Hundreds of billions in cash and billions in R&D, Li Auto fully shifts towards embodied intelligence

On the evening of March 12, Li Auto released its Q4 2025 and full-year financial reports. This emerging car company achieved annual revenue of 112.3 billion yuan, a net profit of 1.1 billion yuan, and cash reserves totaling 101.2 billion yuan. But more eye-catching than revenue and profit is a “money-burning” figure: R&D investment for the year reached a record high of 11.3 billion yuan, averaging nearly 1 billion yuan per month, with AI-related investments accounting for 50%.

In an industry where many new energy vehicle companies face profitability pressures and are tightening their belts for winter, Li Auto is increasing its technology investments. Financial data shows that over the past three years, Li Auto’s cumulative R&D spending exceeded 33 billion yuan, spending about 100 million yuan every three days, betting on breakthroughs in core embodied intelligence technology.

What is the underlying card in this high-stakes gamble? A hundred-billion-yuan cash reserve and three consecutive years of profitability give Li Auto the confidence to “burn money,” while the upcoming Q2 launch of the all-new Li L9 series will serve as the first concentrated validation of these three years of technological investment. A question worth asking is: when “car manufacturing” turns into “human creation,” and cars evolve from transportation tools into “silicon-based life,” can Li Auto’s transformation support the next decade?

Integrated Software and Hardware: Redefining Cars with a “Human Creation” Logic

At the high-level performance meeting on the evening of the 12th, Li Auto Chairman and CEO Li Xiang said: “Today, when we create products, we are creating humans. Our core goal—creating embodied intelligence—is to build our R&D system as if we are creating humans, and develop corresponding products.”

This philosophy is fully embodied in the upcoming Q2 launch of the all-new Li L9. This embodied intelligence flagship SUV will fully realize Li Auto’s technological accumulation over the past three years, with systematic upgrades in perception, decision-making, and execution: perception upgraded to 3D ViT visual perception, enabling the vehicle to understand the physical world like a human; decision-making powered by a self-developed Mach 100 chip, using a native data flow architecture, jointly designed with Xinghuan OS and VLA large models; execution equipped with the world’s first mass-produced full-line control chassis and 800V active suspension system, achieving millisecond-level response from perception to execution.

Chief Technology Officer Xie Yan emphasized the core value of the self-developed chip: under the same silicon chip area, Mach 100 provides higher effective computing power, offering greater design space for VLA algorithms. For example, deploying VLA models with parameter scales six times larger and ten times more computationally intensive than the previous generation. More importantly, this bottom-layer customization of AI computing power creates a technological barrier that is difficult for competitors to replicate.

In terms of R&D organization, Li Auto underwent a major restructuring in January this year. The R&D team is no longer divided by software and hardware functions but restructured into four systems based on embodied intelligence: organ system, including chips, datasets, operating systems; brain system, including perception, pre-training, post-training, reinforcement learning; software core, including general agent systems, MCP protocols, skill libraries; hardware core, including energy, drive, and control systems.

“Such an organizational approach avoids the situation where a ‘big brain’ is paired with ‘small hands and feet,’ and also prevents each application team from inefficiently trying to do training and modeling,” Li Xiang revealed. After restructuring, the training efficiency of the autonomous driving model improved from an iteration every two weeks to once a day, returning the team to the high-efficiency state of a startup.

Channel Transformation: “Store Partners” Activate Direct Sales System

Beyond product technology, Li Auto’s reforms in its sales system are equally noteworthy. Li Xiang admitted: “Our biggest problem in the past was managing the direct sales system with a dealer management approach. The core of the direct sales system is store-centric management. Without dealers, store management should be our own responsibility.”

Starting from Q3 2025, Li Auto launched a systematic channel transformation: building a flat four-layer organizational structure of “Headquarters-Region-City Manager-Store Manager”; closing underperforming stores and concentrating resources on key commercial districts and central stores in auto cities; the most significant breakthrough is the March launch of the “Store Partner” program—making stores the basic operating units, with store managers having real decision-making authority and profit-sharing rights.

“Under the current environment where auto sales are generally unprofitable, we aim to cultivate store managers earning over one million yuan annually, making their income two to three times higher than industry average,” Li Xiang said. Store managers’ assessments shifted from single sales volume to overall store operation results. New store site selection involves the store manager throughout the process, with responsibilities and rights linked to individuals, improving store operation quality from the source.

Initial results are promising: after organizational adjustments, Li Auto’s frontline sales turnover rate decreased by 50%, and store operation satisfaction increased from 76% to 94%. President Ma Donghui expects: “We aim to see improvements and enhancements in sales and operations by the third quarter.”

2026 Goals: Steady Growth and Technological Validation

At the performance meeting, Li Xiang provided a clear outlook for the 2026 market environment: “This year, the number of new high-end new energy vehicles priced above 200,000 yuan will be equal to the sum of the past three years, but the overall market growth is limited. Considering these factors, our sales target for this year is a year-over-year increase of over 20%.”

Li Auto’s strategy is “3+2”: three core strategies include managing the sales system well, ensuring the successful upgrade of the new Li L9, and increasing pure electric vehicle volume; two auxiliary strategies are breakthroughs in intelligent experience and expansion into overseas markets.

In overseas markets, Li Auto entered Uzbekistan, Egypt, Kazakhstan, and Azerbaijan in 2025, selling three main models—Li L9, Li L7, and Li L6—marking the start of substantive globalization.

Regarding profitability, Ma Donghui revealed strategies to cope with raw material price increases, including signing long-term LTA agreements with suppliers to lock in prices, developing in-house range extenders, electric drive systems, power modules, SiC chips, and more reasonable pricing for new models. “We are confident that we can keep the impact of raw material price increases within controllable limits and restore healthy gross margins for new products.”

Financially, Li Auto has built a solid foundation for this strategic transformation. By the end of 2025, cash reserves reached 101.2 billion yuan, ranking first among Chinese new energy vehicle companies; three consecutive years of revenue exceeding 100 billion yuan and three years of profitability make it the only emerging car company in China to achieve this. Ample cash reserves support long-term technological investments, product innovation, supercharging network development, and sales and service system expansion.

Li Xiang stated that Li Auto will transform the complete automotive and embodied intelligence technology system accumulated since 2022’s Li L9 into real user experience and commercial value, building the core moat for the next decade.

The first validation of this “high-stakes gamble” will come after the launch of the all-new Li L9 series in Q2. The market will ultimately vote with sales—when the Li L9 Livis priced at 559,800 yuan, equipped with self-developed chips, full-line control chassis, and 800V active suspension, hits the market, will consumers buy into this integrated “software-hardware” technological narrative? The answer may determine whether Li Auto can truly complete its transformation from a “car-making company” to an “embodied intelligence enterprise.”