Li Auto is pushing deeper into vertical integration, announcing that the 2026 i6, which starts deliveries in November, will come standard with the company's own 5C lithium iron phosphate (LFP) battery. The move follows a pattern across Li Auto's recent models, where early production used CATL cells before switching to self-developed packs, according to Chinese outlet D1EV (第一电动).
From joint development to full self-reliance
Li Auto's battery journey began with its aborted SEV micro-car project, when the company first formed a battery team. Reality soon set in: developing cells from scratch at that stage was impractical, so Li Auto turned to co-development with CATL for the large battery in the Li ONE range-extender electric vehicle (EREV).
The company then moved to a self-developed, contract-manufactured approach. The ternary lithium batteries in the Li L7 and L8 were designed in-house, with CATL supplying the Pro and Max trims while the Air version used Li Auto's own battery pack, produced on a dedicated line at Gotion High-tech. In 2022, Li Auto invested 400 million yuan (about $56.3 million) in Sunwoda's pre-A round for roughly 3.2% stake, and Sunwoda later set up a dedicated business unit of more than 1,000 people for Li Auto.
Cooperation with CATL continued, and the two jointly developed the 5C battery that debuted in the Li MEGA in 2024. But as Li Auto's in-house capability matured, it took more control. After the i8 launched, Li Auto and Sunwoda each put up 50% to form Shandong Li Auto Battery Co., with Li Auto defining the product, process, performance, materials and quality standards while Sunwoda handled manufacturing.
The production switch is now clear: new Li L8, MEGA and i9 models start with CATL cells, then move to Li Auto's own packs. The 2026 i6 will be the first to carry the self-developed 5C LFP battery across the entire range, and it will also feature Li Auto's in-house Mach chip, completing the company's core hardware stack.
Why go in-house
Cost pressure is a major driver. The 2026 L6, refreshed this year, saw its battery capacity rise from 36.8 kWh to 51 kWh, adding about 8,000 yuan (about $1,127) per vehicle in battery cost alone amid surging LFP prices, yet the car still starts under 250,000 yuan (about $35,211). Self-development removes supplier margins, a critical advantage in a market where vehicle prices are squeezed to the bone.
Control is another factor. Many automakers have lost sales because suppliers could not deliver parts on time, and with new-model hype fading quickly, production delays can be fatal. In-house manufacturing ensures supply and lets components be tuned to the vehicle architecture.
Li Auto also plans to sell components externally, following Nio's example. According to 36Kr, Li Auto has pitched its Mach chip, silicon carbide power devices and range extender systems to outside buyers, including an embodied intelligence company.
CATL's chief manufacturing officer Ni Jun recently pushed back, saying: "Knowing how to build cars does not mean knowing how to build batteries. Let professionals do professional work." Xpeng CEO He Xiaopeng offered a different view in 2023, arguing that self-development is essential to understand the right direction, while procurement can come later at scale.
The risk is consumer trust. NielsenIQ's 2026 Global New Energy Vehicle Consumer Study found 37.1% of Chinese consumers might abandon a purchase if their preferred model does not use CATL batteries. Li Auto itself saw weak early demand for the i8 when it used a mix of CATL and Sunwoda cells, before switching entirely to CATL. Geely's Galaxy TT and Xingyuan models also chose CATL despite having in-house batteries.
Self-development requires heavy upfront investment and a long payback period, testing cash flow and strategic patience. But it also enables deep integration with the range-extender system, and if external supply takes off, it could turn R&D into revenue. For contract manufacturers, automaker input can push component makers to improve, as BMW and CATL's joint work on large cylindrical cells showed.
As China's EV market shifts from price competition to technology competition, self-developed hardware is becoming a key battleground. Li Auto's ultimate goal, CEO Li Xiang has said, is to become an embodied intelligence company, and in-house core hardware is a prerequisite for that ambition.
