Li Auto recently experienced three important dates: September 26th, the launch date of the Li i6; October 10th, the release date of its Q3 delivery data; and October 31st, the date of its recall announcement filing. The first two were key moves in its bet on pure electric transformation, while the recall and sales data at the end of the month delivered a less than optimistic report card—Q3 deliveries reached 93,211 units, with the MEGA model taking the top spot in sales of pure electric MPVs priced above 500,000 yuan. However, October deliveries were only 31,767 units, a decrease of over 2,000 units compared to September's 33,951 units, causing it to fall out of the top 5.
On October 26, 2025, in Shanghai, an Ideal i6 car is displayed in a shopping mall. (Visual China photo)
As of the end of October, the cumulative deliveries for 2025 still fall significantly short of the adjusted annual target of 640,000 vehicles. NIO and XPeng, often compared to Li Auto, both exceeded 40,000 deliveries in October, suggesting that Li Auto may be falling out of the top tier of emerging electric vehicle manufacturers.
"Excellence is the greatest enemy of greatness." Li Xiang's remark during a recent interview with Luo Yonghao perhaps best encapsulates the current predicament of Ideal. This company, which has secured its leading position among new energy vehicle startups through its range-extended technology, is undergoing a difficult leap from demand-driven to technology-driven growth. Behind the sales fluctuations lies a fierce collision between industry trends and its own reforms.
The final whistle of the extended-range era
On the day Shanghai canceled the green license plate qualification for range-extended vehicles in 2023, this once core market had fallen out of the top three cities in terms of ideal sales by 2025. The cost of a Shanghai license plate of nearly 100,000 yuan became the last straw that broke the camel's back for consumer decisions.
This is just a microcosm of the decline in the range-extended electric vehicle (REEV) market. Data from the first quarter of 2025 shows that the growth rate of the REEV market plummeted to 3.5%, a stark contrast to the booming pure electric vehicle market and the sluggish REEV sector. Li Auto's once-unique selling point has now become a target: the Wenjie M9, with its enhanced intelligent features, is attracting high-end users, while the Deep Blue S09 is carving out a niche in the 200,000-500,000 yuan market with its lower price. Li Auto's overall delivery volume declined month-on-month in October, further confirming the market pressure on REEV models.
"Selecting the right products, choosing the right products for the long term, and iterating at an extremely high frequency"—these are the qualities of a top entrepreneur that Li Xiang summarized in an interview, and they precisely pinpoint the shortcomings of Li Auto's range-extended vehicle business. From L9 to L6, the highly unified "cookie-cutter" design reduced costs, but it also resulted in insufficient product differentiation.
The data from 2024 already revealed the signs: sales of L8 and L9 declined by 33.4% and 24.5% year-on-year, respectively, leaving the brand to rely solely on L6 for sales volume, which caused the average price per vehicle to drop from 370,000 yuan to 330,000 yuan.
Under the dual pressure of policy and market forces, Li Auto has had to adjust its fundamentals. Internally, it has reduced the annual production target for its range-extended L series from 560,000 vehicles to 520,000 vehicles by 2025, while significantly increasing the target for pure electric vehicles from 50,000 vehicles to 120,000 vehicles. Behind this adjustment lies the realistic anxiety that range-extended vehicles cannot be maintained and pure electric vehicles must succeed.
Public data shows that in the Chinese market, pure electric vehicles sold 612,000 units in September, a year-on-year increase of 21.3%; range-extended electric vehicles sold 279,000 units in the same period, a year-on-year increase of 10.2%. The market for range-extended electric vehicles is already very narrow.
MEGA controversy
In response to the changes, Li Auto launched its first pure electric vehicle, the MEGA, in March 2024. However, the public opinion storm triggered by this car is still fresh in Li Xiang's memory. This pure electric flagship MPV, priced at 559,800 yuan, was jokingly referred to as a "hearse" by netizens due to its unique design. Within 72 hours of its launch, the number of canceled orders reached 10,297, far exceeding the initial order of 3,218 units.
