Li Auto's management believes China's NEV penetration will reach 90 percent by 2028, when it will need to sell at least 3 million vehicles annually if it is to become one of the top five players, according to local media.

(Image credit: CnEVPost)

Li Auto (NASDAQ: LI) has set aggressive sales targets for the years to come and will ramp up R&D to stay competitive.

Li Auto is targeting to see annual sales of at least 3 million vehicles in 2028, nearly double its previously announced 2025 target of 1.6 million vehicles, a report in local media 36kr said today.

The extended-range electric vehicle (EREV) maker mentioned the target at a strategy meeting late last month, arguing that China's new energy vehicle (NEV) penetration rate will reach 90 percent by 2028, according to the report.

The company's management believes that if only four or five players in China's NEV industry win out by then, BYD (OTCMKTS: BYDDY), Tesla (NASDAQ: TSLA), and Huawei will be among them, and that Li Auto will need to sell more than 3 million vehicles a year to be in the game, according to the report.

To achieve that goal, Li Auto's SOP (start of production) timeline has been planned through 2027, and it expects to launch its next-generation technology platform with fully autonomous driving capabilities in 2026, the report said.

Li Auto's four-day strategy meeting saw the company study the R&D cases of Tesla and BYD, and reached a key consensus -- to expand R&D spending, according to 36kr.

Li Auto has more than RMB 70 billion ($9.5 billion) in cash and needs to turn that money into sustained competitiveness, the report said, citing several people who attended the meeting.

The company is looking at smart driving with unprecedented importance and spent a full day during the strategy session discussing how to invest in it.

Li Xiang, Li Auto's founder, chairman, and CEO, said at that strategy meeting that the company should have been fully investing in smart driving R&D since the middle of last year, not the beginning of this year, according to the report.

Li Auto also discussed how to deal with competition from Huawei, and its management held a more than hour-long meeting on the first night of the strategy session, where Huawei was one of the topics discussed, the report said.

Huawei-backed NEV brand Aito launched its new M7 EREV on September 12, lowering the starting price by RMB 40,000 and adding a five-seat version beyond the original six-seat version option.

The EREV, which is seen as a key competitor to the Li Auto model, received more than 50,000 firm orders after 25 days on the market, according to data shared by Aito earlier this month.

Li Auto models currently on sale include the five-seat Li L7, as well as the six-seat Li L8 and Li L9, all of which are EREVs.

Li Auto previously listed BYD, Huawei, and Tesla as its top three competitors, with BYD coming in first. And this year, the first spot changed to Huawei, according to 36kr.

Li Auto remains cautious about overseas markets, which won't be a strategic focus for a relatively long time, according to the report.

The company may not seriously consider entering overseas markets until after 2028, and will focus on parallel exports of vehicles until then, the report said.

($1 = RMB 7.2991)

Li Auto CEO reaffirms goal of reaching 1.6 million annual sales by 2025