image source: Visual China

LAS VEGAS, January 17 (TMTPost) – China’s automaker Li Auto has released its weekly sales volume as scheduled, which was surpassed by  -- Aito once again. Although the difference in sales between the two was not significant, both with 68 hundred  units, the fierce competition is evident.

In the first week of 2024, Li Auto delivered a total of 4,300 new cars, a significant decrease of 69.5% from the previous week's 14,100 units. Although the sales in the second week caught up to the level of Aito, the cumulative sales for the first two weeks still lagged behind Aito by over 1,800 units.

Data shows that in the first week, Aito' new M7 achieved sales of 5,487 units, accounting for 92.2% of Aito' total sales. This also indicates that the sales of its M5 have not improved. In the second week, Aito' new M7 delivered 6,400 units, a week-on-week growth rate of 16.6%, while Aito' M5 decreased by 13.8%, dropping to 400 units.

In December 2023, Aito delivered 24,000 new cars, a year-on-year increase of over 141%, ranking second among so-called “new forces,” which refer to emerging new enegy vehicle producers. Li Auto delivered a total of 50,000 cars in December 2023, a year-on-year growth rate of over 137%, surpassing the 50,000-unit mark in monthly sales for the first time.

Li Auto offers steeper discounts to win the game?

After being surpassed by Aito, Li Auto  responded quickly. A sales consultant from Li Auto said that the company started handing out the Chinese New Year discounts to major stores on January 10. Taking Beijing as an example, the cash discount has been increased from 36,000 yuan last month to 43,000 yuan this month.

Li Auto’s employee told TMTPost that the preferential purchase policy is because the new 2024 models of L9/L8/L7 will be officially released and delivered in March. Also, the price reduction is in response to the continuous price competition from the three luxury brands, namely Mercedes-Benz, BMW, Audi.

The discounts on Mercedes-Benz models generally exceed 100,000 yuan. The popular SUV GLC currently has a discount of 95,000 yuan, with a maximum price reduction of over 22%. The discount on its electric cars is even more significant. The fully electric luxury   Mercedes-Benz EQS, with an official price of over a million yuan, currently offers a discount of about 669,000 yuan, a maximum price reduction of 50%.

The discounts on BMW electric cars are also remarkable. The largest discount is for the all-electric luxury sedan BMW i7, currently offering a discount of over 400,000 yuan, with a maximum reduction of over 28%. The discounts on popular models BMW iX3 and i3 are also around 150,000 yuan, with a maximum reduction of about 40%.

Similar to Mercedes-Benz and BMW, Audi's electric car discounts far exceed those of gasoline-powered cars. The most discounted electric car is the Audi e-tron, with a cash discount of nearly 250,000 yuan, a discount of about 40%.

In 2023, BMW (including MINI, Rolls-Royce), Mercedes-Benz, and Audi had sales in China of 825,000 vehicles, 765,000 vehicles, and 729,000 vehicles, respectively, with year-on-year growth rates of 4.2%, 1.8%, and 13.5%. The sales of pure electric vehicles in China were about 100,000 vehicles for BMW, 31,000 vehicles for Audi's pure electric e-tron series. Mercedes-Benz did not release specific sales data for pure electric models.

Therefore, price promotions can indeed boost sales in the short term. However, the substantial discount policies of BBA (Mercedes-Benz, BMW, Audi) may backfire on their brand reputation in the long run. As the penetration rate of new energy vehicles continues to rise, the slow movements of BBA in the field of new energy vehicles may give Li Auto more opportunities.

According to research data released by Autohome, from January to May 2023, BBA users accounted for 25% of the owners who replaced their Li Autos.

Aito wins in sales but encounters after-sales problems

Li Auto is unwilling to engage in direct competition with Aito and Huawei. However, Aito is different. On the Aito Car App developed by Huawei, the car purchase page prominently displays a comparison between Aito' new M7 and Li Auto's L7.

The sales competition between the two companies is more intense. A sales consultant from Li Auto mentioned that its discounts are greater than Aito', and the delivery period is shorter. However, the new M7 of Aito is offering a 3,000 RMB Chinese New Year bonus, a 5,000 RMB insurance subsidy, a 10,000 RMB replacement subsidy, and a 12,000 RMB interior and exterior option fee reduction. If you get a license plate in Beijing, you can also enjoy an additional 10,000 yuan discount, etc.

However, the rapid growth in sales has brought about various reputation-related issues for Aito.

Firstly, users complain about repeated delays in the delivery of the new M7. Some users claim that the promised 4 to 6-week delivery has been exceeded by over 12 weeks. It takes 6-8 weeks to deliver the regular version, and more than 3 months for the high-end version models.

Aito representatives told TMTPost that the factory's weekly production capacity is close to 6,000 vehicles, similar to the delivery volume. By the end of December, Aito had delivered over 120,000 units. This not only reflects the strong market appeal of the new M7 but also poses a significant test for Aito in terms of delivery.

Secondly, the most common complaint is that the autonomous driving capabilities have not been delivered on time. It was initially promised that the new M7 would have nationwide fully autonomous driving by the end of 2023, but now it has been revised to gradually roll out after the Chinese New Year.

It is evident that the rapid increase in sales also brings significant after-sales problems for Aito  to address promptly.

Entering Full-Scale Competition

He Xiaopeng, the Chairman and CEO of XPeng Motors, recently said that no new forces have emerged, including Li Auto. Industry insiders analyze that this is because Li Auto has not proven its market strength in the mainstream pure electric track as it did in the extended-range car market.

Li Auto's first pure electric model, MEGA, will be launched on March 1 this year, delayed by 3 months from the previously planned end of 2023. Insiders suggest that Li Auto's prospects in the pure electric market may not replicate the huge success in the extended-range market

In addition, another highlight for Li Auto in the first half of 2024 is the launch and delivery of the next all-new extended-range model, L6. This is considered a key factor in driving Li Auto's sales to continue rising in 2024. In the second half of 2024, the company also plans to launch and deliver three new pure electric models, enhancing competitiveness in this field.

Li Auto delivered 378,000 vehicles throughout 2023, a year-on-year growth of 182.2%. In 2024, Li Auto has set a sales target of delivering 800,000 vehicles for the whole year, a expected growth of over 112% compared to 2023. Whether the consecutive 100% growth for two years can be achieved is the biggest focus for Li Auto in 2024.

Although Aito has not disclosed its delivery target for 2024, it’s reportedly set at 600,000 vehicles. Aito will also introduce two new models in 2024, the upgraded version of Aito M5 and the all-new model Aito M8.

Both companies have developed multiple new models, accelerated its speed in opening new  stores, and set ambitious sales targets. The competition between Li Auto and Aito, or rather, the competition between Li Auto and the Huawei models, will unfold in 2024.