In 2024, Li Auto sold over 500,000 range-extended vehicles, establishing itself as a key player. Leapmotor, which pivoted quickly to focus on range-extended offerings, became the second new energy vehicle (NEV) maker to achieve quarterly profitability. Other brands, such as Avatr and Deepal, also demonstrated the growing market viability of range-extended products.
As more automakers embraced the range-extended approach, Tesla and Nio stood as major holdouts. By the end of 2024, nearly all other pure electric vehicle makers had announced plans to enter this segment, signaling that 2025 would be key for the technology’s adoption.
To produce standout range-extended vehicles, larger battery capacities have become essential. Most owners rely heavily on their vehicles’ pure electric mode, which explains why Tesla and Nio charging stations often see heavy usage by Li Auto vehicle owners. Leading models in this segment boast battery capacities exceeding 40 kilowatt-hours and pure electric ranges of at least 300 kilometers.
However, larger batteries come with challenges. They increase costs and require more chassis space, confining most range-extended models to the mid- to high-end SUV category, typically priced above USD 30,000.
The Aito M8, designed to compete with Li Auto’s L9, has already secured approval from China’s Ministry of Industry and Information Technology and is set to debut in the first quarter of 2025. Similarly, Xpeng Motors is preparing to launch its first range-extended vehicle, a large SUV developed on its G9 platform.
IM Motors has also announced plans to release its inaugural range-extended SUV in early 2025. Other contenders, including the Deepal S09, GAC Trumpchi S7, and Zeekr’s yet-to-be-revealed range-extended models, are gearing up to compete in what promises to be 2025’s most fiercely contested segment: mid-to-large, range-extended SUVs.
These new entrants will face stiff competition from BYD’s fifth-generation DM system, which powers models like the Denza N9 and Tang L. These vehicles offer improved fuel efficiency, competitive pricing, and premium features such as advanced smart driving systems, ensuring they remain formidable options.
In particular, the Tang L, which has not seen a major upgrade in years, is poised for a significant comeback. Developed specifically to rival Li Auto’s offerings, it boasts luxurious features such as built-in refrigerators, large screens, and spacious interiors. As BYD’s flagship under its Dynasty series, the Tang L is aimed at breaking into higher price brackets with its comprehensive and robust feature set.
Core technologies such as smart driving systems, advanced batteries, and vehicle integration have become increasingly accessible. BYD, for example, has demonstrated its mastery in these areas with the launch of the Denza D9, which features innovations like a ten-screen display system, elevating in-car entertainment to new heights.
As range-extended SUVs take center stage for automakers, Li Auto is facing mounting pressure. Much like BYD’s dominance in 2023 inspired a wave of imitators in 2024, Li Auto’s success has drawn competitors eager to challenge its niche market of family-friendly “dad cars.”
While Li Auto has excelled at defining its product offerings, it is not immune to the effects of aggressive competition—Tesla itself has seen its market share eroded under similar pressures. Li Auto’s relatively conservative sales target of 700,000 units for 2025 underscores the growing challenges it faces in an increasingly crowded market.
Ironically, in an era driven by electrification, automakers are relying more than ever on the humble fuel tank to sustain sales, profitability, and survival.
Smart driving capabilities near ubiquity
If 2024 marked the beginning of a new era for automotive intelligence, 2025 is poised to see this trend sweep across the industry, influencing nearly every automaker and most vehicle models.
Mid-level smart driving features, such as highway navigate-on-autopilot (NOA) and automatic parking, are set to become standard selling points for vehicles priced around USD 15,000, with some features even making their way into models priced as low as USD 10,000.
The shift is evident in the success of new models like Xpeng’s Mona M03 and GAC’s Aion RT, which highlight a critical change: smart driving is no longer a premium feature but an accessible one, enabled by advancements in cost reduction.
This democratization of smart driving technology is driven by two key factors: the sheer scale of China’s EV market and relentless innovation from chipmakers and smart driving solution providers. With affordable options such as Texas Instruments’ TDA4VH and Nvidia’s Orin N, the industry now has a robust selection of cost-effective chips to integrate smart driving into budget-friendly vehicles.
Most solutions built on these chips offer integrated driving and parking assistance functions. Priced at just a few thousand RMB, some systems even include basic city NOA functionality, as demonstrated by the Mona M03.
Leading automakers like BYD have accelerated their efforts in this area, setting new industry standards. According to a report by 36Kr, BYD will begin delivering self-developed smart driving systems in 2025, incorporating both highway and urban NOA capabilities.
If BYD fulfills its promise, 2025 could be a transformative year for China’s EV market, with over one million vehicles equipped with mid- to high-level smart driving systems. This figure alone could rival the combined deliveries of Li Auto, Nio, Xpeng, and Huawei-backed Aito, signaling a major leap forward in automotive intelligence.