On March 16, 2025, in Haikou, Hainan, consumers visited Li Auto's first pure electric vehicle, MEGA. (Visual China photo)
"It really happened at a special time, and we were pushed up by the overall traffic." In front of Luo Yonghao's camera, Li Xiang still couldn't hide his helplessness when talking about this, but he insisted on his product philosophy. This incident exposed the blind spot in Li Auto's understanding of the pure electric vehicle market: it wanted to establish brand recognition through design innovation, but underestimated the power of users' aesthetic inertia.
It wasn't until the third quarter of 2025 that MEGA saw a sales comeback, proving its product strength by becoming the top-selling product of the quarter. Behind this success was the rapid expansion of Li Auto's supercharging network.
As of September 30, 3,420 supercharging stations had been built nationwide, covering 269 cities. By the end of October, this number had been updated to 3,508, with 19,177 charging piles in operation. The nine-vertical-nine-horizontal highway network, completed in July, has made long-distance charging possible from Harbin in the north to Sanya in the south. "The pure electric charging network is the new range extender," Li Xiang's words from years ago have been validated by the market a year later.
However, MEGA's path to redemption encountered another setback in October.
On October 31, Li Auto voluntarily filed a recall for 11,411 2024 MEGA vehicles due to insufficient anti-corrosion performance of the coolant, which could lead to battery thermal runaway risk in extreme cases. The response to the previous MEGA fire incident in Shanghai had already attracted market attention, and some analysts believe that the related negative events affected the delivery volume in the last week of October.
MEGA's ups and downs serve as a mirror, reflecting the haste of Li Auto's pure electric transformation: the i8 and i6, originally scheduled for release in 2024, were postponed to 2025, missing the optimal market window; it wasn't until the i6's launch that Li Auto first used Jackson Yee as its brand ambassador, attempting to break free from the limitations of its family user image. "Product development cannot pursue perfection; it must iterate frequently to meet market demands," Li Xiang emphasized in an interview, a methodology that was precisely the crucial element missing in MEGA's early stages.
A desperate gamble with the VLA model
In May 2025, the departure of Xia Zhongpu, the head of the end-to-end model, caused a stir within Li Auto. This key technical staff member, who had risen from level 19 to level 21 within two years, left due to the company's full-scale shift to the VLA model, reflecting a dramatic change in Li Auto's intelligent driving strategy.
"VLA represents the stage of human intelligence; end-to-end is merely mammalian intelligence," Li Xiang stated at an internal meeting, demonstrating his strong confidence in the new technology. Ideal's bet on the VLA large-scale model, which achieves decision-making through 3D vision and physical world modeling, was initially rated as comparable to Huawei's ADS 3.3, demonstrating outstanding performance in scenarios such as defensive driving and underground parking garage navigation. However, as an initial product, it still suffers from issues such as the need for standardized voice commands and low efficiency in making U-turns on narrow roads, and has yet to establish a strong reputation.
Autonomous driving mode. (Visual China image)
This technological bet consumed enormous resources. Ideal invested more than three times the expected amount of training cards, achieving a total computing power of 13 EFLOPS, of which 10 EFLOPS were dedicated to model training. Lang Xianpeng, the person in charge of assisted driving, was promoted to level 24, demonstrating the extent of the resource allocation. This aligns closely with Li Xiang's observation of top entrepreneurs: "In the right long-term track, you must iterate at a speed far exceeding the industry average."
However, the cost of this technological shift is a time lag. When Huawei ADS 4.0 had already covered 226 cities, Li Auto AD Max only supported 45 cities; when the i6 was launched, although the VLA model was standard, user awareness still needed to be cultivated.
