couldn't bear it anymore, Li wanted to bow to reality

Produced by Radar Finance and Economics, edited by Li Yihui, Deep Sea

Li Xiang, who once claimed that "the ideal car does not reduce prices", finally compromised.

On the morning of April 22, Li Auto's official Weibo posted that from now on, the 2024 Ideal L7, Ideal L8, Ideal L9 and Ideal MEGA will adopt a new price system, and new users and users who have ordered but not delivered can enjoy the new price.

The price list shows that the price of different versions of the ideal L series has been reduced by 18,000-20,000 yuan, and the ideal MEGA has been reduced by 30,000 yuan compared with the previous one, becoming the model with the largest decline.

In the eyes of the industry, the ideal compromise price reduction or a helpless move under pressure. On the one hand, Tesla announced a price cut for all models in the Chinese market this past weekend, and on the other hand, although the current ideal sales are still strong, it has been defeated by the question for three consecutive months, ranking second in the sales volume of new forces.

Just a year ago, Li Xiang, chairman and CEO of Li Auto, said on many occasions that Li Auto would not reduce prices. But now, the ideal internal and external situation has changed, especially a series of problems encountered since the listing of MEGA, which made Li Xiang begin to review and reflect.

Zhang Xiang, a visiting professor at Hainan Vocational University of Science and Technology, told Radar Finance that the competition in the new energy vehicle industry has entered a white-hot stage, and price reduction has become the main theme in 2024, so it is difficult to avoid the price adjustment of ideal cars. In addition, now more and more car companies are cutting into the range extension track, and the market facing the ideal has become the red sea, which is also the reason for its price reduction.

Official announcement to join the "price war"

The price war in the auto market has intensified, and Ideal has taken the initiative to make price adjustments.

On the morning of April 22, Li Auto announced that from now on, the 2024 Ideal L7, Ideal L8, Ideal L9 and Ideal MEGA will adopt a new price system, and new users and users who have ordered but not delivered can enjoy the new price.

After this adjustment, the price range of the Ideal L7, L8 and L9 has become 301,800-439,800 yuan, which is 18,000-20,000 yuan lower than the previous price, and the new price of the flagship MPV Ideal MEGA is 529,800 yuan, which is 30,000 yuan lower than the previous one.

At the same time, Li Auto also said that it will provide cash rebates for owners of the 2024 Li L7, Li L8, Li L9 and Li MEGA. In other words, Ideal will increase the satisfaction of old consumers through cash compensation.

It is worth noting that after Li Auto made a clear official announcement of price cuts, Li Auto's Hong Kong stocks fell by more than 9% intraday on April 22, and finally closed down 8.33%.

Regarding the price war, Li Auto was cautious before. At Li Auto's spring media sharing conference on March 2, 2023, Li Xiang said, "Price cuts may not necessarily increase sales, but they can hit other companies." But on the question of whether the price of the ideal new energy vehicle will be reduced, Li Xiang bluntly said that it will not.

Regarding the reason why Li Auto does not reduce the price to less than 300,000 yuan, Li Xiang further gave the reason from the perspective of user cognition, "Consumers do not accept a good brand of medium and large SUVs sold for more than 200,000 yuan." ”

On the night of the communication meeting, some netizens commented on Li Xiang's Weibo, "Will the ideal price be reduced?" Li Xiang replied, "No."

Although it has verbally promised not to reduce prices, Li Auto has still launched preferential activities. According to the Beijing News, in February this year, in an ideal car store in Beijing, after a subsidy of 43,000 yuan, the price of the ideal L7 Air naked car dropped to 300,000 yuan, "276,800 yuan can pick up the car, and the car will be given away with floor mats and trunk mats when ordered before the year." ”

The staff of the store said that the discount is a price reduction measure of Li Auto before the model iteration, and the L series models participating in the price reduction are all 2023 models. "Because the Spring Festival is approaching, the discount has increased a bit. ”

With this sudden official price cut, Li Auto has become the latest leading new energy manufacturer to join the price war, and the company is also believed to have adopted a more active price strategy to attract consumers in the face of fierce market competition.

Zhang Xiang told Radar Finance that the competition of new energy vehicles will further intensify in 2024, and there are more than 70 passenger car companies in China, and many brands have to reduce prices to digest inventory, and even Tesla is currently cutting prices. Under the pressure of opponents step by step, the price adjustment of Li Auto is inevitable.

Radar Finance noticed that on April 21, just before Ideal made the above adjustment, Tesla China also lowered the prices of all models. The day before, Xpeng Motors also announced the launch of a time-limited car purchase subsidy of 500 million yuan, covering many of its models, including Xpeng G9, G6, P7i and 2024 Xpeng P5.

In addition, in Zhang Xiang's view, another reason for the ideal price reduction is that the range extension market has changed from a blue ocean to a red ocean.

Ideal "internal and external troubles"

Li Auto's price cut seems sudden, but it is inevitable.

The past March can be called a low period for Li Auto. Reflecting in the secondary market, market data shows that since March 1, the Hong Kong stock of Li Auto has fallen by 45% in a total of 34 trading days, and the current share price has fallen below HK$100.

Looking back, the strong rise of the external world and the internal Ideal Mega suffered Waterloo, both of which created a bleak situation for Ideal Auto in the capital market.

On March 1, Li Auto's first pure electric MPV, the Ideal MEGA, was launched, with a price of 559,800 yuan. However, after its launch, the new car, which was set internally to challenge the monthly sales target of 8,000 units, immediately fell into a whirlpool of "appearance controversy" and "order volume did not meet expectations".

