While claims that it is offering the insurance subsidy to celebrate the milestones in the deliveries of its L-series models, it is more likely to be an effort to maintain current sales momentum.

(Image credit: CnEVPost)

Li Auto (NASDAQ: LI) has begun offering customers a limited-time insurance subsidy to maintain sales momentum, even though the company is facing capacity bottlenecks in deliveries.

Customers who purchase any of Li Auto's currently on-sale models between August 30 and September 30 can receive a subsidy of RMB 10,000 yuan ($1,370) when they purchase auto insurance from one of the company's partner insurance agencies, the company announced today.

Li Auto currently sells the five-seat Li L7, as well as the six-seat Li L8 and Li L9. Its first production car, the Li One, has been discontinued. All of these models are extended-range electric vehicles (EREVs), which are essentially plug-in hybrids.

Li Auto said it's celebrating the one-year anniversary of deliveries of its L-series models, and the cumulative deliveries of the series surpassed 250,000 units.

The first model in Li Auto's L-series is the flagship Li L9, which was launched on June 21, 2022, and began deliveries on August 30, 2022.

On the one-year anniversary of the Li L9's delivery, the model saw its 100,000th delivery today, Li Auto said.

While Li Auto claims that the insurance subsidy is being offered to celebrate the milestones of deliveries of the L-series models, it is more likely that it is being offered to maintain the current momentum in sales.

Li Auto's sales have seen explosive growth this year, with monthly deliveries having hit record highs for four consecutive months, with 34,134 units delivered in July.

However, Li Auto's weekly deliveries have largely remained at around 8,000 units since July, which the company said is limited by capacity constraints.

Li Auto's parts capacity bottleneck will be resolved in October, its founder, chairman and CEO Li Xiang said on Weibo earlier this month.

Li Auto's factory in Changzhou, Jiangsu province, will be upgraded during China's National Day holiday to support the expansion, he said.

October 1 is China's National Day, and this year's legal holiday runs from September 29 to October 6, with September 29 being the Mid-Autumn Festival, and October 7 and October 8 will be work days, even though they fall on weekends.

In China, EV companies mostly adopt a direct sales model and are therefore very cautious about cutting prices and offering subsidies for fear of causing dissatisfaction among existing owners.

Offering entitlements, including insurance subsidies, is usually a car company's best bet outside of price cuts.

Before 's (NASDAQ: TSLA) previous rounds of major price cuts in China, it usually offered insurance subsidies to try to boost sales.

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