LI, NIO, and Xpeng's Heated Sales Rivalry at 2024 Onset

As the dawn of 2024 broke, leading automakers immediately engaged in a first-of-the-year tussle using sales figures.

For the top three emerging forces, LI, NIO, and Xpeng, the diversification of their total sales in 2023 was already substantial. More specifically:

  • LI’s annual sales were 376,030 units, a year-on-year increase of 182.2%.
  • NIO’s annual sales were 160,038 units, a YoY increase of 30.7%.
  • Xpeng’s annual sales were 141,601 units, a YoY increase of 17%.

Judging from this annual sales performance, LI has far outstripped NIO and Xpeng.

However, it needs to be emphasized that even though LI is in a much better position than NIO and Xpeng in terms of sales, in reality, since 2023, all three have been promoting their hard but valuable transformation in a wave-like progression on what they believe to be the right path.

Compared with 2022 and previous years, the strength of LI, NIO and Xpeng are incomparable.

LI: The tense layout on the eve of pure electrification

As a new energy player in 2023, most were proceeding with worry and frustration, but LI was one of the few who always sang and advanced valiantly. And 2023 was a year of unprecedented harvest for LI.

As mentioned before, LI’s annual sales in 2023 were 376,030 units, an increase of 182.2% over the same period. Among them, LI’s sales broke through 40,000 for the first time in October, and exceeded 50,000 in December, achieving its sales target time and time again.

After announcing the annual sales results, LI Auto CEO envisioned even higher targets for 2024 – annual sales of 800,000 and monthly sales of 100,000, equivalent to doubling the current annual and monthly sales targets.

To achieve this sales target, it implies that LI’s organizational efficiency and systemic capabilities need to reach a new level yet again, as he often says:

Master your own destiny, challenge the limit of growth.

In fact, after years of transformation and development, particularly the rapid iterations from individual to organization strictures led by him, the maturity of LI’s system is already very leading among new forces, as it was particularly evident in 2023.

A very typical example is that before 2023, Shanghai LI Auto’s sales accounted for about 10% of LI’s total sales. However, after entering 2023, Shanghai ended its policy of issuing free green tags for plug-in hybrids, and LI Auto’s sales in Shanghai quickly fell. Now, for LI Auto, Shanghai is basically a more marginal market.

However, it proved that while the Shanghai market is important to LI Auto, LI Auto did not form a reliance on Shanghai. Despite losing Shanghai, LI Auto can still dominate one’s own destiny, as that’s the supportive power of a mature system.It is precisely due to an established system and soaring sales figures that LI Auto has been sufficiently confident, financially backed and flexible to respond to swift market changes. At LI Auto’s autumn strategic meeting this year, it was stated that with over 70 billion in cash reserves, it must be utilised to promote continuous competitive strength.

Presently, ‘competitiveness,’ or rather a leap beyond previous ‘competitiveness’ continues to emerge for LI Auto in 2023.

For instance, at the autumn strategic meeting, LI Auto planned to consider overseas expansion only after 2028. Yet by the end of November, news spread that the LI Auto L9 will be exported to UAE, Saudi Arabia, and other Middle Eastern countries along with some North African countries. Furthermore, intelligent driving, traditionally a weak point for LI Auto, saw considerable resources invested to fill this gap after a certain setback, officially implementing OTA 5.0 on December 19, 2023.

Of course, for LI Auto, another monumental breakthrough is the MEGA.

The MEGA, LI Auto’s first all-electric MPV, is the first foray into the electric market, tasked with securing first place in sales of over 500,000 vehicles, regardless of energy type or body style.

To win this battle, LI Auto has worked relentlessly, building a super factory in Shunyi, Beijing, collaborating with CATL on the development of Kirin batteries, and establishing supercharging stations. According to official news, the MEGA is set to be launched on March 1 this year, with LI Auto stating, “released and delivered immediately, and scaled up as soon as delivery is complete.”

If examined from the MEGA’s perspective, LI Auto’s aggressive strategy for 2023 is setting the stage for the MEGA, including capital, technology, replenishment, and volume. Further, post-2024, with MEGA’s launch, intelligent driving entering cities, 800,000 annual sales… LI Auto’s organizational efficiency and system capabilities are set to roll into ‘extreme growth.’

NIO: Exemplifying System Strength, Laying the Groundwork for Output

NIO’s sales fluctuations in 2023 have been significant, experiencing both severe lows and monthly highs of 20,000 sales.

However, overall, with July as the dividing month, NIO entered the second half of the year with steady sales of over 15,000, entering a better state relative to its own past. Nevertheless, such sales performance is still insufficient for NIO.

In fact, NIO itself readily possesses the ability to achieve high sales. After all, NIO has, to date, built 145 NIO Centers, 335 NIO Spaces, 310 service centers, 62 delivery centers, and an additional 2,325 battery swap stations, along with 9,712 supercharging piles. Both sales channels and battery system strength are what NIO commands and are central competitive criteria that many contemporaries cannot immediately attain.However, due to organization efficiency issues, NIO is yet unable to flexibly utilize its full potential, even with its core competencies. NIO’s CEO Li Bin stated in a face-to-face event with NIO media on December 14, 2023:

“We’ve improved our organizational agility somewhat, but each company has its inertia… We still have a way to go to be truly flexible.”

Indeed, with the situation NIO is currently in, it is difficult to be flexible. NIO has taken an unconventional path — building a vast business ecosystem around intelligent cars which requires lengthy and considerable resources, where the time to see real returns is uncertain.

While constructing this vast business system, NIO’s organizational scale inflated rapidly and sales cost skyrocketed, which placed the company on the edge of danger. According to Li Bin, NIO’s development is similar to the construction of the Shanghai Center Building, demanding a significant amount of time to consolidate the foundation.

