Li Auto bets 2.65 billion yuan on in-house batteries, wraps them in lifetime fire guarantees

Li Auto will invest 2.65 billion yuan ($394 million) in Sunwoda's power battery subsidiary for a direct 8.79% stake, becoming its second-largest shareholder, as it launched the Lianshan in-house electric powertrain system with two lifetime guarantees — against battery self-ignition and against fire after collisions.

The NASDAQ-listed Chinese automaker (ticker: LI) unveiled the system at its Power Day event on Tuesday. Lianshan covers three domains: batteries, electric drive units and the charging network. The company said it will take care of "everything about electricity."

The guarantees are the sharpest instrument in the announcement. If a vehicle self-ignites due to quality problems with the original battery and meets scrapping criteria, Li Auto will replace it with a new vehicle of the same configuration. If a battery catches fire after a collision or chassis scraping and the vehicle is scrapped, the company covers the gap between the insured damage amount and the actual payout. Both programs carry eligibility conditions.

Why the guarantees matter

The pledge addresses a commercial problem, not just an engineering one. Li Auto is accelerating the shift of its models from CATL (HKEX: 3750) batteries — the world's largest power battery maker, whose cells Chinese consumers generally regard as safer and more premium — to in-house packs built by a 50-50 joint venture with Sunwoda (SZSE: 300207) established in 2025.

When CATL signed a five-year strategic cooperation agreement with Li Auto in September 2025, it said more than 1 million Li Auto vehicles carrying its batteries had been delivered with no thermal runaway incidents caused by the batteries themselves. Sunwoda's record is less clean: Vremt, a Geely-affiliated company, sued Sunwoda EVB in December 2025 for 2.31 billion yuan in damages, alleging quality problems with delivered cells.

Li Auto already felt the supply side of this transition. In January it delayed some Li i6 deliveries on insufficient battery supply and pushed order holders toward Sunwoda-equipped versions with an added 2-year or 40,000-kilometer warranty extension.

What does this change for buyers and suppliers? For buyers, a contractual safety backstop on cells made outside the CATL halo. For the supply base, confirmation that CATL's share of Li Auto programs will keep shrinking even as founder, chairman and CEO Li Xiang thanked CATL on September 28 for joint development work on the Li One and Li Mega, and said the strategy is not "de-anyone."

The technical claims

Li Auto said the Lianshan battery uses a high-stability cathode, a low-lithium-consumption anode and a dual-formula electrolyte supporting continuous dynamic repair. All models will retain at least 75% battery health within 8 years or 160,000 kilometers.

Claimed safety performance:

• The battery underside withstands a 500-joule impact without fire or explosion.
• The pack stays watertight after 48 hours submerged in 1 meter of water.
• The full pack will not catch fire for 24 hours after a single cell enters thermal runaway at 50 degrees Celsius.

Range claims under the CLTC standard: the new Li L8 offers 430 kilometers of pure electric range and the 2026 Li i6 offers 780 kilometers, an improvement of more than 8% over the 2025 versions. The company attributes this to cell-level material changes, highly integrated packs and vehicle-level energy management.

The Lianshan electric drive uses a proprietary CAR119 cast aluminum rotor material, adding more than 15 kilometers of urban range and more than 8 kilometers on highways. A restructured power module routing current directly to the chip adds another 30 kilometers and frees 24 millimeters of headroom. Li Auto said 4 million of its in-house silicon carbide power chips have entered production vehicles over the past year with zero failures; the next-generation drive delivers more power and range without growing in size.

On charging, more than 4,200 supercharging stations now cover cities, highways and scenic areas across the "12 vertical and 13 horizontal" expressway corridors, with one station every 100 kilometers targeted within the year. Equipment availability stands at 99.9%, and all highway stations carry 5C chargers (a charging-rate class enabling roughly a 20% to 80% top-up in about 12 minutes). New 5C ternary lithium cells run 12 degrees Celsius cooler during supercharging than ordinary 2C cells, and adaptive algorithms hold lithium iron phosphate state-of-charge estimation error within 3% while lifting winter peak power at low charge by more than 40%.

What to watch next

The 2026 Li i6, with the in-house 5C battery and Mach chip, launches October 28, with deliveries from early November. In-house batteries are already in the Li L8, Li L6 and Li i8 and will extend to all models. The backdrop is soft: September deliveries fell 6.29% year-on-year to 31,817 vehicles, and first-nine-month deliveries slipped 1.25% to 293,436. Watch whether the lifetime guarantees move order mix toward Sunwoda-equipped versions — and whether the Vremt lawsuit surfaces in customer sentiment.