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’s Carbon Emission Goals and the New Energy Vehicle Industry

China is targeting to reach its carbon emissions peak around 2030. This initiative will significantly boost the development of the new energy vehicle industry. The US and the European Union have set higher standards for future carbon emissions, including a timetable for phasing out fuel vehicles. As per our analysis, global new energy vehicle sales will surpass most institutions’ forecasts, and we predict that new energy passenger vehicles will account for 60% of sales by 2030. The Chinese market will likely contribute even more to this trend. New energy vehicles are poised for rapid development in the coming decade.We are optimistic about the growth in sales of new energy vehicles, but we believe that the global economy may face uncertainties owing to the COVID-19 pandemic and global debt. Based on this, we estimate that the global annual sales of passenger vehicles will remain between 65 million and 70 million without substantial growth. We predict that the global sales of new energy passenger vehicles will be around 40 million by 2030, and the Chinese market will reach 20 million.

2. Development of Technology

Autonomous driving technology will be developed at the speed of Moore’s Law in the next decade. In 2030, both on-board computing power and sensor resolution will be improved by hundreds of times. Autonomous driving will standardize chips with thousands of TOPS, cameras with hundreds of millions of pixels and high-resolution solid-state lidars.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

In the field of electric technology, the ultra-fast charging technology that achieves 300-500 km range with just 10 minutes of charging will soon become mainstream. This will make the charging experience akin to refueling for gasoline vehicles, becoming essential for the widespread adoption of electric vehicles. Furthermore, the utilization of more environmentally friendly power generation, charging networks equipped with energy storage capabilities, and V2G (Vehicle-to-Grid) technology will establish a new commercial value chain. HPC (High Power Charging) super charging stations will surpass gas stations in terms of investment returns, thus better supporting the commercial adaptation of electric vehicles.

Change of the Market

By 2030, the full popularity of autonomous driving will lead to polarization of consumer demands for automobiles.# Some people think that autonomous driving will turn vehicles into exclusive personal spaces for themselves and their families.
This space would feature an atmosphere and design tailored to their preferences, with abundant electricity, supercomputing capabilities, and state-of-the-art VR and AR environments. It would be a space for entertainment, socializing, work, and family.
The smart electric vehicle would become a space of greater value than a home. We are confident that the demand for private smart electric vehicles will not decrease, and 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

The competition in the traditional fuel vehicle industry is between machinery and industry giants. The competition pattern of the industry in recent decades has been relatively friendly, like a football league rather than a cup match or a knockout match. Even a brand with a small market share can seize market segments through unique positioning and product features and survive and develop healthily.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 EnergyThe 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 pursue two parallel routes: 1. The extended-range electric platform with pure electricity for urban mobility and power generation for long-distance mobility as user value (“power bank”); 2. A 400 kW ultra-fast charging high-voltage pure electric platform that can achieve 300-500 km range in 10 minutes (“super charger”). Everything we do is driven by the perspective of user value, providing energy solutions for free mobility, and accelerating the popularization of electric vehicles.#### 3. The Challenge of Organization

传统工业组织无法满足智能电动汽车的发展需求。在智能电动汽车时代，需要智能组织。

传统燃油汽车在一个相对可控的世界中运行。计划、流程和控制是最有效的管理模式，同时强大的工业企业和工业组织也应运而生。购买传统燃油汽车后，它几乎在3年后就不会发生太大的改变。但是对于智能电动汽车来说，它几乎每个月都在增长，这意味着管理方法和对人才的需求完全不同。# Human Intelligence Operating Mode
Human beings are the most advanced intelligent creatures on earth. The operating mode of human intelligence consists of:

1. Perception;
2. Decision-Making;
3. Execution;
4. Feedback.
   Specific to a product, an organization, and its partners, effectively applying the operating mode of human intelligence to build management and an 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 achieve great success under this universal trend. Although the traditional automobile industry has been developing for over 100 years, by 2030, the competition in the smart electric vehicle industry will have essentially been settled.We aspire that the unwavering efforts of all our partners will lead to the realization of a truly exceptional event that will define the pinnacle of our lives and the industry’s for the next ten years. May we make the next ten years our greatest and most fulfilling, without any trace of regret.

