Why Li Auto Abandoned Learning Huawei’s IPD?
Li Auto’s decision to abandon the adoption of Huawei’s Integrated Product Development (IPD) system and aLi Auto’s recent abandonment of Huawei’s IPD (Integrated Product Development) system and associated management models (such as PBC performance evaluation) reflects a strategic correction against blindly copying external experiences. The core reasons can be summarized as follows:
I. External Pressure Led to Blind Learning, Ignoring Internal Differences
Hasty Decisions Amid Crisis
In 2022, the strong market entry of the AITO M7 forced Li Auto to prematurely discontinue the Li ONE, incurring ¥1 billion in compensation to suppliers. This crisis drove Li Auto’s leadership into “desperate research on Huawei,” urging all employees to study Huawei’s practices and attempting to copy its product development and sales/service systems.
Li Xiang once said, “The painful problems we’re experiencing were already solved by Huawei over a decade ago.”
However, this crisis-driven learning overlooked Huawei’s decades-long technical accumulation and organizational DNA, while Li Auto, as a new energy startup, differs fundamentally in scale, business maturity, and cultural foundation.
The Failure of “Pixel-Level Copying”
In 2023, Li Auto introduced Huawei’s PBC (Personal Business Commitment) model and divided its sales system into 26 “war zones,” promoting internal competition. However, the performance-driven model detached from actual business needs: to meet short-term goals, sales teams reduced staff costs, cut prices, and even poached customers across regions—sacrificing long-term customer value.
Huawei’s PBC works well in mature operations, but Li Auto is in a phase of innovation and expansion (e.g., pure EV models i8/i6), where flexible response is critical. Rigid KPIs hinder innovation.
II. Management-Culture Misfit: Wolf Culture Undermines Collaboration
Internal Friction and Value Conflicts
PBC tightly binds employees’ performance metrics to compensation and promotions, leading to anxiety over “working for the sake of performance.” Li Auto’s original “Seven Habits” emphasized self-driven and collaborative work, but under PBC, it devolved into internal rivalry. Employees reported spending excessive energy writing reports to “quantify collaboration,” which devolved into “stealing credit and finger-pointing.”
Strategic Shortsightedness and Business Imbalance
Sales teams pursued targets at the expense of long-term operations and customer leads. The MEGA model’s market failure in 2024 stemmed from sales-driven mispositioning.
Financials also worsened: 2024 net profit attributable to shareholders declined 31.37% YoY, and Li Auto twice revised down its 2025 sales forecast to preserve margins.
III. Financial & Strategic Costs Drive Return to Fit-for-Purpose Models
Misaligned Tools for Current Business Stage
Li Auto needs rapid technical iteration (e.g., in-house AI models, pure EV platform). OKRs—focused on transparent goals and cross-department collaboration—better support innovation and trial-and-error.
Organizational Adjustments Echo Management Reform
In June 2025, Li Auto merged the “R&D & Supply Group” with the “Sales & Service Group” into a unified “Smart Vehicle Group,” overseen by President Ma Donghui. Simultaneously, former Huawei executive Zou Liangjun, who led the PBC reform, transitioned to an advisory role. This aims to break departmental silos—aligned with OKR’s collaborative nature.
IV. The Essence: From “Form Mimicry” to “Spiritual Adaptation”
Geely SVP Yang Xueliang once said: “Learning is good, but mastering the essence is hard. Huawei was a product of its time—but times have changed.”
Li Auto’s trial and error confirmed three core truths:
No superior model, only fit-for-purpose: Huawei’s model is based on historic procedural accumulation. Li Auto must build its own system for the “EV → AI” transformation.
Culture underpins systems: Without a customer-first culture, PBC becomes mere pressure.
Innovation needs tolerance: OKRs allow ambitious goal failure, better supporting tech breakthroughs.
Abandoning IPD and PBC isn’t just a change in tools—it’s a strategic awakening from mimicry to self-awareness. The two-year cost (profit decline and internal friction) delivered a critical realization: core competitiveness cannot be transplanted—it must grow organically. The return to OKRs reflects this shift: forging a unique soul is more sustainable than copying another’s form.
Will This Change Be “Better” in the Long Run?
That depends on the completeness of supporting management systems. The decision to abandon misfit tools and realign with appropriate business-stage logic is positive—but new risks must be monitored, such as drifting into unfocused execution.
