Li Auto officially positions overseas expansion as one of its core strategies for 2025.

Following Li Xiang, CEO of Li Auto, personally announcing the company's overseas expansion on his social media circle and the recent opening of Li Auto's Germany R&D Center in Munich, Li Auto also announced during its latest earnings call that it will officially enter international markets this year. Moreover, the company clearly stated that globalization and overseas expansion are among Li Auto’s core strategies for 2025. Over the past two years, Chinese new-energy vehicle brands have been accelerating their journey overseas, with companies like NIO, XPeng, Leapmotor, BYD, Chery, Changan, Geely, and Avatr already launching models in Europe. As one of China’s earliest “new force” automakers, XPeng and NIO—part of the “NIO-Xpeng-Li Auto” trio—first entered the Norwegian market back in 2020 and 2021, respectively. In comparison, Li Auto’s moves in this regard haven’t been as swift.
Last year, Li Auto launched its lowest-priced model, the L6, as part of its product lineup. Relying on four range-extender models and one all-electric vehicle, Li Auto achieved annual sales of 500,500 units, representing a year-on-year growth of 33.1%. This year, Li Auto has set an ambitious full-year sales target of 700,000 vehicles, which means that in addition to the two all-electric models—i8 and i6—scheduled for release in the second half of this year, Li Auto needs to explore even greater potential growth opportunities. Yang Jing, Director of Corporate Ratings at Fitch Ratings for the Asia-Pacific region, notes that with the accelerating trend toward intelligent driving technologies, competition among domestic automakers will intensify further this year. For individual automotive companies, tapping into overseas markets could prove to be another reliable path to sustained growth.
From the perspective of the overall export market, last year’s slowdown was primarily driven by pure electric vehicles, while plug-in hybrid and range-extended models showed structural growth based on a low initial base. Compared to pure electric vehicles, which face trade barriers in certain regions, plug-in hybrids appear to have a more promising short-term outlook. "Consumers find it easier to switch from traditional fuel-powered cars to plug-in hybrid models, and this transition trend—from gasoline vehicles to plug-in hybrids—has already been validated in the domestic market. Moreover, there’s strong potential for this opportunity to be replicated in overseas markets as well." Since the end of October last year, the European Union has imposed tariffs of up to 45.3% on electric vehicles imported from China. Amidst declining subsidies for pure electric vehicles in Europe, rising import duties, and an overall slowdown in the growth of pure electric models in the region, several Chinese automakers have begun adjusting their European market strategies. They are shifting focus from purely electric vehicles toward models that offer multiple powertrain options, while simultaneously ramping up plans to boost exports of hybrid vehicles to Europe.

Over the past two years, Chinese auto brands have collectively targeted the European market. However, they are still relatively new in this market, requiring more time and localized operations to build brand recognition. Aside from SAIC MG and Chery, which have established a strong brand presence in Europe, and BYD, which recently entered the European market with significant investment last year, other Chinese brands still have relatively low European deliveries, with annual sales per brand hovering around a few thousand units. Ideal's advantage lies in its core sales of extended-range models, a relatively mature product line, and its established presence in overseas markets through parallel exports, primarily in the Middle East, Central Asia, and Russia. Consequently, Ideal officials have stated that they will leverage their established luxury brand image in Central Asia to further expand their market presence.

Compared to whole-vehicle exports by OEMs, parallel exports do not require OEMs to conduct vehicle certification or invest in channel development, allowing them to test the waters in overseas markets. Xiaomi Auto currently relies on this model for its overseas expansion.

According to a previous report by Wandian, Ideal sold over 30,000 vehicles overseas through parallel exports in 2023, accounting for approximately 10% of its sales. Jiemian News learned from auto exporters that Ideal has not ceased its parallel export business even after fully launching its overseas expansion. In terms of channel selection, Ideal has opted for a dealer model rather than a direct sales model. While the former offers advantages in early brand building, it has been adopted and subsequently abandoned by several Chinese automakers entering Europe, primarily due to financial and time costs. The dealer and agency models, on the other hand, can effectively reduce channel costs for OEMs and allow them to expand their market through local dealers.

Over the past year, Ideal has established its own after-sales service centers in markets such as Kazakhstan, Uzbekistan, and the UAE. Ideal also plans to increase its presence in the Middle East, Latin America, and Asia-Pacific. Roland Berger's "Global Automotive Industry Outlook to 2040" predicts that global auto sales will continue to grow slowly at an average annual rate of 1.1%. Europe and the United States will reach saturation, while emerging markets such as Southeast Asia, India, Latin America, and Africa are expected to become the next growth markets. Risks and uncertainties also exist. Chinese brands have experienced trial and error in developing overseas markets over the past few years. Last year, Great Wall Motors closed its European headquarters and relocated management back to China, handing over sales of its Weimar and Ora brands to dealerships. This was largely due to excessive initial investment in overseas market operators, which failed to produce the expected results. In a recent interview, NIO founder and CEO William Li Bin stated that the company will focus on further consolidating its position in the Chinese market, with global expansion plans postponed until after 2028. For Ideal, trial and error may still be inevitable. Emerging markets' tolerance for brand premiums has yet to be fully verified. Developing tailored product promotion, brand storytelling, and a comprehensive after-sales service system will be key areas for Ideal to focus on.

Reprinted from Sina Auto

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