By late 2024, advanced smart driving had progressed to the point where vehicles could automatically travel between parking spaces with minimal human intervention. In 2025, as technology continues to evolve, Level 3 capabilities are expected to become more widespread. In specific scenarios, drivers may finally be able to relinquish full control, allowing vehicles to operate entirely autonomously.
Huawei has already taken a significant step forward in this space. On January 13, its valet parking driver (VPD) feature reportedly became the first autonomous parking system deployed at an international airport, debuting at Shenzhen Bao’an International Airport.
This achievement not only highlights Huawei’s technical expertise but also addresses a challenge in autonomous driving: liability. As part of the rollout, Huawei partnered with insurance providers to introduce a parking coverage plan, ensuring that any collision occurring while using VPD is fully covered.
Richard Jin, CEO of Huawei’s intelligent automotive business unit, emphasized the importance of this milestone, stating, “This marks a breakthrough in liability allocation, which has long been a bottleneck for advanced smart driving.”
Meanwhile, competitors like Li Auto and Xpeng are not far behind in the race. With high-level smart driving technology nearing an inflection point, automakers face mounting pressure to invest heavily in R&D, computing power, and talent to stay competitive.
Battery development has been a mixed bag
In 2024, price cuts emerged as the defining trend in the battery industry. The cost of battery cells dropped nearly 40%, reaching around RMB 0.3 (USD 0.04) per watt-hour by year-end. A 60 kWh battery pack now costs less than RMB 20,000 (USD 2,800), nearing the industry’s cost limits.
By late 2024, the market began to rebound, with production rates rising across the board. First- and second-tier battery manufacturers reported full production capacity on some lines, signaling renewed demand. However, this rebound also suggests that battery prices have likely bottomed out, with a slight increase expected in 2025.
In terms of charging speeds, 4C fast-charging became mainstream in 2024, while 5C technology began to emerge. In 2025, 6C fast-charging is expected to dominate product launch headlines.
However, fast-charging faces significant practical limitations. Vehicles supporting 4C fast-charging often struggle to find compatible charging stations, reducing the technology’s utility. Even if vehicles with 6C capabilities enter the market, adoption will likely be slow without corresponding improvements in charging infrastructure.
Bringing fast-charging features to lower-priced models presents further challenges. Beyond battery costs, compatible 800-volt architectures are required, necessitating costly adaptations to drivetrains and electrical systems. Without economies of scale, this technology remains difficult to implement in budget-friendly vehicles.
Semi-solid-state batteries remain the industry’s most promising breakthrough, but progress has been painfully slow. As of early 2025, only two products exist in this category. The first is Nio’s 150 kWh battery pack, used in its battery swapping network. However, Nio’s business model limits its ability to showcase the battery’s long-term lifecycle performance. Moreover, this product is available only as a rental, not for outright purchase, diminishing its relevance as a true benchmark.
The second is the Lightyear edition of IM Motors’ L6, which uses a semi-solid-state battery that claims to support over 1,000 km of range, up to 3C fast-charging, and costs RMB 325,900 (USD 45,626). However, as of this month, delivery of the vehicle has yet to commence.
According to 36Kr, semi-solid-state batteries capable of passing rigorous thermal runaway tests often sacrifice other critical metrics, such as energy density or cycle life. These trade-offs undermine their appeal, making them fall short of their promised potential.
For now, automakers view semi-solid-state batteries as niche products, generating more buzz than practical benefits. Some industry insiders even call them a solution in search of a problem. “All semi-solid-state batteries shipping today are made using pilot production lines, not mature systems,” one battery company CEO told 36Kr.
While semi-solid-state batteries are more feasible than their fully solid-state counterparts, achieving an optimal balance of performance, safety, and cost at scale is unlikely in 2025.
During a 2023 earnings call, BYD chairman Wang Chuanfu was noted declaring “the next three years will be a decisive battle” for the automotive industry.
The first year of this battle, 2024, saw annual NEV production and sales surpass 10 million units for the first time, with penetration rates climbing above 40%. Looking ahead, projections from the China EV100 Forum suggest that penetration rates could reach 55% in 2025. This influx of millions of new vehicles is expected to intensify market polarization. Joint ventures continue to lose market share to domestic brands, while competition among Chinese brands becomes increasingly fierce.
The era of grand narratives around batteries seems largely over. As batteries revert to their role as a core automotive component, smart driving systems are now emerging as the next key driver of sales and brand differentiation.
Even BYD, a leader in the NEV market, is racing to close the gap in smart driving technology. Promising signs indicate that BYD is poised to catch up—and possibly overtake competitors.
The pace of technological innovation in the automotive industry has reached a point where stagnation is no longer an option. Automakers who fail to innovate will be left behind. If fewer than five automakers are destined to remain standing in the industry’s endgame, the current pool of competitors already feels overwhelmingly crowded.
In 2025, every automaker must remain vigilant and ready to fight for survival. With competition intensifying, no one can afford to let their guard down.
KrASIA Connection features translated and adapted content that was originally published by 36Kr. This article was written by Han Yongchang for 36Kr.