Giant Fleet

Li Auto has told the world’s biggest battery maker it can take it from here. On September 7, the Chinese EV maker laid out a plan to roll its self-developed 5C batteries across its entire vehicle lineup, capping a quiet six-year engineering effort and loosening its ties to CATL — a supplier for which Li Auto ranked as the fourth-largest customer as recently as April 2026.

From Three Models to All of Them

The in-house packs are not an experiment — they are already on the road in the L8, L6, and i8. What changed this week is the pace of the rollout. Buyers who ordered the new-generation Li Mega after 3:00 p.m. Beijing time on September 7 will receive vehicles with Li Auto’s own 5C batteries rather than CATL’s ternary packs, with deliveries expected in November. The switch was partly forced by success: Mega orders after launch ran ahead of expectations, leaving CATL battery inventories, in the company’s words, close to depletion.

The upcoming Li i9, a flagship six-seat SUV debuting in mid-September, will follow the same script — CATL cells at first, then a transition to in-house packs as production ramps. And the refreshed 2026 Li i6, opening pre-orders in late September with deliveries from early November, pairs the 5C in-house battery with Li Auto’s self-developed Mach assisted-driving chip.

The Sunwoda Connection

Li Auto is not building gigafactories alone. The company has invested 2.65 billion yuan (about $390 million) in Sunwoda EVB, taking a direct 8.79 percent stake — 11.17 percent counting related entities — to become the battery maker’s second-largest single shareholder, on top of a 50-50 manufacturing joint venture established in 2025. The division of labor: Li Auto handles cell design, materials development, and battery management systems — work it began back in 2020 — while Sunwoda runs the production lines. “Battery technology is not a commodity,” senior director Liu Zhimin said. “By controlling the underlying design and manufacturing standards, we ensure both the certainty of supply and the ability to innovate rapidly.”

Margins Tell the Real Story

The strategic logic is written in Li Auto’s financials. Vehicle margin slid from 19.4 percent a year ago to 9.4 percent in the second quarter of 2026, and management has said it intends to claw costs back through integrated design, in-house technology, and supply-chain optimization rather than raising prices. The battery is the single most expensive component in an EV; owning its design and a piece of its manufacturer is the bluntest available instrument for margin repair.

The refresh also needs to revive the i6 itself. The five-seat electric SUV delivered 135,863 units in the first seven months of 2026 — roughly half of Li Auto’s monthly volume — but July’s 15,420 units marked a 28 percent drop from June.

What It Means

Li Auto is now the second major Chinese EV maker after Xpeng to step back from CATL, and the pattern matters more than either single defection. China’s strongest EV brands increasingly see batteries the way Apple sees silicon: too strategic to outsource. For CATL — still utterly dominant globally — losing marquee domestic customers while rivals like Leapmotor sign on is manageable arithmetic today, but it signals where bargaining power is heading. And for buyers, vertical integration is the mechanism by which Chinese EVs keep getting better without getting pricier — the exact combination Western automakers are struggling to match.

Sources: CnEVPost, CarNewsChina