Is Li Auto’s layoffs affecting major arteries? Start recalling laid off people

In April this year, Musk laid off the entire Supercharger team with a wave of his hand, including even the team leader who was still on maternity leave.

However, due to lack of operation, Tesla supercharging stations soon encountered user experience problems. Charging stations in many places in North America were damaged and high-voltage cables were stolen, making it difficult for local car owners to charge and causing dissatisfaction.

Musk then realized the seriousness of the problem and quickly recalled some employees of the Supercharger team, including middle-level leaders such as the North American Charging Business Director. Sure enough, old employees are the best.

Li Xiang obviously feels the same way——

According to Jiemian News on June 4, Li Auto, which started large-scale layoffs just one month ago, is recalling some laid-off employees in key positions .

Some Li Auto R&D personnel said that the previously negotiated compensation has not yet been paid, and this part of the compensation will not be provided to these recalled employees in the future. The contracts of these employees will be directly extended, and the period of layoff will be considered "welfare leave."

Leifeng.com previously quoted employees from Li Auto’s intelligent driving department as reporting that this round of personnel adjustments by Li Auto has had a great impact on the internal R&D and testing department. Development has almost come to a standstill, and testing only relies on the assistance of a small number of low-cost external teams.

This time the layoffs hit major arteries.

The story of ideal layoffs

In mid-2023, Li Xiang explained Li Auto's goals in the next few years in a letter to all employees: to be the first in sales of all luxury brands in the Chinese market, and to achieve annual delivery volume of 1.6 million vehicles.

According to the delivery guidance announced by Li Auto Senior Vice President Zou Liangjun, Li Auto expects to deliver 100,000-103,000 new cars in the first quarter of 2024, with monthly sales reaching 50,000 in March and more than 70,000 in June. It will sprint towards the target of 800,000 vehicles.

Before joining Ideal, Zou Liangjun was responsible for overseas markets at Huawei and Honor. Later Auto reported that before sanctions, doubling Huawei's annual revenue in overseas markets was a normal indicator, and managers' thinking and behavior were all aimed at doubling performance.

▲ Zou Liangjun of Li Auto

Just like NIO's crazy recruitment of 3,000 sales people, Li Auto also needs more people to sell more cars. As a result, Ideal began to allocate resources according to the expected sales volume of 800,000 vehicles.

In September last year, Li Auto determined a large-scale recruitment plan at its autumn strategic meeting. Li Wenzhi, head of the CFO Office, took the lead in this work. As a result, Li Auto became the fastest-expanding new force.

The financial report shows that at the end of 2021, Li Auto had a total of 11,901 employees, which increased to 19,396 at the end of 2022. At the end of last year, this number became 31,591. In other words, Li Auto will recruit 12,195 new employees in 2023, a year-on-year increase of more than 60%, and the number of new employees will be more than the total number of employees in 2021.

Among them, Li Auto’s “Sales Service Operations” department, which is responsible for used cars, network expansion, network planning and other sales-related services, had less than 200 people in July last year. It has expanded to nearly a thousand people at the beginning of this year.

At the same time, Ideal also spent a large sum of money to rent an office with an area of ​​more than 10,000 square meters in Hongqiao, Shanghai , and planned to turn it into a permanent headquarters for the sales and service department, working closely with leading pure-play companies such as Tesla and Weilai. Tramway companies "fight decisively in the Yangtze River Delta".

But the real problem is that it is not easy to quickly double sales in today's new energy market in China. You know, Li Auto will only deliver 376,000 vehicles in 2023. But in Li Xiang’s view at the time, with the 5.3-meter-long “mobile home,” this was a goal that was entirely possible to achieve.

According to the original product plan, this year was supposed to be Li Auto's pure electric year, with MEGA taking the lead and three pure electric models to be launched in the second half of the year.

Now, they will all be delayed.

▲Ideal pure electric SUV spy photos

In last month's earnings call, Li Xiang announced a major piece of news: the company will not release a pure electric SUV product this year .

The failure of MEGA severely damaged Li Auto's vitality. In the first quarter of this year, it even suffered a long-lost operating loss, reaching 580 million yuan. For reference, Li Auto made a profit of 410 million yuan in the same period last year and 3.04 billion yuan in the fourth quarter of last year.

and the high-scoring dark horse comedy "The Annual Party Can't Stop!" released last year. "Like Zhonghe Group in "Li Auto", the first thing that comes to mind is layoffs, and the layoff rate will exceed 18%.

In 2023, the total salary of Li Auto employees will exceed 12.1 billion yuan, and the per capita salary will exceed 380,000 yuan. If the layoffs exceed 18%, more than 2.1 billion yuan can be saved.

The layoffs are about to begin.

The list was submitted the night before, HR discussed it in the morning, people left in the afternoon, and Feishu closed the account in the evening.

On workplace social platforms, users certified as former Li Auto employees left the aforementioned text. Based on the total headcount of 31,600 people, Ideal will have more than 5,600 layoffs in this round.