Even though it’s 2023, NIO’s “tower” is still not visible and strictly speaking, is still in the stage of foundation work. To form and output a strong system, NIO needs to continue exploring. Meanwhile, the outside world has been questioning NIO, and it’s time for NIO to give an explanation.

Consequently, throughout 2023, NIO sought to illustrate its system strength in various ways, it was as if telling everyone: don’t worry, wait a bit more.

Take actions like hosting Innovation Technology Day, releasing the ET9, and verbalising where NIO’s billions in quarterly R&D expenditures have been spent; partnering with CCAG and Geely for battery exchange, attests the industry’s acceptance of NIO’s battery swap stations.

This not only reassured the market and instilled confidence, but it also laid a foundation for the complete output of the system’s strength in the future.

Indeed, merely explicating system strength isn’t sufficient, what’s critical is to enhance efficiency and output this strength as swiftly as possible. Actually, with 2023 as the starting point, NIO began taking more practical actions in its business execution.

For instance, if the business system is vast, and organizational structure is bloated, it means layoffs, cutting businesses, and concentrating resources on core fields; if there are no technical labels, and brand popularity dwindles, it let technology executives seize the public opinion high ground on Weibo, and even Li Bin personally took the initiative; if the market changes rapidly and competition is fierce, it would focus more on the present and reduce the five-year plan to two years.

Although a massive business system indeed strained NIO, the current NIO is growing stronger in its control over the entire system after repeatedly weathering market backlash. Once the system reaches its stride, the power that it propels will be formidable.

Xpeng: A Phoenix Rising from the Ashes

Xpeng’s 2023, a blessing in disguise.

Data reveals an upward sales trajectory for Xpeng in 2023. Nonetheless, it is well-known that on September 21, 2022, Xpeng’s G9 dream was shattered, leading to a decline in brand strength, sluggish product sales, organizational turmoil, and the company becoming ensnared in the mire of stagnation.

Yet, it is inarguable that the crisis ignited by G9 afforded Xpeng a lucid understanding of its intrinsic vulnerabilities, leading to a decisive, samurai-like resolution to dismiss 10 out of 12 senior executives, paving the way for a thorough internal restructuring from top to bottom.

Seen from this angle, G9 can be seen as a crucial turning point in Xpeng’s evolutionary journey, which in turn, precipitated the emergence of another turning point— the launch of G6.

Worth mentioning is that G6 is not just pivotal for Xpeng, but also marks a transformational moment in the entire smart car industry.

On June 29, 2023, the G6 officially hit the market. Xpeng spared no expense in equipping the G6 with both common and advanced technology, all while maintaining a starting price of just 209,900 yuan. With a starting price of 229,900 yuan, the Max version comes equipped with a dual-core Orin-X chip with a total computing power of 508 TOPS and 31 smart driving hardware, including lidar, enabling city pilot assistance capabilities.

At that point, Xpeng, willing to bet everything on G6 to make it a success, seemed like a true gambler. However, fortune favored the brave – G6 was a hit, and Xpeng won the gamble. Moreover, G6 set a new value benchmark in the field of smart driving, and concurrently, initiated the price war in the latter half of 2023. Xpeng, on the back of G6, made a roaring comeback.

Although G6 was a tremendous sell, Xpeng did not let go of its fixation with G9 and decided to learn from its past experience, this time ‘reinventing G9’.

On September 19, 2023, the 2024 model G9 was officially launched, with a starting price slashed from 309,900 yuan to 263,900 yuan. With a price reduction of 46,000 yuan, the cost-effectiveness of G9 became instantly pronounced. As expected, the 2024 model G9 became another sales pillar for Xpeng, following G6.

Evidently, after much toiling, Xpeng’s approach has become more accurate and efficient.

With the support of G6 and G9, Xpeng successfully breached the 20,000 sales mark in October 2023. However, since October, Xpeng’s overall sales have been hovering just above 20,000, signaling that Xpeng needs another breakthrough – the baton has been passed to X9.With a starting price of 359.8k, the X9 is Xpeng’s re-entry into the 300k and above market, marking a fresh exploration into the all-electric MPV market. For Xpeng, X9 isn’t just about achieving a sales breakthrough, but assisting the brand in moving upmarket and gaining larger profits, given that the G6 and G9 focus mostly on grabbing attention.

All in all, despite Xpeng’s struggles in the first half of 2023, launching the G6 mid-year was a successful move that unleashed significant potential. With the G6, Xpeng managed to stabilize its sales, empowering the company to either advance or retreat in the market comfortably.

In Conclusion

In 2023, NIO, Xpeng and LI Auto were all vigorously racing in their respective tracks, burning cash, eliminating competition, grabbing market share, and battling for customers.

From a broader perspective, development gaps have begun to show between NIO, Xpeng and LI Auto, leading each electric vehicle (EV) manufacturer to ‘plow their own furrow’.

Looking specifically at the companies, you’ll find that each has arrived in a relatively better position, exerting an indelible influence on the development of the new energy vehicle industry with their respective strengths.

At the same time, in 2023, NIO, Xpeng, and LI Auto have yet to solve some ‘long-standing’ problems. For instance, technical challenges faced by LI Auto to keep its autonomous driving in the top tier; organizational issues within NIO’s business system; and how Xpeng can establish a strong moat in terms of autonomous driving that leads to a closed loop business model.

Entering 2024, price wars, autonomous vehicle city entrance battles, charging wars and more tough battles lie ahead for NIO, Xpeng, and LI Auto, which will be another test for their respective systems.

Of course, behind these tests is a process that may make the systems of NIO, Xpeng, and LI Auto stronger, possibly even strong enough to survive the elimination process.

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