Company: LI
Filing Date: 2025-04-10
Form Type: 20-F
Source: 0001410578-25-000678
Chunk: 29

Company: Li Auto Inc.
Filing Date: 2025-04-10
Form: 20-F
Item: Item 3
Chunk 29
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 demand for our existing and future EREVs, which in turn could materially and adversely affect our business, results of operations, financial conditions, and prospects.
Furthermore, changes in government incentives or subsidies to support NEVs could adversely affect our business. Favorable government incentives and subsidies enjoyed by NEVs have been decreasing. China’s central government phased out the subsidies for purchasers of NEVs and the national-level subsidies for NEVs ceased as of the date of this annual report. See “Item 4. Information on the Company—B. Business Overview—Regulations—Favorable Government Policies Relating to NEVs in China—Government Subsidies for NEV Purchasers” for details. In April 2024, China’s central government introduced policies to encourage consumers to replace their old vehicles with new NEVs by offering subsidies. These policies were further updated in August 2024 with increased subsidies amounts. The local governments in China have also been implementing incentives and subsidy policies for consumers of NEVs for replacement purposes. However, if these favorable incentives and subsidies are scaled back in the future, consumer willingness to purchase NEVs may decline, which could negatively impact our vehicle sales.
We cannot assure you that any further changes in regulatory policies would be favorable to our business. Furthermore, any reduction, elimination, or discriminatory application of government subsidies and economic incentives because of policy changes, the reduced need for such subsidies and incentives due to the perceived success of NEVs, fiscal tightening, or other factors may affect government incentives or subsides and result in the diminished competitiveness of the NEV industry generally.
Our vehicles sales are also affected by government policies, such as tariffs on imported cars and removal of restriction on foreign ownership of NEV automakers and ICE passenger automakers. As a result, foreign NEV competitors and foreign ICE automakers could build wholly-owned manufacturing facilities in China without the need for a domestic joint venture partner. For example, Tesla has built a factory to manufacture electronic vehicles in Shanghai without a joint venture partner. These changes could intensify market competition and reduce our pricing advantage, which in turn could materially and adversely affect our business, results of operations, financial conditions, and prospects.
The current tensions in international trade and rising international political tensions may adversely affect our business, financial condition, and results of operations.
In recent years, there have been heightened trade and political tensions in international relations, particularly between the United States and China. These tensions have affected both diplomatic and economic ties between the two countries and created uncertainties to the international economy as a whole. Heightened