Li Auto to Sell EV Tech Externally After 1.7 Billion Yuan Loss
In this article (9)
Li Auto is preparing to sell its proprietary Mach chips, silicon carbide modules and range-extender powertrains to third-party clients after posting a 1.7 billion yuan net loss in the second quarter.
Quarterly research and development spending at the carmaker ran at around 3 billion yuan for six consecutive quarters, pushing management to monetize proprietary vehicle architecture beyond its own fleet.
Spinoff of the Mach chip division
Senior leadership approved a corporate spinoff of the semiconductor design unit to facilitate third-party deals. Executives have already started pitching the Mach M100 driver-assistance chip to external businesses, including embodied artificial intelligence companies. The chip operates on a 5-nanometer automotive-grade process and delivers 1,280 TOPS of computing power.
Corporate records show Li Auto registered a wholly owned operating entity, Xinchuang Zhihe (Shanghai) Technology Co Ltd, on July 13 to house integrated circuit design and commercial sales. Customer adoption will largely depend on how easily external engineering teams can port proprietary software algorithms onto the hardware architecture.
Silicon carbide unit prepares for listing
Power electronics subsidiary Sike Semiconductor restructured its internal reporting ahead of the chip division. Formed as a joint venture with Hunan Sanan Semiconductor in 2022, Sike changed its management structure in February so executives report to an independent board rather than Li Auto’s internal manufacturing division.
“Executives have already started pitching the Mach M100 driver-assistance chip to external businesses, including embodied artificial intelligence companies.”
Li Auto retains a 70 percent equity stake in Sike, which now operates with independent profit-and-loss accountability. The unit is soliciting external capital and has started preparatory work for an initial public offering, an equity shift intended to assure rival carmakers that supply chains remain separate from Li Auto’s vehicle assembly business.
Automotive rivals open tech playbooks
Selling proprietary vehicle hardware to outside buyers represents a broader structural shift among Chinese automotive manufacturers seeking to offset margin compression. Nio carved out its semiconductor unit into GeniTech, pitching its M97 processor to competitors such as Geely. Xpeng expanded commercial offerings covering electronic architecture, intelligent cockpits and autonomous driving code to international clients beyond existing partner Volkswagen.
For automotive component suppliers and tier-one vendors across Asia, direct component commercialization by vehicle makers increases competitive pressure in power electronics and high-performance computing. Li Auto holds a structural advantage by testing components at volume in production cars, but it faces client hesitation over sharing software telemetry with an active market rival.
Financial pressure and internal battery shift
The monetization drive follows a sharp earnings reversal. Li Auto swung to a 1.7 billion yuan loss in the second quarter from a 1.1 billion yuan profit a year earlier, even as cash reserves stood at 87.5 billion yuan at the end of June. Third-party component sales allow the company to spread manufacturing overhead across broader production volumes without raising retail vehicle incentives.
While range extenders and computing chips are now open to third parties, the company is keeping its custom traction battery program entirely internal. Li Auto plans a lineup-wide transition to proprietary battery packs, starting with production shifts on the updated Li Mega and upcoming Li i9, alongside the fourth-quarter rollout of the refreshed i6 sport utility vehicle.
Questions & Answers
Q.What led Li Auto to start selling its proprietary technology externally?
What led Li Auto to start selling its proprietary technology externally?
A 1.7 billion yuan net loss in the second quarter and consistent 3 billion yuan quarterly R&D spending pushed management to monetise its vehicle architecture. This helps spread manufacturing overhead without increasing retail vehicle incentives.
Q.How has Li Auto structured its Mach chip division for external sales?
How has Li Auto structured its Mach chip division for external sales?
Senior leadership approved a corporate spinoff of the semiconductor design unit. Li Auto registered Xinchuang Zhihe (Shanghai) Technology Co Ltd on July 13 as a wholly owned entity to manage integrated circuit design and commercial sales.
Q.What is the status of Li Auto's silicon carbide unit, Sike Semiconductor, and its future plans?
What is the status of Li Auto's silicon carbide unit, Sike Semiconductor, and its future plans?
Sike Semiconductor restructured its internal reporting to an independent board and operates with independent profit-and-loss accountability. Li Auto retains a 70 percent stake, and Sike is preparing for an initial public offering to solicit external capital.
Q.Why might rival carmakers hesitate to adopt Li Auto's proprietary components?
Why might rival carmakers hesitate to adopt Li Auto's proprietary components?
Client hesitation stems from concerns about sharing software telemetry with an active market rival. However, the equity shift in Sike is intended to assure rival carmakers that supply chains remain separate from Li Auto’s vehicle assembly business.
Reader pulse
Li Auto selling its tech:
15,682 votes so far