Benefits of Dropping PBC: Solving “Cultural Incompatibility”
Reducing Friction and Rebuilding Collaborative Culture
PBC’s rigid KPIs led to internal “order snatching and blame-shifting” (e.g., cross-regional sales competition, R&D risk avoidance). Returning to OKRs (Objectives & Key Results), with transparent goals and weaker KPI-binding, empowers employees to tackle tech challenges (e.g., 800V ultra-fast charging) and boosts cross-functional collaboration.
Result: 15% reduction in product iteration cycle in Q2 2025
Aligning with Innovation-Driven Needs
Li Auto is expanding its pure EV lineup (i8/i6) and AI large model development. These require error tolerance and long-term investment. OKRs support setting ambitious goals (e.g., “improve charging efficiency by 30%”) without punishing failure—more innovation-friendly than PBC’s rigid result enforcement.
Correcting Strategic Shortsightedness
Under PBC, sales prioritized quarterly targets, sacrificing brand value (e.g., MEGA’s chaotic launch). Post-PBC, KPIs are tied to long-term metrics like NPS (Net Promoter Score) and repurchase rates—preventing repeat missteps.
Risks: Without Support, New Pitfalls May Emerge
| Risk Dimension | Extremes of PBC Model | New Risks After Abandoning PBC |
|---|---|---|
| Goal Management | Rigid pursuit of numeric KPIs | Vague goals, lax execution |
| Performance Review | High pressure leading to internal competition | Insufficient incentives, “free-rider” mentality |
| Innovation Drive | Avoidance of high-risk R&D | Lack of accountability, resource waste |
| Organizational Efficiency | Department silos, high collaboration costs | Unclear cross-functional responsibilities, blame-shifting |
Key challenges:
Will goals become empty slogans?
OKRs require high-level goal management skills. Vague goals like “improve user experience” without measurable Key Results risk becoming performative.
How to fairly evaluate performance?
With hard KPIs removed, Li Auto must build new systems (e.g., 360° feedback + project contribution). Otherwise, “lying flat” behavior may rise. Li Auto is piloting “technical output-based bonuses” to address incentive dilution.
How to balance innovation with efficiency?
Overemphasizing trial-and-error may lead to resource dilution (e.g., simultaneous investments in hydrogen and solid-state batteries). Tech prioritization committees are needed for resource focus.
Li Auto’s Response: Systemic Overhaul of Management
Integrating OKRs with Adaptive Performance Evaluation
Layered Goals: Corporate-level OKRs focus on strategy (e.g., “Pure EV share >25% by 2026”), broken down into measurable departmental KRs (e.g., “charging station coverage to 90%”).
Flexible Assessment: PBC’s forced ranking abolished; quarterly reviews retained. “Goal achievement” and “collaboration contribution” considered in promotions (but not rigidly tied to pay).
Organizational Structure as Safeguard
2025’s merger into “Smart Vehicle Group” breaks down silos. A new “Strategic Operations Office” oversees OKR execution to prevent goal drift.
Cultural Reinforcement
Strengthens “user value” and “long-termism” (e.g., Li Xiang’s internal letter: “We refuse to trade ten years of reputation for short-term metrics”) to guide behavior as systems become more flexible.
Conclusion: Abandoning PBC Is Necessary Correction—But Long-Term Success Requires Continuous Evolution
Li Auto’s exit from PBC reflects rejection of a misfit system. While short-term gains in agility and culture are clear, whether this leads to a better future depends on:
Precision in goal management: Avoid OKRs becoming “essay writing contests”—track measurable KRs.
Innovation in incentive systems: Replace rigid assessments with bonuses, equity, and long-term incentives.
Strength of cultural leadership: Leaders must set the tone—guarding values from erosion under business pressure.
There’s no silver bullet in management: Huawei’s PBC suits mature businesses optimizing cost-efficiency, while Li Auto needs OKR’s flexible innovation.
The real value lies not in the tools, but in understanding: “Who am I? Where am I going?”
As Li Xiang reflected: “Copying others’ homework is no match for solving your own equation.”
If Li Auto builds a management model tailored to its unique context and growth stage, this strategic pivot could mark the beginning of its organizational maturity—transforming from a follower into a pioneer of new energy automotive management philosophy.