Li Auto, a leading Chinese electric vehicle maker, is stepping up its overseas strategy, having just established a dedicated division for international markets. This new division is helmed by Wang Jin, who reports directly to senior vice president Zou Liangjun. Wang, who previously managed Huawei’s sales in Chile, joined Li Auto over a year ago and brings crucial experience to the role.
For now, Li Auto’s overseas team is small, with limited activity. But the company is focusing its initial efforts on the Middle East and Central Asia, especially the UAE and Saudi Arabia. Earlier this year, Zou announced a shift to a direct sales model in these regions, with plans to create a dedicated after-sales network. The company expects to launch deliveries in the fourth quarter, with flagship models, the L7 and L9, leading the way.
Until recently, Li Auto’s international sales relied on a parallel export model—an approach that, while practical, marks a transitional phase. With the recent formation of a direct overseas division, Li Auto is signaling a deeper commitment to international growth.
However, the company has temporarily shelved its plan to open its own overseas stores. Sources close to the matter say Li Auto hesitated, fearing that such a move might alienate local partners and potentially drive them toward competitors.
As China’s automotive market grows increasingly competitive, international expansion is rapidly becoming a must for leading Chinese automakers. For Li Auto, the initial groundwork in the Middle East and Central Asia through parallel exports has built brand awareness, giving it an advantage as it begins expanding into these markets.
Now, Li Auto is experimenting with a more adaptable approach, recruiting local dealers to manage sales in regions where demand is already strong.
“Direct sales networks come with many challenges. Li Auto is now working with dealers in markets where there’s proven demand,” said a source familiar with the company’s plans.
The company is also customizing its models for international markets. “At the beginning of the year, we completed a review of the modifications needed for the Middle East,” an insider said. Besides the Middle East, Latin America is emerging as a target market for Li Auto. With Wang’s background in Latin American markets, this region could provide a promising new growth channel.
Li Auto declined to respond to these recent developments when 36Kr reached out for comment.
Li Auto’s journey toward international expansion has seen twists and turns. In 2020, CEO Li Xiang said that overseas markets were a necessary next step for the company. But by July 2022, he signaled a more reserved approach, announcing that Li Auto would delay foreign market plans until at least 2025. During a meeting held in October the same year, an even more conservative outlook emerged, with the company suggesting it might wait until 2028 to enter global markets in earnest, relying on parallel exports for the time being.
This year, however, Li Auto’s stance has shifted once again.
The adjustment reflects Li Auto’s evolving growth strategy. Following challenges in fully electric vehicle sales, Li Auto revised its 2023 sales target from 800,000 to around 500,000 units. Sources say the company now anticipates a longer timeline to reach its next million-unit milestone, with a slower growth trajectory.
Intense competition within China is also a factor. Aito, backed by Huawei, is matching Li Auto in sales. Meanwhile, brands like Xiaomi, Leapmotor, and Xpeng Motors are expanding rapidly, gaining traction in the domestic market.
For Li Auto, overseas expansion could present a new growth path amid the tight domestic competition.
Since the start of 2023, numerous Chinese automakers have accelerated their overseas expansion. Nio, Xpeng, Leapmotor, BYD, Chery, SAIC MG, Changan, Geely, and Voyah have all launched models in Europe.
However, the European Union’s tariffs on Chinese vehicles have made European factories a costly requirement for Chinese companies. BYD, for instance, plans to establish its first European factory in Szeged, Hungary. Chery will repurpose a former Nissan plant, and SAIC, Geely, and others are exploring European manufacturing options. Leapmotor, meanwhile, has chosen to leverage Stellantis’ European sales network.
Li Auto remains cautious about entering the European market. “Europe and the US are red lines for our export operations,” an insider said.
For now, Li Auto prefers expanding into markets validated by parallel exports. In 2023, many of its vehicles reached the Middle East, Central Asia, and Russia. In Russia, a Li L9, priced at RMB 450,000 (USD 63,000) in China, reportedly sold for as much as RMB 900,000 (USD 126,000) after parallel export.
Earlier this year, CEO Li posted on social media that monthly parallel export volumes had reached around 3,000 units across Central Asia and the Middle East. If this pace continues, Li Auto’s annual exports could exceed 30,000 units, providing a solid growth foundation. By contrast, Chinese startups exporting to Europe report annual sales of around 3,000 units.
However, parallel exports come with risks. This year, Russia introduced regulations requiring taxes on vehicles shipped through Central Asia, which could cut into profit margins.
Li Auto is also exploring new Latin American markets, including Mexico, Brazil, and Chile, where demand shows promise. According to data from the China Association of Automobile Manufacturers, Russia, Mexico, and Brazil were the top three destinations for Chinese vehicle exports in the first half of 2023.
These new markets bring potential for growth but will also challenge Li Auto to evolve and strengthen its capabilities.
KrASIA Connection features translated and adapted content that was originally published by 36Kr. This article was written by Li Anqi for 36Kr.