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ElectronicsLi Auto reportedly bought chips from black market at 800 times the...

Li Auto reportedly bought chips from black market at 800 times the cost of normal prices

With the chip shortage woes showing no signs of abating, Li Auto seems to be doing everything it can to secure supply.

Li Auto recently bought thousands of pieces of Electronic Parking Brake (EPB) chips from the black market, and while their normal unit price is about RMB 6 yuan ($0.93), the company’s purchase price came to about RMB 5,000 apiece, over 800 times that of the normal price, yicai.com reported Saturday.

The report stressed that when they sought confirmation from Li Auto on the matter, the company denied it.

Jiemian.com quoted Li Auto’s response as saying that this information is untrue, and that the company does work hard to do its best to ensure chip supply in case of chip shortage, and that in this tight chip supply situation now, car companies will choose to buy stock chips from regular channels to ensure supply.

The yicai.com report did not provide further details on Li Auto’s purchases of the chips, though it is worth noting that the company is doing everything it can to deal with the onslaught of chip shortages.

As pressure on chip supply intensifies, Li Auto has opened a new delivery model – it will deliver Li ONEs that are missing two radars, to be retrofitted in the future when that component arrives, according to what a large number of users of the company’s app have shared.

Covid-19 in Malaysia has led to a serious hindrance in the production of a dedicated chip for Li Auto’s millimeter-wave radar supplier, which in turn has affected the company’s access to the accessory.

Li Auto is currently selling the 2021 Li ONE, which was released on May 25, with five millimeter-wave radars for the assisted driving function, up from one previously.

Li Auto’s delivery specialists will communicate the new program to customers who were scheduled to receive deliveries in October and November, while customers scheduled to take delivery in December will not be affected.

Under the program, Li Auto will deliver models with one front-millimeter wave radar and two rear-millimeter wave radars, and will install the missing two free of charge between December and next spring, which will be Feburary 1.

Customers can choose to get early delivery of the model with three radars or wait until December to get delivery of the model with all five radars.

If they choose a model with two missing radars, they will be compensated with a lifetime warranty and 10,000 points.

Li Auto delivered 7,094 Li ONEs – the company’s only model – in September, up 102 percent year-over-year and down about 25 percent from August.

“Li Auto saw a drop in deliveries in September due to the continued shortage of chip supply,” said Yannan Shen, co-founder and president of the company.

The company’s order numbers have continued to grow since the launch of the 2021 Li ONE, Shen said, adding that the company is taking additional steps to secure parts availability in hopes of shortening customer pickup wait times as much as possible.

On September 20, Li Auto said it was lowering its delivery forecast for the third quarter by 500-1,500 units to about 24,500 units after the Covid-19 in Malaysia caused a serious hindrance in the production of specialized chips for its millimeter-wave radar supplier.

The supplier of Li Auto’s millimeter wave radar and ultrasonic radar is Bosch.

On August 17, Xu Daquan, vice president of Bosch China, said that one of ST’s plants in Malaysia was affected by Covid-19 and shut down part of its production line until August 21, causing a very significant impact on the supply of chips for Bosch’s VCU, TCU and ESP/IPB systems.

Xu then expected these chips were largely in a state of supply disruption for some time.

This article was first published by Phate Zhang on CnEVPost, a website focusing on new energy vehicle news from China.

CnEVPost is a website focused on the coverage of the new energy vehicle industry in China. As with our original intent for CnTechPost, there are a lot of interesting things happening in the Chinese EV industry every day, but they are not covered by the mainstream English language media. We're here to keep track of what's happening in the Chinese EV industry and strive to be the first to publish what we see in English.