Li Auto’s organizational transformation: from scaling growth to product accountability

Late 2022: turning one successful product into a repeatable capability

Li Auto delivered 133,246 vehicles and generated RMB45.29 billion in revenue in 2022. Its business was moving beyond the concentrated operating model built around Li ONE. With few products, a founder can coordinate engineering, product and sales directly. A broader portfolio requires explicit rules for shared development resources, procurement reuse and launch sequencing.^[1]

Changes announced in December 2022 and effective in January 2023 addressed that transition. Ma Donghui succeeded Shen Yanan as president, overseeing R&D and supply. Commercial functions, including sales, service and charging, came under CEO Li Xiang’s direct oversight; Xie Yan became CTO. Development, procurement, manufacturing and quality formed a more integrated chain within a matrix organization.^[2]

The underlying growth model had changed. Close collaboration among a small leadership group can produce one winning vehicle. A larger portfolio needs repeatable development and delivery capabilities. A matrix allows specialist resources to be shared, but also introduces a cost: when product, platform and functional teams all participate without a final decision owner, coordination expands with the portfolio.

2023: rapid growth left the system’s limits untested

Deliveries reached 376,030 in 2023, revenue RMB123.85 billion, vehicle margin 21.5% and operating profit RMB7.41 billion. The new organization supported the company through a major expansion.^[3]

The reorganization cannot take all the credit. The L-series addressed a relatively coherent family market through closely related SUVs and a shared range-extension approach. Established demand and common technology made coordination easier. The organization was scaling a product proposition that already worked.

The harder test would come outside that proposition. A battery-electric MPV required different assumptions about buyers, charging and sales readiness. Applying the growth logic of established extended-range SUVs to a new category could cause a disciplined organization to execute the wrong assumptions efficiently. That became the central issue in 2024.

Spring 2024: MEGA brought product and commercial accountability together

On March 21, Li Auto cut its first-quarter delivery outlook from 100,000–103,000 to 76,000–78,000. In the company’s announcement, Li Xiang acknowledged that MEGA had been managed as a scaling business before its initial market validation was complete, alongside excessive attention to volume competition.^[4]

This diagnosis went deeper than a marketing problem. Product definition, channel preparation and volume ambitions had rested on an optimistic demand assumption. Coordinated investment magnified the consequences when that assumption failed. The organizational question was who had the responsibility and authority to challenge it before a broad rollout.

In April, the matrix 2.0 changes brought vehicle product teams and commercial teams into a more unified product-line structure led by Liu Jie. The former CEO office became a product and strategy group. Development and post-launch business performance were moving toward shared accountability.^[5]

The direction was sound. A product leader should answer for the target customer, sales performance and cost of service as well as the vehicle itself. Yet a departmental merger alone cannot correct the sequence of decisions. If business targets are fixed before customer validation, integration can simply make an optimistic assumption harder to challenge.

Full-year 2024 deliveries ultimately reached 500,508, up 33.1%, while operating profit slipped from RMB7.41 billion to RMB7.02 billion. Greater volume did not produce higher operating earnings. Product mix and business quality needed to matter alongside delivery targets.^[6]

2025: coordination gave way to a shorter chain of command

In June, the R&D and supply group merged with sales and service into an intelligent vehicle group under Ma Donghui, reporting to Li Xiang. Automotive development, delivery and execution became more concentrated, while the CEO gained room to focus on AI and other priorities.^[7]

In November, National Business Daily verified a merger of organization and human-resources functions under Yang Haishan, reporting directly to Li Xiang, with corresponding changes to the former organization and finance group. Authority over people, evaluation and organizational resources moved closer to the founder.^[8]

Li subsequently called for a return to an entrepreneurial management model. This concerned authority and working practices: he had remained CEO throughout. A simple claim that professional managers were unsuitable would also fail to explain the product cycle and competitive pressures.^[9]

The business results explain the urgency. Deliveries fell 18.8% to 406,343 in 2025, revenue declined 22.3% to RMB112.31 billion, and the company recorded an operating loss of RMB521 million. Full-year net income remained positive; an operating loss should not be described as a net loss. Shrinking scale made coordination costs, scattered resources and forecasting mistakes harder to absorb.^[10]

These reforms moved accountability earlier in the process and concentrated decision authority. That can accelerate correction, but routing every dispute to the founder would create another bottleneck. Recovering entrepreneurial speed requires clear boundaries between decisions owned by product lines, standards controlled by shared platforms and exceptions requiring the CEO.

2026: fewer product interfaces, alongside an AI foundation

In January, Li Auto confirmed that three product-line departments would become two. Tang Jing took MEGA and the L9, L8 and L7; Li Xinyang took the i-series and L6. This describes the division announced at that time. It continued the consolidation of portfolio decisions rather than adding a management unit for every model.^[11]

In July, 36Kr reported plans to move some product functions into R&D, including vehicle definition and autonomous-driving end-product teams. The proposed changes would shorten interfaces between product lines, platform product functions and development. The report described planned arrangements, not proof that every change had been completed.^[12]

The logic is consistent. Earlier specialization built capabilities; the newer emphasis is removing repeated decisions between specialists. Product lines should own the commercial problem and its outcome. R&D should own technical solutions and execution efficiency. An intermediate group without a distinct decision-making purpose slows feedback.

Li Auto also strengthened its embodied-AI direction at the beginning of 2026.^[13]That creates a resource-allocation challenge. Vehicles must deliver sales and cash on a quarterly rhythm, while AI exploration needs longer technical development. Shared foundations can help both, but they need different success criteria. Automotive projects must meet delivery, cost and quality commitments. Exploratory projects need technical milestones and explicit conditions for further investment, so that they do not continually draw management attention from the core business.

The latest scorecard: recovering volume, profitability still constrained

July, August and September 2026 deliveries were 30,468, 37,679 and 31,817 respectively, totaling 99,964. That was approximately 7.2% above the 93,211 delivered in the third quarter of 2025. The improvement comes against a depressed prior-year base and does not yet establish that the organizational transformation has succeeded.^{[14][15][16][10]}

At publication, the latest complete quarterly financial results available were for the second quarter: 98,330 deliveries and a 9.4% vehicle margin, against 19.4% a year earlier. The company attributed the year-on-year margin decline primarily to product mix. Third-quarter delivery growth cannot establish a profit recovery for that quarter.^[17]

The most likely next direction is tighter automotive accountability, fewer interfaces between product and engineering, and continued sharing of foundational technology. Repeated reporting-line changes must stop substituting for product reviews. Three business outcomes will determine whether the reform works: more accurate demand forecasts for launches, recovering vehicle profitability and fewer recurring issues that require escalation to top management.

Other automakers can draw a concrete lesson. Rapid growth requires specialist capabilities; slower growth exposes redundant decisions. Neither phase removes a product leader’s commercial responsibility. Li Auto’s most valuable transformation would bring market evidence into development earlier, detect unsuccessful assumptions sooner and allocate resources faster to products that work. Reporting structures may keep changing. Accountability needs to become progressively clearer.