The cold launch of Ideal MEGA has undoubtedly poured cold water on the highly anticipated Ideal Auto team. Li Xiang, known as the "King of Weibo", has been silent for more than half a month, and has carried out internal reflection and correction.

On the afternoon of March 21, Li Xiang issued an internal letter, admitting that he had misjudged the grasp of the market rhythm, "We mistakenly regarded MEGA's operation from the 0 to 1 stage (commercial verification period) as the 1 to 10 stage (high-speed development period)."

At the same time, Li Xiang mentioned that the company pays too much attention to sales and competition from top to bottom, so that desire surpasses value, and the user value and operational efficiency that it is best at have decreased significantly.

Regarding the misjudgment of the pure electric strategy and the company's internal over-focus on the desire for sales, Li Xiang said that it will reduce the expectations and desires of sales and return to healthy growth. Focus on users rather than competition, focus on value rather than desire.

With the strategic correction, Ideal also recently announced the start of the matrix organization 2.0 upgrade, and at the same time adjusted the organizational structure of multiple departments.

It is understood that the new round of organizational changes of Li Auto is mainly concentrated in the CEO office of Li Auto, which has changed from the original department covering the brand department, product department, commercial department, strategy department and supply department to the "product and strategy group".

Among them, the product and strategy group will set up a "product line" department and a "quality operation" department. In addition, Li Auto has set up a new GTM (Go to Market) team to coordinate the implementation of the new product launch plan.

Li Auto officially said that the adjustment will focus on solving the problem of too long value transmission chain and avoiding overly complex processes that reduce the quality and efficiency of decision-making.

From the perspective of the external environment, new energy vehicles are still constantly reshuffling. If the starting price of Xiaomi SU7 of 215,900 yuan makes all new energy brands highly nervous, then the strong rise of the question world will start all-round competition with Li Auto.

Wang Bo, founder of Dongji Positioning, pointed out that the strong rise of Huawei Wenjie is reshaping the competitive landscape of the new energy vehicle industry. Among them, the most affected is Li Auto.

He said that Huawei's cross-border entry into the large SUV market has basically absorbed all the product highlights of Li Auto. However, Huawei is not a simple imitation, but has successfully established a powerful concept such as the "King of Technology" of the M9 by highlighting various hard-core technologies.

Wang Bo believes that Huawei's hard and rigid ideal car has formed a crushing trend for the ideal brand in terms of competitive potential. It can be said that Huawei also has ideals and is stronger, and Huawei also has ideals that are not.

In fact, with a large number of orders accumulated before, Wenjie has been ahead of the ideal sales volume for three consecutive months.

According to public media reports, AITO's deliveries returned to more than 30,000 units in March, ranking first with 31,700 units, which is also the brand's third consecutive month of winning the new force sales championship this year.

Li Auto ranked second with 29,000 units, ranking second in sales of new forces for three consecutive months.

Will the ideal L6 live up to expectations?

Just as it lost its sales crown, Li Auto also released a new car in a low-key manner.

On the evening of April 18, Ideal's first L6 with less than 300,000 yuan was announced to be listed. It is reported that the new model is positioned as a compact SUV, divided into two models, Pro and Max, with prices of 249,800 yuan and 279,800 yuan respectively.

According to Liu Jie, vice president of commercial of Li Auto, the starting price of the Ideal L6 was originally set at 259,800 yuan, but it was finally adjusted to 249,800 yuan for release.

In the new energy vehicle market 200,000-300,000 yuan price band, there are not only Xiaomi SU7, which was also released recently, the new Wenjie M7 blessed by Huawei, and the hot-selling Tesla Model 3, etc., the competition is quite fierce.

Even so, Li Auto's expectations for the Ideal L6 have not decreased, and the internal believes that "the steady state is still more than 20,000 units per month".

However, the agency has "poured cold water" on the ideal L6. According to a research report released by Morgan Stanley, the new model L6 launched by Li Auto-W did not bring the expected market surprises. The price positioning of the L6 is comparable to that of similar local products, and it does not form a significant advantage.

According to the report, Li Auto's additional incentives for early car buyers and the competitive configuration of the L6 show that the model still has some market competitiveness.

Based on these factors, Morgan Stanley predicts that the L6 is expected to achieve its monthly sales target of more than 15,000 to 20,000 units, and Li Auto's annual sales are expected to be between 560,000 and 640,000 units.

Wang Xing, the founder of Meituan, also made a rare comment, believing that "among all the models launched by Ideal so far, the L6 is likely to be the one that Ideal's own employees buy the most." I'm sure many of Ideal's employees knew this in their hearts during the design and production of this car. ”

In the comments of the circle of friends, Wang Xing added, "In other words, MEGA is a bit like a car made for the ideal CEO himself, and the L6 is the car made by the ideal employee for himself." ”

In the eyes of some analysts, Wang Xing's implication is that the price of all models before the ideal is on the high side. Previously, after the sales of Ideal MEGA were cold, Wang Xing had reduced his holdings of Ideal Auto three times in a row.

According to the disclosure of interests of the Stock Exchange, Wang Xing sold a total of 4,162,300 shares of Li Auto for three consecutive days from March 26 to March 28, cashing out nearly HK $503 million.

It is worth mentioning that in this price adjustment, Li Auto did not adjust the price of the Ideal L6 that had just been launched.

According to the official disclosure on April 22, the 72-hour order of the ideal L6 on the market exceeded 10,000 units. At present, although the L6 is a good number, it is still unknown whether it will be able to complete the impulse mission with many competitors watching.