Li Auto is opening several of its in-house technologies to outside partners as it looks for new sources of revenue, according to multiple industry sources. Some units are also seeking external capital as they move into separate businesses.
The push includes Li Auto’s proprietary Mach chips, silicon carbide modules made by Sike Semiconductor, and range extenders. The Mach chip and silicon carbide module businesses have already been placed in separate corporate entities as they seek more outside customers. Sike is also preparing to raise external capital.
Li Auto has also signaled that other powertrain technologies, including its range extender system, are available to external customers. Its in-house battery business, however, has no such plans for now.
“Batteries are highly customized, which makes external supply too difficult,” an industry source said.
In July, Li Auto registered Xinchuang Zhihe, a wholly owned company in Shanghai, for its Mach chip business, a step toward separating the unit and preparing for external sales.
According to 36Kr, Li Auto’s senior management has also approved the spinoff of the chip business, while it is pursuing customers in parallel. A source said several embodied intelligence companies have held talks with Li Auto executives, who explicitly pitched the Mach chip to them.
Whether those companies ultimately adopt the Mach chip may depend on how difficult it is to port their algorithms.
The Mach M100 is Li Auto’s first driver assistance chip available for mass production. Each chip delivers 1,280 tera operations per second (TOPS) of computing power and memory bandwidth of 273 gigabytes per second. Li Auto has previously said the Mach M100 provides three times the usable computing power of Nvidia’s Thor-U.
Since the second quarter, the Mach M100 has been installed in the new Li L9, Li L8, Li Mega, and the new Li i9. A person at Li Auto said mass production has gone relatively smoothly for the company’s first proprietary chip, with Li Auto reserving substantial production capacity at chip fabrication plants.
Sike Semiconductor moved toward external supply even earlier. The silicon carbide company began operating independently at the start of this year, taking responsibility for its own profit and loss while seeking customers outside Li Auto.
Spinning off proprietary technologies and supplying them to outside customers is not unusual in the automotive industry. Companies commonly do so to share development costs and reach more customers.
With gross margins under pressure, Li Auto seeks outside funding
Li Auto is not short of cash on its balance sheet. At the end of the second quarter of 2026, it still had RMB 87.5 billion (USD 13.1 billion) in cash reserves, the highest among China’s newer electric vehicle makers.
Even so, Li Auto faces three demands on its cash: a sales recovery that remains fragile, depressed gross margins, and substantial R&D spending.
Li Auto delivered 261,600 vehicles from January through August 2026, down 0.6% year-on-year. Sales only began to recover gradually after August, as the Li L6, new Li Mega, Li i8, and Li i9 came to market in succession.
Since 2023, Li Auto had been the most profitable among China’s newer electric vehicle brands. But in the first half of 2026, as its product lineup underwent a transition, the company posted a net loss of RMB 3.994 billion (USD 595.7 million), compared with a profit of RMB 1.743 billion (USD 260 million) a year earlier.
Its gross margin also fell to 9.4% from 19.4%, well below the 15–20% range that CEO Li Xiang has previously described as healthy.
Even as sales and profits remain under pressure, Li Auto is increasing spending to preserve its longer-term competitiveness. The second quarter of 2026 marked the sixth consecutive quarter in which its R&D expenses were around RMB 3 billion (USD 447.4 million), while quarterly operating cash flow had only just returned to positive territory.
Those pressures help explain why Li Auto is seeking more revenue and capital from outside the company.
Nio has taken a similar path. It recorded a net loss of RMB 22.4 billion (USD 3.3 billion) in 2024, the largest in its history. That same year, it began opening its battery swap network to third-party automakers and energy companies.
In 2025, Nio spun its proprietary chip business into an independent subsidiary, GeniTech. Nio CEO William Li publicly said the company was willing to open it to the industry.
GeniTech subsequently stepped up talks with automakers and robotics companies and formed a joint venture with Axera Semiconductor. In February this year, it completed its first funding round, raising RMB 2.257 billion (USD 336.6 million) at a post-money valuation of around RMB 10 billion (USD 1.5 billion).
Nio’s chip spinoff is not the only one making progress. According to 36Kr, Huixi Technology, a chip company that once went through severe operating difficulties, has also secured consecutive funding rounds amid the embodied intelligence boom, with its valuation rising rapidly.
