Li Auto Advances In-House Battery Development to Strengthen Supply Chain Control

On June 23, 2024, Li Auto unveiled its new L8 model. Although the company’s self-developed 5C battery was not a focal point of the launch event, its inclusion marks Li Auto’s deeper involvement in the traction battery sector. The battery has a capacity of 72.7 kWh, delivering a CLTC-rated all-electric range of 430 kilometers. It supports charging from 10% to 80% in under 10 minutes and emphasizes longevity and safety. Traction batteries typically account for 30% to 40% of a pure electric vehicle’s total cost, directly influencing vehicle performance, cost structure, delivery timelines, and supply chain bargaining power. Amid intensifying price competition in the new energy vehicle (NEV) market that is squeezing profit margins, Li Auto has opted against pursuing BYD-style full vertical integration. Instead, it focuses on product definition, system validation, and setting quality standards for batteries, while outsourcing manufacturing to partners. Li Auto began assembling its battery R&D team as early as 2015 and launched ultra-fast-charging battery development in 2018. The current team comprises approximately 270–280 members, including over 30 PhDs. Its battery lab in Shunyi, Beijing, spans more than 5,000 square meters, with cumulative fixed investments exceeding RMB 500 million. In the self-developed 5C battery project, Li Auto leads the development of cell material formulations, structural design, battery pack (Pack), and battery management system (BMS), while co-developing fast-charging-specific material systems and electrode processes with upstream suppliers. Previously, Li Auto’s first BEV, the MEGA, used a 5C battery co-developed with CATL, with Li Auto’s team deeply involved throughout the process. The L8’s battery further consolidates definition authority internally. On the manufacturing side, Li Auto does not produce cells itself; instead, Sunwoda handles cell production. Battery pack assembly is managed by “Li Auto Battery Co., Ltd.,” a 50:50 joint venture between Li Auto and Sunwoda. This JV has already established entities in Nanjing, Zaozhuang, and Jinhua, with Liu Liguo, Senior Vice President of Li Auto, serving as Chairman. This approach aims to strike a balance between heavy asset investment and supply chain control. Compared to fully outsourced procurement, Li Auto can engage earlier in design and quality standard-setting; compared to building a complete in-house supply chain, it avoids capacity and capital risks. Supply certainty is a key driver. Recently, delayed ramp-up of core component capacity led to partial delivery postponements for the Li Auto i6. In response, the company offered customers an alternative version equipped with Sunwoda batteries along with extended warranty coverage. According to MIIT filings, the i6 is now registered with both CATL and Sunwoda battery variants. Cost optimization remains a long-term objective. Liu Zhimin, Head of Li Auto’s Battery Division, stated that in-house development isn’t solely about lowering prices but rather restructuring cost architecture through product definition, material selection, and manufacturing efficiency. Currently, profits in the EV battery supply chain are increasingly concentrated upstream, compelling automakers to secure technological and cost advantages via in-house R&D, joint ventures, or diversified sourcing. At the same time, in-house development heightens automakers’ quality responsibilities. Li Auto explicitly states that regardless of battery source, it remains the primary party accountable to end users. It currently offers an 8-year or 160,000-kilometer warranty, guaranteeing battery health of no less than 75%. The company is also developing next-generation long-life batteries targeting a lifespan of 10 years or 300,000 kilometers. Li Auto stresses it will not rely solely on in-house development and will continue its multi-supplier strategy. All solutions are evaluated comprehensively based on product competitiveness, safety, quality, cost, and delivery capability. If its self-developed products lack competitiveness, they will not be adopted. The company has no intention of becoming a battery manufacturer; its core goal is to gain greater control over critical components. Ultimately, the commercial success of its self-developed 5C battery will depend on scalable delivery capability, cost control, and long-term safety validation.