More importantly, there is an imbalance in the structure of R&D investment. The total R&D expenditure in 2025 is expected to be 12 billion yuan, of which more than 6 billion yuan will be invested in the field of AI, while the investment in pure electric three-electric technologies is insufficient. The coolant system problem exposed by the MEGA recall precisely confirms the hidden concern of insufficient refinement of the three-electric basic capabilities.
Shifting strategic focus
"If everyone does the three most important things well each day, that's already very impressive; doing a dozen things will only make things worse." Li Xiang's philosophy on efficiency, shared in an interview, perhaps reflects his own reflection on the current state of Ideal's organization. In 2025, the company simultaneously adjusted its sales and R&D efforts to keep pace with the market.
The core move was the regional sales reform. The 26 sales regions were merged into five major regions, drawing on Apple's regional management experience, but this encountered difficulties in integrating staff. At the beginning of the reform, there was a mismatch between channels and products; by mid-year, most stores were still primarily promoting range-extended electric vehicles.
While senior management stated that "pure electric vehicles are the ultimate direction," they also emphasized that "range-extended electric vehicles remain the core business." From range-extended electric vehicles to pure electric vehicles, and then to AI large-scale models, Li Xiang's attention has been constantly shifting and diverting. This shift in strategic focus is consuming internal energy and is far from Li Xiang's ideal of long-term and high-frequency iteration.
Re-entering the pure electric vehicle market
In a sense, MEGA was merely a "guinea pig" for Li Auto to test the waters in the pure electric vehicle field. The i6, on the other hand, is the true "first pure electric vehicle".
On September 26, 2025, at the launch event for the Li Auto i6, Li Xiang stood under the spotlight, with the screen behind him displaying the starting price of 239,800 yuan. This pure electric SUV, equipped with a VLA model and a 5C battery, was expected to revive the market, and deliveries began immediately upon its launch, with 551 dealerships simultaneously showcasing the vehicle.
Judging from market feedback, the i6 has indeed accurately hit the pain points: double-layered laminated glass and low wind resistance design improve battery life, the standard intelligent body system enhances the interactive experience, and the price directly competes with the Wenjie M7 and Xiaomi YU7. After its launch, orders quickly exceeded 70,000 units, far exceeding expectations.
The changing industry landscape has also provided Li Auto with a breathing space. In October, the penetration rate of new energy vehicles exceeded 60%, the pure electric vehicle market continued to maintain rapid growth, and with BYD dominating the market and attracting many competitors, opportunities still exist in niche markets.
While new players like Xiaomi are making a strong entry, their brand recognition is still relatively weak. Li Auto's cumulative sales in the SUV market above 200,000 yuan have surpassed Tesla's, proving that its user base remains strong.
On April 23, 2025, at the media briefing of the 2025 Shanghai Auto Show, Li Xiang, founder, chairman, and CEO of Li Auto, introduced the newly upgraded Li Auto MEGA HOME Family Special Edition. (Visual China photo)
"Accurate selection, long-term commitment, and high-frequency iteration"—these three entrepreneurial qualities summarized by Li Xiang have now become ideal self-examination questions. Accurate selection in the extended-range era is no longer effective; long-term commitment in the pure electric vehicle sector is being validated; and whether high-frequency iteration can keep up will determine the success or failure of this transformation.
The vision for 2025 is like a car changing lanes. The inertia of the old track is still pulling, the rules of the new track are not yet fully adapted, and the MEGA recall has served as a warning brake on this lane change. However, with ample cash reserves of hundreds of billions, the engine of VLA technology beginning to show power, and the market popularity of the i6 providing the possibility for acceleration.
When Li Xiang was asked about his views on competition, he replied, "I will adhere to principles and not become corrupted by it." This statement may foreshadow the ideal transformation logic—avoiding opportunism and navigating market cycles through product and technology iteration and honest problem-solving.
For this automaker that has been around for ten years, the recent stagnation in sales may only be a temporary pain. Whether it can accelerate again depends on whether it can rebuild its own moat in the pure electric vehicle market.
