- Analysts estimate the Li Mega recall could drag down Li Auto‘s profits by RMB 1.14 billion.
- Li Auto also dismissed some employees over quality complaints related to its 2025 L-series EREVs.
Li Auto (NASDAQ: LI) has dismissed multiple employees in connection with the recall of its Li Mega MPV (multi-purpose vehicle) and another quality issue involving its L-series extended-range electric vehicle (EREV) models.
The company announced accountability measures for 14 individuals in two internal memos today, with multiple employees terminated, according to reports by domestic media outlets including 21jingji and Sina Tech.
Late on October 23, a Li Mega experienced sparks from its chassis while passing through a traffic light intersection, followed by the entire vehicle being engulfed in flames within tens of seconds. The incident quickly sparked widespread discussion and concerns about the vehicle’s safety.
Li Auto announced on October 31 that it would recall 11,411 units of the 2024 Li Mega MPV starting November 7, representing half of all models sold.
Vehicles within the recall scope may experience battery fires due to coolant leakage, according to an announcement at the time.
Analysts at China Renaissance Securities projected in a research note earlier this month that the component replacement cost per vehicle in the recall would be about RMB 100,000 ($14,090), potentially dragging down Li Auto’s profits by RMB 1.14 billion.
The negative impact of the recall could affect Li Auto’s sales in the fourth quarter of this year and the first quarter of next year, according to the team.
Li Auto announced in an internal memo today that multiple employees across teams involved in coolant verification, power battery testing, and quality safety have been dismissed, while some team leaders had their year-end bonuses and promotion eligibility revoked.
Additionally, the company dismissed several employees due to recent owner complaints about abnormal front wheel noises on its L series EREVs.
The issue primarily affects 2025 Li L6, Li L7, Li L8, and Li L9 EREV models. Owners reported hearing unusual noises from the front wheels shortly after delivery, which impaired the driving experience, according to 21jingji.
Li Auto identified the problem and replaced parts for affected owners but offered no compensation, sparking dissatisfaction, the report said.
This has significantly impacted the company’s reputation for product quality and safety, Li Auto said in today’s memo.
This marks Li Auto’s sixth major organizational restructuring this year.
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