Experts say Li Auto has its finger on consumers’ pulse, and is particularly good at catering to tastes of affluent motorists.

“Li Auto’s success [in the weak market] has ignited hopes for a turnaround of the overall market,” said Phate Zhang, founder of Shanghai-based EV data provider CnEVpost. “It shows that products that really cater to consumer needs will still draw enough buyers, even in a sluggish market.”

Li Auto surges by the most in 6 months after posting best quarterly result

After plodding along with a single model, the Li One, between 2015 and mid-2022, the company launched three new luxury SUVs (sport utility vehicles) starting in June 2022. The, L7, L8, L9 models became instant hits with Chinese households.

All the new Li Auto SUVs boast of an intelligent four-wheel-drive system, 15.7-inch passenger entertainment and rear cabin entertainment screens, and features like Lidar sensors – elements that appeal to China’s middle-class consumers.

The company sold 25,681 units in April, up 23.3 per cent from the previous month, the second consecutive month that Li Auto’s monthly deliveries exceeded the 20,000-mark.

That made it an industry outlier. In April, sales of pure electric and plug-in hybrid cars on the mainland decreased 3.6 per cent from a month earlier to 527,000 units, according to data from the China Passenger Car Association.

Elon Musk’s Tesla, the front-runner in China’s premium electric car market, delivered 76,663 units in March. Its April delivery figures are not available yet.

Li Auto’s has resolutely stayed out of the ongoing price war which has seen market leader Tesla and some domestic rivals slash their prices by between 10 per cent and 40 per cent.

Shanghai-headquartered Nio delivered 6,658 vehicles, reporting a decline of 36 per cent from March.

“Li Auto’s SUVs use the extended-range battery technology and target wealthy families in this vast market,” said Tian Maowei, a sales manager at Yiyou Auto Service in Shanghai. “All those families have a common goal when they look for an electric car for household use, namely a spacious, fashionable vehicle that overcomes range anxiety.”

In a post-earnings conference call, Li Auto managers said the company aims to build 300 charging stations with 4C supercharger piles by the end of 2023, allowing battery-powered vehicles to get 400 kilometres of range in 10 minutes. “4C” refers to the ability to charge the battery pack in a quarter of an hour.

Li Auto’s four models, all of which are categorised as luxury SUVs, are priced from 300,000 yuan (US$43,115) to about 500,000 yuan.

The models take on bestselling petrol-powered luxury vehicles including BMW’s X3, Mercedes-Benz’ GLC and Audi’s Q5.

All of Li Auto’s cars can go as far as more than 1,000km on a single charge, compared with about 500km of drive range for EVs made by its rivals such as Tesla and Xpeng.

The extended-range battery technology – pitched as a solution to the challenges of inadequate charging infrastructure and battery technology constraints – was shunned by many venture capitalists when it was introduced in 2015.

In addition to charging for electricity, these cars are fitted with a small internal combustion engine to generate additional electric power when cars run out of electric charge.

“We initially considered buying an Audi Q5 to replace our 10-year old Skoda sedan, until we realised that the L8 was a better choice because it looks better and turns out to be a value-for-money vehicle,” said Pinky Yu, a white-collar clerk in Shanghai who plans to order an L8 priced at 339,800 yuan this month. “I think Li Auto’s SUVs can easily attract thousands of customers like me.”

The price range of an Audi Q5 petrol SUV starts from about 360,000 yuan.

Li Auto reported a net profit of 933.8 million yuan for the first three months of this year, compared to a net loss of 10.9 million yuan for the same period last year.

Xpeng and Nio have yet to post a profit owing to massive research and development costs and heavy spending on marketing and sales.