Li Auto’s Mach chip, meanwhile, uses a dataflow architecture designed around artificial intelligence workloads. It, too, is looking for new opportunities.
Is there a market for Li Auto’s technology?
The range extender was one of the components Li Auto began developing in-house relatively early. By 2026, Li Auto had introduced its third-generation range extender and was both developing and manufacturing the component itself.
Publicly available information indicates that Li Auto’s latest range-extender system, based on its proprietary third-generation range extender and platform, achieves fuel consumption of 6.3 liters per 100 kilometers. It also uses a new-generation motor developed and manufactured in-house, delivering power-generation efficiency of 94.8% and extending the maintenance interval to three years.
An industry source told 36Kr that Li Auto may be looking to supply range extenders externally because it planned substantial production capacity early on, and external sales would help make fuller use of that manufacturing capacity.
Legacy luxury brands now seeking to transform their businesses in China could become customers.
Silicon carbide semiconductors are another technology that Li Auto moved to develop in-house early.
In 2022, Li Auto and Sanan Semiconductor jointly established Sike Semiconductor. Under the division of responsibilities, Li Auto leads module design and vehicle integration, Sanan supplies silicon carbide chips and substrates, and Sike Semiconductor’s factory in Suzhou handles packaging and testing.
An industry source told 36Kr that Li Auto’s silicon carbide modules benefit from being designed around an automaker’s integration needs.
“Li Auto’s approach isn’t simply to pile up semiconductor specifications,” the source said. “It is about making the module smaller to free up space inside the vehicle and making efficiency improvements translate directly into real-world range. In other words, Li Auto understands what kind of components automakers actually need better than suppliers do.”
But technological advantages do not automatically translate into sales to third parties. One obstacle is Li Auto’s identity as an automaker itself.
To overcome the trust barrier that comes with that identity, Li Auto is trying to loosen Sike’s ties to the parent company and turn it into a genuine third-party supplier.
Li Auto owns 70% of Sike Semiconductor. A person close to Sike told 36Kr that since its establishment, the company had reported to Li Auto’s manufacturing division. But in February this year, Sike became operationally independent, and its management team began reporting to Sike’s board instead.
“Sike and Li Auto used to be part of the same system. Now Sike has completed the separation,” a person familiar with the matter told 36Kr.
Sike Semiconductor is also seeking external financing and has begun preparations for an IPO. Its direction is clear: bring in external capital quickly and broaden its ownership, addressing other automakers’ concerns about buying from a competitor.
Li Auto’s Mach chip business is following a similar path.
Wholly owned Xinchuang Zhihe has a registered business scope that includes integrated circuit chip design and related services, as well as sales of chips and related products. Its legal representative is Wang Yang.
According to 36Kr, Wang joined Li Auto in 2020 and serves as its joint company secretary, having long been responsible for matters related to capital markets.
Several industry sources told 36Kr that supplying Li Auto’s chips externally should not be particularly difficult, in part because a number of embodied AI companies founded by former Li Auto employees are potential customers with existing ties to the company.
So far, five embodied AI companies have emerged from Li Auto alumni: former Li Auto AI chief scientist Chen Wei founded Zigleap AI; former Li Auto CTO Wang Kai founded Simplexity Robotics; former head of smart driving Lang Xianpeng took part in founding Kunlunx AI; former co-CTO Xia Zhongpu joined Anyverse Dynamics as a co-founder; and former director of intelligent driving products Zhao Zhelun took part in founding Vita Dynamics.
Li Auto’s proprietary Mach M100 chip was designed specifically for vision-language-action models and on-device foundation models, a technical approach similar to what robotics companies are now using. That could make it easier to adapt than chips from Nvidia and other vendors, an advantage that could appeal to startups.
KrASIA features translated and adapted content that was originally published by 36Kr. This article was written by Xu Caiyu for 36Kr.
Note: RMB figures are converted to USD at rates of RMB 6.70 = USD 1 based on estimates as of September 21, 2026, unless otherwise stated. USD conversions are approximate and, where appropriate, rounded for ease of reference. They may not fully match prevailing exchange rates.