Li Auto is opening up its technology to other automakers. According to 36Kr, the company has started plans to supply its self-developed Mach chips, silicon carbide modules and range extenders to external customers. The move comes as the company's financial performance deteriorates and it seeks new revenue streams.
The decision follows requests from former executives. During the 2026 Beijing auto show, several ex-Li Auto executives reportedly asked CEO Li Xiang whether the Mach M100 chip could be supplied externally. This prompted the company to consider spinning off its chip and silicon carbide businesses into independent entities.
Margins under pressure
Li Auto's financial results for the first half of 2026 show the urgency. Deliveries fell 5.1% year-on-year to 193,500 units, reaching only 39.7% of its annual target. The overall gross margin dropped to 9.5%, down 10.8 percentage points from a year earlier and below the 15%-20% healthy range that Li Xiang has cited. The company posted a net loss attributable to shareholders of 3.98 billion yuan (about $560 million), compared with a profit of 1.74 billion yuan in the same period last year.
R&D spending rose 3.3% to 5.498 billion yuan (about $774 million) in the first half, with a research intensity of 11.3%. The company expects full-year R&D expenditure of 12 billion yuan (about $1.69 billion), half of which will go to AI.
The market context is challenging. According to the China Passenger Car Association (CPCA), retail sales of new energy vehicles in China fell 12.1% year-on-year to 6.674 million units in the first eight months of 2026. Sales of BEVs (battery-electric vehicles), PHEVs (plug-in hybrids) and EREVs (range-extender electric vehicles) all declined: 4.469 million (down 3.9%), 1.6 million (down 27.1%) and 606,000 (down 19.3%) respectively.
From carmaker to supplier?
Li Auto is not alone in seeking technology revenue. Xpeng has been selling its platform and software to Volkswagen since 2023. In the first half of 2026, Xpeng's services and other business revenue grew 67.1% to 4.732 billion yuan (about $666 million), with a gross margin of 71.4% for that segment, lifting overall margins. Leapmotor is also providing battery packs, e-motors and controllers to partners such as Stellantis and FAW.
However, Li Auto's plan is at an earlier stage. It has not yet secured a major partner. The company is spinning off its semiconductor business, Scott Semiconductor, which it co-owns with Sanan Optoelectronics, into an independent operation, though Li Auto still holds 70% of the shares. The Mach chip business, under Xinchuang Zhihé, remains fully owned.
There are risks. Selling the third-generation range extender externally could undermine the differentiation of its higher-priced models, which currently use it exclusively. Customers might also worry about supply security when a competitor is both supplier and rival. Li Auto will need to prove that its technology can become a sustainable revenue source, not just a cost-sharing exercise.
