NIO, XPENG, and Li Auto: Will Their Paths Cross Again?

As 2024 began, automakers kicked off the new year with a sales showdown.

For the three leading new-energy brands—NIO, XPENG, and Li Auto—the divergence in their total 2023 sales was stark. Specifically:

Li Auto’s annual sales reached 376,030 units, a year-on-year increase of 182.2%;

NIO’s annual sales totaled 160,038 units, up 30.7% year on year;

XPENG’s annual sales came to 141,601 units, an increase of 17% year on year.

From these annual figures, Li Auto has pulled significantly ahead of NIO and XPENG.

However, it is important to emphasize that while Li Auto’s performance looks far superior to NIO and XPENG from a sales perspective, in reality, since 2023, all three have been driving themselves through difficult yet valuable transformations, moving forward in a wave-like manner along the paths they believe are correct.

Compared with 2022 and earlier years, the capabilities of NIO, XPENG, and Li Auto have diverged significantly.

01Li Auto: Tense Layout on the Eve of Pure Electric

As new energy players entered 2023, most moved forward with heads bowed in anxiety and frustration. Li Auto was one of the few that continued to advance with confidence. And 2023 proved to be an unprecedentedly fruitful year for Li Auto.

As previously mentioned, Li Auto’s annual sales volume in 2023 reached 376,030 units, a year-on-year increase of 182.2%. In October, Li Auto’s monthly sales broke through 40,000 for the first time, and in December, they exceeded 50,000, repeatedly achieving its set sales targets.

Following the announcement of its annual sales results, Li Auto CEO Xiang Li set a new, higher goal for 2024 — annual sales of 800,000 units and monthly sales of 100,000 units. This means doubling both current annual and monthly sales figures.

To achieve such sales goals, Li Auto’s organizational efficiency and systemic capabilities must reach a completely new height, as Xiang Li often says:

Take control of your own destiny, and challenge the limits of growth.

After years of transformation and development, particularly the rapid iteration from individual leadership to organizational maturity under Xiang Li, the Li Auto system has achieved a level of maturity among new-energy automakers that is now leading the industry. This was especially evident in 2023.

A typical example: before 2023, Li Auto’s sales in Shanghai accounted for approximately 10% of its total volume. However, after Shanghai canceled its policy of issuing free green license plates for extended-range electric vehicles (EREVs) in 2023, Li Auto’s sales in the city plummeted. Today, Shanghai has become merely a peripheral market for Li Auto.

Nevertheless, evidence shows that while the Shanghai market remains important to Li Auto, the company does not depend on it. Even without Shanghai, Li Auto continues to dominate, a testament to the strength of its mature operational system.

It is precisely this robust system, combined with its unstoppable sales momentum, that gives Li Auto the confidence, capital, and flexibility to respond to rapid market changes. During the company’s autumn strategy meeting earlier this year, an executive stated, 'We have over RMB 70 billion in cash on hand; we must convert this into sustained competitive advantage.'

Currently, this 'competitive advantage'—even surpassing previous levels—is continuously manifesting at Li Auto in 2023.

For instance, although the company initially planned at its autumn strategy meeting to consider international expansion only after 2028, by late November reports emerged that the Li L9 would be exported to the Middle East, including the UAE and Saudi Arabia, as well as parts of North Africa. Additionally, autonomous driving had long been a weakness for Li Auto. Following public criticism regarding its limited city navigation rollout, the company rapidly invested significant resources to address this gap, officially releasing OTA version 5.0 on December 19, 2023.

Finally, for Li Auto, there is another major, arguably revolutionary breakthrough: the MEGA.

As Li Auto’s first pure-electric MPV, the MEGA represents the company’s opening battle in the all-electric segment. It carries the heavy responsibility of securing the sales lead among models priced above RMB 500,000, regardless of energy type or body style.

To prepare for this challenge, Li Auto has invested significant effort—building a super factory in Shunyi, Beijing; co-developing the Qilin battery with CATL; and expanding its ultra-fast charging network. According to official announcements, the MEGA is scheduled for launch on March 1 this year, with Li Auto stating that it will move from release to delivery and then immediately scale up production volumes.

