Chinese EV maker Li Auto facing layoffs




Chinese EV maker Li Auto is reportedly undergoing massive layoffs as sales fall short of budget and the price war intensifies. Chinese media reports say the cuts could be as high as more than 18% of its 31,000 workforce.

Li joins Tesla in sacking thousands of staff, including a reported couple of hundred in China. Li’s sackings are in China, while Tesla’s cuts are across its businesses worldwide, including Australia.

The cuts and spending constraints that go with them are the latest signs of the intensifying negative pressures from the price war and weakening demand for EVs, especially battery-powered. Hybrid sales, both plug-in and regenerative types, remain strong according to sales data for April and the first four months of the year.

The problems at Li and Tesla are echoed by the surprise decision by market leader BYD to abandon a near $US300 million lithium cathode plant in Chile that was due to be completed by 2025—it hasn’t started. BYD seems to be more interested in expanding its vehicle assembly operations offshore than its battery business (it is the world’s second-biggest battery maker after CATL, another Chinese giant).

Both companies are finding it increasingly hard to keep sales momentum going as well as protecting their positions in a brutal price war in China, Europe, and the US. Tesla’s sales are down in the first four months of this year, but Li has seen a more damaging slide. In the January-April period, Tesla sold 163,841 units in China, down 7.6% from the first four months of 2023 when China was emerging from the harsh pandemic restrictions.

China has had two weak months this year for car sales—February, which was disrupted by the New Year holding, and April, which was a normal month with no disruptions.

The media reports pointed to a huge expansion in jobs by the company in the past year, with an estimated employment jump of 63% in 12 months, but sales did not follow. Li slashed its sales estimate for this year to between 560,000 and 640,000 units in late March, down from a start-of-the-year estimate of up to 800,000.

The staff cuts started late in 2023 and have accelerated as the sales performance has weakened. Cuts across the company have been reported with a figure of around 5,600 being mentioned as the total reduction. The final round of cuts is happening this month; staff who leave are not being replaced, and production is being scaled back to meet weaker demand.

Li Auto launched the Li L6, its lowest-priced model, in mid-April, with deliveries starting on April 24. Chinese media say the 2024 sales target for Li now is around 560,000 units, but the company has made a very weak start to the year, so that estimate might see a shortfall. In the first four months, Li Auto’s sales totaled 106,200 according to data from the China Passenger Car Association.

That’s not even 20% of the 560,000 estimate, so the company will have to find a way to boost activity in the next 8 months.


Name Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.