Li Auto has recently created a first-tier division responsible for overseas market expansion, putting a much-changed international expansion plan back on the table.
Li Auto (NASDAQ: LI) has recently created a first-tier division responsible for overseas market expansion, putting its much-changed international expansion plans back on the table, according to a new report.
The new division is headed by Wang Jin, who has been with Li Auto for more than a year now and reports to the Chinese carmaker's senior vice president of sales and service, Zou Liangjun, according to a 36kr report yesterday.
Wang previously worked at Huawei in Zou's team, where he was responsible for Huawei's sales and services in Chile.
Li Auto currently has a small headcount in that department and hasn't made much of a move yet, 36kr said.
Li Auto initially hoped to enter the Middle East and Central Asia, including the UAE and Saudi Arabia, first in its efforts to expand overseas, with Zou saying in February that the company would use the same direct sales model as it does at home.
The company planned to begin delivering vehicles overseas in the fourth quarter, starting with the Li L9 and Li L7, he said at the time.
However, Li Auto has since shelved plans to build direct stores overseas.
One of Li Auto's concerns was that opening stores locally would affect the interests of existing channel players, thus pushing them towards competitors, 36kr cited a source as saying.
Currently, Li Auto's strategy for expanding into overseas markets is to recruit local dealers.
The challenge of setting up a direct sales system is significant, and Li Auto is recruiting dealers who want to sell vehicles in places where they have already had market validation, the source said.
Meanwhile, Li Auto is working on some specialized designs for overseas models, identifying parts that need to be adapted for the Middle East market at the beginning of the year, according to the report.
In addition to the Middle East, Latin American is also becoming an option for Li Auto to enter overseas markets, the report said, adding that Wang's previous experience has made him more familiar with business in Latin American countries.
Li Auto is one of the few of China's major new car-making forces that has yet to begin expanding into overseas markets. Its local peers Nio (NYSE: NIO), Xpeng (NYSE: XPEV), and Zeekr (NYSE: ZK) are all actively doing that.
The company's approach to overseas markets has changed several times over the past few years.
Li Xiang, Li Auto's founder, chairman and CEO, mentioned in 2020 that the company would definitely enter overseas markets. Last July, he said that Li Auto would not enter overseas markets before 2025.
At a strategy meeting last October, Li Auto's internal team mentioned that the company might not seriously consider entering overseas markets until after 2028, with parallel exports as the main focus until then, according to 36kr.
This year, Li Auto's attitude towards expanding into overseas markets has changed again, mainly due to the poor performance of its first battery electric vehicle (BEV) model, the Li Mega, as well as increasing competition in the domestic market, according to the report.
Overseas markets could bring new growth for Li Auto, but it is cautious about entering Europe, preferring to expand sales in markets validated by parallel exports, the report said.
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