In Dec. 2021, Li Auto signed a strategic corporation contract to build a plant in the southwestern Chinese city of Chongqing, and now the company confirmed the plan.
The company mentioned this plant in its financial report for 2021: “In December 2021, we are planning to enter into a strategic cooperation framework agreement with the Chongqing municipal government. This allows us to build a manufacturing base in Chongqing in the Liangjiang New Area,”
Li Auto did not provide more information about the site, but this is the first time it has confirmed that it will build a manufacturing site in Chongqing.
Xiang Li, Li Auto’s CEO, has further announced in the report that the cost of production for Li Auto’s car is still high. The current quarantine in Suzhou that has caused a decrease in production in its factories has also influenced Li Auto.
Li Auto will be increasing its suppliers and requiring prepayment to ease the current problem on the supply chain.
Li Auto also suggests that although they will be facing problems brought by increasing raw materials, with the increase of sales, economies of scale will be decreasing the pressure of cost of production, thus further increasing profit rate.
Photo credit: tencent.com
Li Auto’s other construction plans
Li Auto is targeting sales of 1.6 million units by 2025. However, its current plant in Changzhou, Jiangsu province, has a capacity of only 100,000 units. It delivered 90,491 vehicles for the full year in 2021.
Li Auto is also planning to increase its production capacity in its Changzhou plant and build a new plant in Beijing.
Among them, Changzhou’s base is built by Lixiang itself, occupying more than 750 acres and producing more than 100,000 cars annually. After the expansion, it could double its production.
Beijing’s plant will be the Beijing modern first factory brought by Li Auto, after reconstruction, it will be producing more than 100,000 cars annually in 2023.