Core Viewpoint - The establishment of a joint venture between Xinwanda Power Technology Co., Ltd. and Li Auto marks a significant step in Li Auto's strategy to enhance its supply chain through self-research and manufacturing, particularly in the context of rising battery costs impacting overall vehicle expenses [1][7]. Group 1: Joint Venture Details - The joint venture, Shandong Li Auto Battery Co., Ltd., will focus on the production, manufacturing, and sales of lithium-ion power batteries for electric vehicles, with both companies holding a 50% stake [1]. - This collaboration builds on an 8-year history of partnership between Xinwanda and Li Auto, which has included deep cooperation in R&D, quality, manufacturing, delivery, and customer service [3]. Group 2: Financial Context - Li Auto's Q2 2025 financial report indicated a revenue of RMB 30.246 billion, a year-on-year decline of 4.5%, with net profit remaining nearly unchanged at RMB 10.97 billion [8]. - The company has experienced a continuous decline in vehicle sales for three consecutive months, prompting the need for supply chain optimization to support operations [7][10]. Group 3: Industry Trends - The trend of automakers forming joint ventures with battery manufacturers is becoming more common, as seen with other companies like Dongfeng Group and CATL, to ensure supply chain security and improve profit structures [4][5]. - The battery segment has increasingly concentrated industry profits, with significant profit margins available as the electric vehicle market expands [6]. Group 4: Future Outlook - Li Auto's third-quarter guidance suggests a projected vehicle delivery of 90,000 to 95,000 units, representing a year-on-year decrease of 37.8% to 41.1%, with expected revenue between RMB 24.8 billion and RMB 26.2 billion, down 38.8% to 42.1% [10]. - Despite recent sales challenges, Li Auto maintains a strong gross margin, with expectations to sustain a vehicle gross margin around 19% in the upcoming quarter [10][11].

Core Viewpoint - The establishment of a joint venture between Li Auto and Sunwoda Power Technology aims to enhance the production and supply of lithium-ion batteries for electric vehicles, reflecting a strategic move to strengthen supply chain resilience and competitiveness in the automotive industry [4][9]. Group 1: Joint Venture Details - The joint venture is a 50:50 partnership between Beijing Li Auto and Sunwoda Power Technology, focusing on the production, manufacturing, and sales of lithium-ion batteries for electric vehicles [3]. - This collaboration is part of a broader trend in the industry where automakers and battery manufacturers form joint ventures to address supply chain challenges and improve competitive positioning [4]. Group 2: Strategic Importance - Analysts suggest that such joint ventures allow automakers to secure priority access to battery production capacity, ensuring stability in production and delivery [4]. - The partnership also enables automakers to engage in core battery research and manufacturing, sharing profits in this high-margin sector, while battery suppliers can mitigate investment risks [4]. Group 3: Additional Collaborations - Recently, Li Auto signed a five-year comprehensive strategic cooperation agreement with CATL, focusing on battery safety and ultra-fast charging technology, which will further enhance their collaboration in battery technology innovation and global expansion [4]. - The batteries developed in collaboration with CATL, such as the 5C ultra-fast charging battery for the Li MEGA, highlight the extensive joint development efforts involving large teams from both companies [5]. Group 4: Supply Chain Management - Li Auto's supply chain management is categorized into four levels, employing various cooperation models, including self-research and manufacturing, strategic partnerships, and deep collaborations [7]. - The decision-making process regarding whether to self-develop or source technology from suppliers is based on the technology's impact on product performance and the ability to meet development speed and quality requirements [7][8]. Group 5: Self-Research and Manufacturing Strategy - Li Auto has adopted a self-research and self-manufacturing approach for key components like electric drive and silicon carbide, forming joint ventures with partners for these areas [8]. - The establishment of the joint venture with Sunwoda is seen as a significant step in advancing Li Auto's self-research and self-manufacturing supply chain strategy [9].

Core Insights - Li Auto has established a joint venture with battery manufacturer Sunwoda Electronic Co., Ltd., named Shandong Li Auto Battery Co., Ltd., with a 50:50 investment ratio [1] - The joint venture has been registered with the Shanghai Market Supervision Administration and will focus on the production, manufacturing, and sales of lithium-ion power batteries for electric vehicles [1] - This collaboration marks a significant step in Li Auto's strategy to advance its "self-research and self-manufacturing" supply chain initiative [1] Company Strategy - Li Auto is expanding its supply chain strategy through joint ventures, having previously partnered with companies in electric drive and silicon carbide chip sectors [1] - The establishment of the joint venture aligns with Li Auto's goal to enhance its control over battery production and reduce reliance on external suppliers [1]