The Success Story of Li Auto’s Ideal ONE

Written by: Zhou Mianwu
Edited by: Leng Zelin

In December 2019, the first batch of Li Auto’s Ideal ONE was delivered. As the first model of a new car company, it was normal for it to not be favored by giants in the industry. At the time, the CEO of Volkswagen China, Stephan Woellenstein, said, “Range-extending power is the worst solution.”

In less than two years, Li Auto’s Ideal ONE exceeded the total monthly sales of all mid-to-large-sized SUVs of Volkswagen China, selling 13,438 units in November 2021.

For 32 consecutive months, Ideal ONE was the only car model that Li Auto sold. It was undoubtedly a best-selling product, with a total of 171,467 deliveries as of May 2022, roughly equivalent to the combined delivery volume of NIO and XPeng.

On June 21, 2022, Li Auto launched its second model, the L9, with a price of 459,800 yuan. Its audience is similar to that of Ideal ONE and may cannibalize some potential Ideal ONE customers. However, due to the significant price difference between the two car models, direct competition is not evident.

Similar Audience to Ideal ONE

What is the essence of a top-selling product? It is to find the greatest common denominator of consumer demand and concentrate on solving this demand with one product.

The appearance of Ideal ONE did not only meet the needs of the 350,000 yuan budget group but also fulfilled the needs of families of second children or multiple generations living under one roof who had accumulated their car needs since January 1, 2016, when the two-child policy was fully opened.

The target audience of Ideal ONE and L9 are similar. L9 may affect the sales of Ideal ONE to some extent, but considering the price difference of over 100,000 yuan, it is expected that the competition between the two car models will not be too significant.

According to several Li Auto salespersons interviewed by Photon Travel, the number of in-store customers at Li Auto stores has dropped recently due to the release of L9, which can prove that some of the users of Ideal ONE were attracted by L9.

In comparison, several NIO salespersons told Photon Travel that the ES7 does not attract many users of NIO’s previous model, the 866, and Li Bin also stated in a conference call that he believes that the ES7 will not significantly affect the sales of the 866.

L9 to Attract Many BBA Users

Many owners of Ideal ONE have a budget higher than 350,000 yuan. Ideal ONE is already the best among the products that meet their needs. Therefore, with L9 having a comprehensive product power that surpasses ONE’s expectations, L9 will naturally affect the purchase of Ideal ONE by some people.

Therefore, L9 will attract the batch of people among Ideal ONE’s potential customers who have a budget of 450,000 yuan. Nothing else, L9’s product power is too evident.### Stronger Power, Longer Endurance, More Fuel-efficient, Better Chassis, and Improved Sound System

These improvements can be considered as the basic upgrades for Ideal ONE. Among them, the sound power has reached 2160W.

Third-row Space Widened

For the target audience, this is a great plus. Most of the Ideal ONE women used to sit comfortably in the third row, now even 1.8m men can sit comfortably.

Four-way Electric Leg Rest on the Right Rear Seat and Exclusive Cold/Fresh Water Dispenser

Ideal ONE is equipped with a small table, which is a standard feature. Now, there is a newly added third-row electric seat adjustment and seat heating, and exclusive cold/fresh water dispenser. These four functions themselves do not have any technical content, other car companies can do the same, but what really tests the product development capabilities. In this aspect, Ideal ONE has been widely recognized by its peers and consumers.

L4 Level Autonomous Driving Supported

As for the auxiliary driving, the most important thing is the hardware support for L4 level autonomous driving in the future. This year is the first year for domestic auto companies to support L4 level autonomous driving hardware. As policies do not yet support road use, and no car company has formally released software, for consumers, they are actually buying a futures. However, since most consumers will use the car for 7-10 years, the hardware that can support it now will be beneficial for 3-5 years in the future.

More Equipped with HUD, Gesture-controlled Screens in the Second Row

In addition, it is equipped with a head-up display (HUD) that can display complete instrument panel information, gesture-controlled screens in the second row, and was designed to consider linking with gaming consoles like Switch and PS5.

An All-rounder Sweeping through the Market

Perhaps the individual improvements alone are not enough to impress people. However, as the range of improvements is too wide, Ideal L9 is powerful enough to threaten the position of BBA.

A Huge Attraction for Family Users

As for the 40-50 thousand RMB midsize SUV market, except for the Model Y, the best-selling models are the Benz GLC, the BMW X3, and the Audi Q5L. Their annual sales are just over 100,000 units. The three models have sizes below 4.8 meters, which is significantly smaller compared to the 5.2 meters of the L9. In areas such as 100 km acceleration and fuel consumption, new energy vehicles have always had advantages.

Customers can buy a much larger car for the same amount of money, with many functions suitable for family use. This is a huge attraction for BBA users.

The Upcoming Model Ecosystem

For a new car manufacturer, it is good news if the first car they release can become a hit. However, it is impossible to rely on just one car model forever. Launching more cars can help narrow down the market target.The success of LI ONE is due in part to the lack of a good car for families with two children in the 400,000-500,000 RMB price range. This gap is now filled by the L9.

Next year, LI plans to release at least three models, one of which is codenamed X02 and is a smaller version of the L9. When X02 is delivered, due to more mature technology in the industry, even if it is cheaper, it is expected to surpass the L9 in some areas and may even cut into some of its users.

Li Xiang previously stated that “for different needs, we will place popular models in each 100,000 RMB price range, and each price range will also have products with both extended-range and pure electric options.”

This is also an official announcement that LI’s single model coverage will officially begin to shrink to within 100,000 RMB, with extended-range and pure electric products in the same price range possibly being completely different products. The announced information shows that the extended-range model is on the X platform, and the pure electric model is on the Whale and Shark platforms.

Expanding the total cake by releasing more models and allowing their own models to compete with each other is a necessary path for car companies, and LI, which is known for its single product, is no exception. The release of the L9 is the beginning of LI ONE’s opening of the era of group wolf products. Li Xiang said: “LI will be very restrained, and will release very few models, but each model must achieve 5-10 times the investment of its peers to become a popular model.”

Next year, we will see LI become a diligent producer of new products.

This article is a translation by ChatGPT of a Chinese report from 42HOW. If you have any questions about it, please email bd@42how.com.