder’s imprinting is. For the first two years, Li Auto tried to develop a low speed small electric vehicle, or SEV. But in 2018 the company abandoned this development model and made the choice to concentrate on premium stylish SUVs instead, focusing on range extension, smart technology and autonomous driving solutions. By December 2019 the first model, and up to now the only one, started to be produced and delivered and so far has gained big momentum and selling volumes.
As is often the case in China most recent ventures, the company is backed by several leading businesses and successful entrepreneurs, such as:
- Meituan — Dianping: the company of Wang Xing. . It’s a Chinese shopping platform for locally found consumer products and retail resources including entertainment, dining, delivery, travel and other services. The Meituan site provides deals of the day by selling vouchers on local services and entertainment, while Dianping hosts consumer reviews of restaurants, similar to Yelp and TripAdvisor and also offers group buying comparable to Groupon. Wang is, furthermore, a co-founder and included in Company’s the Board of Directors for Li Auto since July 2019.
- ByteDance: the company of Zhang Yiming. ByteDance’s core product, Toutiao, is a content platform in China and around the world. Toutiao started out as a news recommendation engine and gradually evolved into a platform delivering content in various formats like texts, images, question-and-answer posts, microblogs, and videos. ByteDance is the developer of the video-sharing social networking services and apps TikTok and Douyin, the Chinese-specific counterpart to TikTok.
The Founder
Li Xiang was born in 1981. He is one of China’s “Born after the 1980s” group. Dating back to the early 2000s, this group consisted of four young Chinese entrepreneurs who showed extraordinary promise, including additionally:
- Mao Kankan, founder of digital game firm MaJoy, who sadly suicide in 2018
- Gao Ran, founding partner of Fengyun Capital
- Dai Zhikang, founder of Discuz, one of China’s most popular Internet forums
He established his first business, Pcpop.com, in 2000, at only 18 years of age right after dropping out of school. The company, specialized in IT products, started to generate good earnings. But his inexperience with managing a growing company ultimately led to reaching a bottleneck in growth.
In 2005, he then proceeded to found Autohome, an online platform for automobile-related sales that provides professionally produced and user-generated content, a comprehensive library and extensive listing information to automobile consumers, covering the entire car purchase and ownership cycle. By 2009 Autohome was the market leader in China, but Li lost control of the firm during the financial crisis of 2008, selling 55% of shares to the Australian telecom company Telstra
In 2014 “William” Li Bin contacted Li Xiang and proposed him to become the co-founder of Nio. He refused, probably due to conflicting ideas on the EV market, but anyway invested 15 Millions USD into Nio as one of the first investors.
In 2015 he resigned from Autohome and created the car company Chehejia, later on renamed to Li (Xiang) Auto.
Models
Up till now the company have produced and sold only one vehicle, the Li ONE SUV, available with six or seven seats in three rows. The starting price is around 328,000 (50,000 USD), with a NEDC estimated range of 800 km and a 0–100 km/h performance of 6.5 seconds.
Technology
The Li ONE is indeed not a full electric. It is powered by a 1.2 liter turbocharged 3-cylinder ICE at the front and an electric motor at the rear.
The electric propulsion portion of the Li ONE consists of a 140 kW rear-drive electric motor, a 100 kW front-drive electric generator connected to the ICE and a 40.5 kWh battery pack, which offers an all-electric range of 180 kilometers.
The company claims a NEDC total range of 800 kilometers, thanks to the 45 liters fuel tank.The ICE engine is used a range extender for the electric motor, it does not directly power the wheels. Li Auto calls the design “EREV (extended range EV) technology.”
The Li ONE’s battery accepts standard charging, DC fast charging, and conventional refueling. Since the gas engine provides power to the electric motor, the car can operate even when customers have no convenient access to charging infrastructure, which many Chinese EV drivers still don’t. The Li ONE also requires less battery capacity for the vehicle’s size if compared with the other EV makers, which helps the company in believes its accelerating the adoption of electric vehicles in China by offering a more affordable EV with a range comparable to a gas-powered automobile.
Apart from the original powertrain adopted, Li Auto have invested heavily into the interior of the car, which has several screens. The infotainment system runs on Android Auto and is powered by a Qualcomm Snapdragon 820A processor. The Li Xiang One is also equipped with a Level 2 Autonomous Driving system and offers OTA updated.
The future
Li Auto is overall a extremely interesting company, whit intense demand and potential profitability. The current production capacity in its Changzhou factory consists of 100,000 units/year and is poised to be progressively expanded to 200,000 units/year. The company has sold 8,660 cars in Q3 2020, which is exceptional, given it has only begun production in November 2019 and the economic disruptions due to local COVID-19 restrictions. It seems there are no problems of capacity then.
Perhaps the more significant challenge that lies ahead for Li Xiang, is to develop and launch new models. For how good the Li ONE can be, it is the sole vehicle produced and sold so far, and the demand risk to dry up in the future. The risk is substantial, considering that Nio and Xpeng are much more aggressively proposing new cars. Nio is said to expand from current three models to four in January, attacking also the Sedan market.
The cake seems to be big enough for all these companies and the future looks bright, but time might be running out, Li Auto better hurry up.