From the perspective of the MEGA, Li Auto’s aggressive momentum in 2023 was essentially laying the groundwork for this model, covering capital, technology, energy replenishment infrastructure, and brand visibility. Entering 2024, with the MEGA’s launch, autonomous driving capabilities extending into urban areas, and annual sales reaching 800,000 units, Li Auto’s organizational efficiency and systemic capabilities are once again pushing against the "limits of growth."

02NIO: Articulating Systemic Strength, Laying the Groundwork for Expansion

NIO experienced significant volatility in its 2023 sales figures, hitting precarious lows as well as peaks of monthly deliveries exceeding 20,000 units.

Overall, however, July served as a dividing line. In the second half of the year, NIO’s monthly sales stabilized above 15,000 units, entering a more favorable state relative to its own historical performance. Yet, for NIO, these results remain insufficient.

In fact, NIO does not lack the ability to sell strong vehicles. To date, NIO has cumulatively built 145 NIO Centers, 335 NIO Spaces, 310 service centers, and 62 delivery centers. Additionally, it operates 2,325 battery swap stations and 9,712 supercharging piles. These channel and energy-replenishment networks constitute core competitive advantages that NIO possesses and which many competitors cannot easily replicate.

However, constrained by current organizational efficiency and other issues, NIO cannot yet flexibly mobilize all its capabilities. Even with core competencies, it cannot fully leverage them. NIO CEO William Li stated at the NIO Media Face-to-Face event on December 14, 2023:

Organizational agility has certainly improved, because every company has its own inertia... We are still a bit far from being able to deploy our resources with complete ease.

Indeed, given NIO's current situation, it is difficult to achieve such flexibility. After all, the path NIO has taken is too unique—it has built a vast business system around smart vehicles, requiring long-term investment of significant human and material resources, while when adequate returns will be realized remains full of uncertainty.

It is precisely in the process of building this vast business system that NIO’s corporate organization expanded rapidly, driving up sales costs and placing the company on the brink of danger. However, NIO has its own way of thinking. In William Li’s view, NIO’s development is like constructing the Shanghai Tower; it requires spending a great deal of time ramming down the foundation.

Even as 2023 began, NIO’s high-rise structure clearly had not yet been erected; strictly speaking, it remained in the stage of laying the foundation. To form and output strong systemic capabilities, NIO still needed to continue exploring. At the same time, external skepticism had surged toward NIO like a tide, and NIO owed an explanation to the market.

Thus, throughout 2023, NIO has used various methods to articulate its systemic strength, as if telling everyone: Don’t rush, wait a little longer.

For example, by holding an Innovation Technology Day and releasing the ET9, NIO demonstrated where its quarterly R&D expenditure of three to four billion yuan was spent. By reaching battery-swap cooperation agreements with Changan and Geely, NIO announced that its battery-swap stations, operated over many years, have gained industry recognition.

By taking this approach, NIO not only provided clarity and injected confidence into the market but also laid a strategic foundation for the full deployment of its systemic capabilities in the future.

Simply explaining these systemic capabilities is insufficient; the urgent priority is to improve efficiency and deploy them as quickly as possible. In fact, starting from 2023, NIO has begun taking more pragmatic actions in its business execution.

For instance, facing a bloated business system and an unwieldy organizational structure, it implemented layoffs and cut non-core businesses to concentrate limited resources on core operations; lacking a distinct technological identity and seeing brand momentum weaken, it had technology executives collectively establish a presence on Weibo to seize public opinion ground, with William Li himself personally engaging in live streaming; amid rapid market changes and fierce competition, it focused more on the present, shortening its five-year plan to two years.

Although the massive business system once weighed heavily on NIO, having survived repeated setbacks from the market, its control over the entire system is becoming increasingly robust. Once this systemic capability is fully unleashed, the resulting power will be formidable.

03XPENG: Cutting Off the Limb to Save the Body, Rising Again

XPENG’s 2023 was a mix of fortune and misfortune.