Among them, the number of employees in the sales and service operations department mentioned above will be reduced by more than 400 people, and the recruitment department will be reduced from more than 200 people to 40-50 people. Even the intelligent driving team, which is regarded as long-term competitive capital, will also be reduced to Within a thousand people.

Li Xiang himself also responded to this round of organizational optimization. He said that the core change in this round of adjustments is the establishment of a dedicated team for quality operations, so that the business can focus on high-quality decision-making and improve execution efficiency without spending a lot of time on repetitive operational work.

However, Li Xiang believes that the benefits brought by organizational structure adjustments will not be reflected in the short term.

I think it usually takes 12-24 months for organizational upgrades and adjustments to see real results. If we want to measure the results of this organizational adjustment, we should see it more clearly in 2025.

Now it seems that as he said, the benefits brought by layoffs will be difficult to realize in the short term, but the problems caused by this measure were quickly put on the table.

The essence of cost reduction and efficiency improvement is to improve efficiency

Li Xiang definitely didn’t want to make such a big move to lay off employees. He had previously introduced Huawei’s global HRBP management department director with a high profile. Everyone knew that a team that was rapidly expanding and shrinking could not settle down to build good products. However, investors gave Performance pressure is too great.

Two days ago, Visit Car reported that what caused Li Auto to be in such a panic was not only the MEGA's departure from the mainstream aesthetic styling, but also the differences in opinions between investors and Li Xiang, which also contributed to Li Xiang's threat to let the factory When workers' incomes catch up with the wage levels of developed countries such as Germany and Japan, they then start to lay off employees frantically, a "performance" of split personality.

On May 16, Li Auto was collectively sued by U.S. investors for "the company and some of its executives made false statements, violated securities laws, and exaggerated market demand and operating strategies, causing the stock price to fall and causing losses to investors."

Li Auto responded that evening, stating that there was indeed a relevant lawsuit, "but this accusation is baseless and we will do our best to protect the interests of the company and shareholders."

In addition to the differences between external investors and management, Li Auto’s internal conflicts have also intensified.

Since its comprehensive benchmark against Huawei, Li Auto has introduced a lot of Huawei's blood and brought many 3C product styles, with a relatively radical style. On the other side, the old idealists headed by Liu Jie, vice president of automotive business who had worked at BMW, are more conservative.

Both parties are trying to close the business loop in their own hands, repeating things and processes, and getting twice the result with half the effort.

Human issues are the root of everything. After the recent organizational change, the responsibilities of each department are not very clear.

Obviously, for Li Auto, a young company, it is not enough to just rely on layoffs to improve profitability. While reducing costs, it also needs to increase efficiency.

In fact, Ideal is also aware of this, and they choose to start with a sales and delivery system that is closer to users.

Perren Auto recently reported that Li Auto has merged the functions of its retail and delivery headquarters into sales . Prior to this, the performance appraisal methods at the retail end and delivery end were different.

For the sales team responsible for explaining the product and leading test drives, if the consumer makes a reservation and does not take the initiative to refund within 24 hours, it can be included in the KPI of the sales staff. The corresponding salary or bonus will be credited in the same month and will not be affected by the actual time when the customer picks up the car.

For delivery teams, delivery rate is the most important metric. If some customers delay picking up their cars due to their own reasons and the delivery ratio of the month is affected, the monthly income of the delivery team will also be affected.

In order to ensure performance, the delivery end may persuade some consumers to return the order first and place the order in the month when the car can be picked up, but this operation will affect the performance of the sales department.

Now that the two teams have merged, their goals are even more aligned.

In addition, Li Auto also made key adjustments to the CEO office department, transforming it from the original departments covering the brand department, product department, commercial department, strategy department, and supply department to the "product and strategy group", weakening the supply chain and business Sales function.

Judging from the delivery results in May, Ideal has indeed performed well after adjustments and fully shifted to the L series. With the help of the price reduction policy, a total of 35,000 new cars were delivered. Among them, the delivery volume of the newly launched Ideal L6 became the sales volume of the month. Main force.

However, it is still a bit difficult for Li Auto to achieve its annual sales target.

In March this year, due to lower than expected orders for MEGA and 2024 models, Lili adjusted its full-year sales target to 560,000-640,000 vehicles.

Now, after the postponement of three pure electric SUV models, Ideal has once again lowered their full-year sales plan. Ideal hopes to achieve monthly sales of 50,000 vehicles as soon as possible in the second half of this year. Based on this data, its annual sales volume is approximately 480,000, which is still an increase of 27.6% compared with the same period last year.

The transformation of Li Auto will continue.

*References:

[1] Major layoffs affected product development and testing, Li Auto recalled some laid-off employees, Jiemian News;

[2] Ideal employees talk: Our problem lies in people and visiting cars;

[3] After the ideal sales target was lowered, it triggered a chain reaction in the sales system and delayed Auto;

[4] Ideal merges the two major departments of retail and delivery, sells cars and sells cars, and everyone Auto.

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