While Li Auto claims that it is offering the insurance subsidy to celebrate the milestones in the deliveries of its L-series models, it is more likely to be an effort to maintain current sales momentum.

However, Li Auto's weekly deliveries have largely remained at around 8,000 units since July, which the company said is limited by capacity constraints.

Li Auto's parts capacity bottleneck will be resolved in October, its founder, chairman and CEO Li Xiang said on Weibo earlier this month.

Li Auto's factory in Changzhou, Jiangsu province, will be upgraded during China's National Day holiday to support the expansion, he said.

October 1 is China's National Day, and this year's legal holiday runs from September 29 to October 6, with September 29 being the Mid-Autumn Festival, and October 7 and October 8 will be work days, even though they fall on weekends.

In China, EV companies mostly adopt a direct sales model and are therefore very cautious about cutting prices and offering subsidies for fear of causing dissatisfaction among existing owners.

Offering entitlements, including insurance subsidies, is usually a car company's best bet outside of price cuts.

Before Tesla's (NASDAQ: TSLA) previous rounds of major price cuts in China, it usually offered insurance subsidies to try to boost sales.

($1 = RMB 7.2892)

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