Market and Strategy – Our Focus in 2025

Time Frame in 2025

From 2015 to 2020, Li Auto was in its infancy stage. As with most startups, we faced relatively scarce resources and funds; thus, our primary objectives were to survive and strengthen our ability to generate internal resources. During this period, we were able to deliver the Li ONE, underwent comprehensive product testing, research and development, supply chain management, production and sales, and organizational logistics tests. We were proud to achieve the top sales volume of new energy SUVs in China in 2020 and successfully accomplished our fundamental goals for survival and self-sustainment.## The Stage of Rapid Development: 2021-2025

For Li Auto, 2021-2025 is a crucial period, marking the stage from 1-10 for us. Our goal is to become the leading enterprise in China’s smart electric vehicle market and win recognition as a global leader.

The challenge is significant, and we have to sell more than 8 million smart electric vehicles in China by 2025, securing a market share of over 20%. It’s an ambitious target, and we have to work hard to achieve it.

To make this happen, we need to focus on developing talent and raising funds. We must prioritize user product value and make technology research and product development our core driving force, placing a significant amount of resources in research and talent reserves. There can be no shortcuts in our pursuit of success.

User Profile in 2025## From 2015 to 2020, we have focused on a specific user group, developed a value system tailored to their needs, and integrated it into our products and services. This valued user group possesses unique characteristics:

• Firstly, they primarily consist of families with children, where three generations of family members often reside together. These users choose Li ONE as their secondary vehicle in addition to the likes of Mercedes-Benz, BMW and Audi, or it replaces their Volkswagen, Toyota, and Honda. The design of Li ONE fully caters to the needs of each family member, including the driver, passengers, elders and children.

• A great driving experience, growth potential, co-pilot screen, electric second-row seats, third-row aisles, and a spacious trunk are just some of the features our design team has implemented to meet this group’s demands.Secondly, electric car owners usually have charging requirements and specific long-distance driving needs, like self-guided tours. Over 70% of them have access to independent parking spots with household chargers, while over 20% benefit from stable public charging facilities within their company or community. Most trips taken within the city are completely electric, which makes it both environmentally friendly and cost-efficient. The range extender power generation technology provides the best solution for long-distance charging, ensuring anxiety-free driving and freedom to travel. By purchasing and driving the Li ONE electric vehicle, they are able to take advantage of its long-distance capabilities.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 aim to provide a richer range of smart electric vehicles. This will include 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. We will adhere to our brand positioning of luxury smart electric vehicles, widely covering the price range of RMB 150,000 to RMB 500,000 in order to make high-quality mobilized homes more accessible to more people.

• 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 of Li Auto by 2025

Li Auto’s strategic goal is to achieve a measurable market share, with the core strategy being focused on the smart electric vehicle market in China. In order to participate in a more intense global market competition by 2030, Li Auto aims to obtain more than 20% of China’s smart electric vehicle market share. This will enable the company to build sufficient reserves of talent, technology and capital.

Li Auto’s Strategic Goals for 2025:

1. To achieve a market share of 20%, Li Auto aims to become the leading enterprise for smart electric vehicles in China, with user product value as the core focus.

Supporting Element #1: To achieve this target, Li Auto will focus on developing leading products and technological R&D capabilities with comprehensive technical expertise.

2. Li Auto intends to have the market share as the core of its business strategy, prioritizing sales, service, production, and supply chain management capabilities.

Supporting Element #2: Li Auto aims to develop leading sales capabilities, focusing on creating an efficient and effective sales service, production, and supply chain enterprise.

3. Li Auto’s strategic resource support capabilities will revolve around an intelligent organization and leading talents, data, and funds.

Supporting Element #3: Li Auto will prioritize the development of an intelligent organizational setup to support the acquisition 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 carefully read and implement the core goals and requirements of the 2025 strategy into their specific work, so that their business decisions and work results can better support the enterprise’s Strategy 2025. Let us welcome the most exciting and challenging ten years to come, and be proud of them.

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.