From a data perspective, XPENG’s sales rose throughout 2023. However, as is well known, on September 21, 2022, XPENG’s hopes were dashed by the G9 launch, leading to a decline in brand strength, sluggish product sales, internal organizational turmoil, and a descent into a developmental quagmire.

Yet it is undeniable that the crisis triggered by the G9 forced XPENG to confront its internal vulnerabilities. With a resolve akin to cutting off one’s own arm to save the body, the company dismissed ten of its twelve executives, initiating a top-down process of rigorous self-refinement.

From this perspective, the G9 marks a pivotal turning point in XPENG’s history. Its emergence, in turn, precipitated another critical inflection point: the launch of the G6.

Notably, the G6 was not only a turning point for XPENG but also for the entire intelligent automotive industry.

On June 29, 2023, the G6 officially launched. XPENG equipped it with a comprehensive array of common and niche smart and comfort features, yet set the starting price at just RMB 209,900. The Max version, starting at RMB 229,900, featured dual Orin-X chips delivering a combined computing power of 508 TOPS, along with 31 autonomous driving hardware components including a LiDAR, enabling urban navigation assist capabilities.

At the time, XPENG seemed like a gambler willing to risk everything to make the G6 a hit. Fortunately, the gamble paid off; the G6 sold exceptionally well, securing XPENG’s victory. The model established a new value benchmark for the entire autonomous driving sector and simultaneously ignited the price war that defined the second half of 2023. XPENG staged a comeback with a decisive strike via the G6.

Although the G6 achieved massive sales, XPENG did not let go of its concerns regarding the G9. Instead, it decided to learn from past mistakes and "fight the G9 again."

On September 19, 2023, the 2024 model G9 launched, lowering its starting price from RMB 309,900 to RMB 263,900—a reduction of RMB 46,000. This price cut immediately highlighted the G9’s cost-effectiveness. As expected by all, the 2024 G9 became XPENG’s next major sales pillar following the G6.

It is evident that after navigating the challenges along the way, XPENG's strategic precision has become increasingly sharp.

With the support of G6 and G9, XPENG successfully broke through 20,000 in sales volume in October 2023. However, starting from October, XPENG's overall sales volume has remained just above 20,000. This means that XPENG needs to break through itself again—the baton has been passed to X9.

Starting at RMB 359,800, the X9 marks XPENG’s return to the market segment above RMB 300,000 and represents a fresh exploration of the pure-electric MPV sector. For XPENG, the X9 is tasked not only with breaking through sales volumes but also with driving brand elevation and securing healthier profit margins, given that the G6 and G9 have primarily served to generate buzz.

Overall, despite XPENG's difficult first half of 2023, the launch of the G6 mid-year successfully unleashed its competitive power. Since the G6, XPENG has basically stabilized its sales situation, allowing it to operate with greater ease in market offense or defense.

04Final Thoughts

In 2023, NIO, XPENG, and Li Auto were all running hard on their respective tracks, burning cash, fighting for dominance, grabbing market share, and conquering cities.

From a holistic perspective, there is already a noticeable development gap among NIO, XPENG, and Li Auto, with the three automakers continuing to "diverge in their paths."

Looking at NIO, XPENG and Li Auto individually, it becomes clear that all three have reached a relatively stronger position and are exerting an indelible influence on the development of the new energy vehicle industry through their own efforts.

Meanwhile, in 2023, NIO, XPENG, and Li Auto still had not resolved some "long-standing" issues, such as the technical challenges Li Auto faces to maintain its autonomous driving capabilities in the first tier; NIO's business system and organizational problems; and how XPENG can build an insurmountable moat in autonomous driving to form a commercial closed loop.

Entering 2024, a series of difficult battles await NIO, XPENG, and Li Auto, including price wars, the push for urban autonomous driving, and charging infrastructure competition. These will be another test of their systemic capabilities.

Of course, behind these tests lies the process of strengthening the systemic capabilities of NIO, XPENG, and Li Auto, perhaps even making them strong enough to survive the elimination round.

Written by: Isaiah Edited by: 308