NIO & Li Auto Diverge in Chinese EV Price War
Li L9. Photo by Larry Evans
May 21, 20262 hours
Zachary Shahan
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The Chinese electric vehicle industry exploded in the past several years, but as EVs have taken more and more share of the auto market, companies have been scrapping to outcompete their EV competitors in selling automobiles. One of the big stories of the past year or so has been price wars in the industry there. Things have subsided a bit following the Chinese government stepping in and telling everyone to cool off, but the story isn’t over.
This past week, NIO has come out and slammed the race-to-the-bottom cost cuts. At the same time, rival Li Auto is bringing prices down. Needless to say, the two companies are not seeing eye to eye.
Li Auto cut prices on its L9 SUV by 10%. A day later, NIO senior vice-president Ji Huaqiang said: “The recent spike in raw material prices has had a severe impact on auto assemblers. Some players have turned out to be reasonable, as they planned to raise car prices to cope with the cost issue.” And the automakers cutting prices? I guess they’ve been unreasonable in Ji’s eyes.
That said, with the recent price cut, the Li Auto L9 is very similar in price to NIO ES9 and has even dropped below it, so perhaps there’s a bit of salt and fear in those comments? The Li Auto L9 costs 509,800 yuan ($74,950), while the ES9 goes for 528,000 yuan ($77,630).
You might just see that as a market balancing itself out, but perhaps Ji is right and Li Auto is going too far in its price cuts while supplies increase in cost. Who knows? In the long run, it’s not about winning a battle here or there, but about being innovative enough to compete and creating products compelling enough to sell well. We’ll see how both companies do in 2026 and beyond.
Still, though, there’s a question of how much risk the Chinese EV industry is taking on and how challenging the future may be for their finances. “Paul Gong, head of China auto research at UBS, said on Tuesday that ‘involution’ remained an ‘enemy within’, as carmakers fight for dominance with similar products. The term — neijuan in Chinese — refers to intense competition that erodes sustainable growth and makes profits elusive,” South China Morning Post writes.
“At the recent auto show in Beijing, we saw new brands trying to launch more large-size electric SUVs in the Chinese market, overcrowding the segment and leading to vicious competition,” Gong added. “This situation proves to be challenging for the [EV] industry.”
The SCMP adds that only a handful of EV producers out of the nearly 50 on the Chinese market are profitable. That includes BYD, the largest plugin vehicle seller in the world by far, and Leapmotor, which has partnered with Stellantis and is a leading EV exporter from the Chinese market. As we reported two months ago, NIO made a profit on its operations in the 4th quarter. But it has been hard to get to that place and the company needs to go further in order to truly survive and succeed financially. Li Auto cutting its prices probably isn’t something NIO executives like to see.
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