Li Xiang, founder, chairman, and CEO of Li Auto, has urged China’s policymakers to establish a mechanism to facilitate mergers and acquisitions (M&A) among car companies. This call comes in the wake of the production halt of Human Horizons’ HiPhi brand, prompting discussions about the stability of the automotive market.
“It’s time for the country to establish and guide a system for mergers and acquisitions of auto companies, including qualification-related issues,” Li wrote on Weibo, a popular Chinese social media platform.
See also: Human Horizons’ HiPhi Brand Halts Production Amid Operational Challenges
The call for M&A reform comes as auto blogger Yuan Qicong shared an image on Weibo of someone selling the HiPhi Y, which has an official starting price of RMB 339,000 ($47,150), for only RMB 199,900. Yuan cautioned consumers against purchasing vehicles from brands facing existential crises, even at discounted prices.
Li echoed these sentiments, highlighting the challenges faced by new automotive brands amid intense market competition. He emphasized the societal value of preserving automotive plants through M&A activities, citing Li Auto’s acquisition of Hyundai’s No. 1 plant in Beijing as an example.
See also: Li Auto to Triple Supercharging Station Plans Ahead of BEV Launch
“A plant with a production beat of 45 JPH (Jobs Per Hour) would require roughly 4,500 employees to run at full capacity,” Li explained. “To support that plant, suppliers at all levels would need to provide six times as many jobs.”
According to Li, revitalizing an automotive plant could add 30,000 stable jobs and contribute over RMB 100 billion in economic output at full production. Additionally, the plant could generate more than RMB 10 billion in tax revenues, benefiting education, social security, infrastructure construction, and economic development.
See also: Li Auto to Triple Supercharging Station Plans Ahead of BEV Launch
Li Auto, known for its extended-range electric vehicles (EREVs), currently produces vehicles at its plant in Changzhou, Jiangsu province. The company is remodeling Hyundai’s No. 1 plant in Beijing’s Shunyi district to increase its production capacity to 100,000 pure-play electric vehicles per year.
Li Auto is set to launch its first battery electric vehicle (BEV) model, the Li Mega MPV (Multi-Purpose Vehicle), on March 1, signaling its commitment to expanding its EV lineup.