Ideal (理想), Out of Control

The fall

Ideal (理想) went from being the lone profitable "new force" in China's EV boom to a company scrambling to stop a slide. It has been reported that annual deliveries fell to 406,300 vehicles in 2025, down 18.8% year‑on‑year, and net profit plunged to RMB 1.14 billion (down 85.8%). Quarterly swings were dramatic: a Q3 loss of RMB 625 million followed by a Q4 break‑even of roughly RMB 2.02 million (reported figures). Market position eroded too — Ideal dropped from the top new‑force seller in 2024 to fifth place in 2025, overtaken by Leapmotor, Huawei‑backed HarmonyOS offerings, Xpeng, and Xiaomi.

What went wrong

The company’s early success was simple: sell extended‑range (增程) family vehicles that solved "charging anxiety" when public chargers were scarce. But that advantage evaporated as rivals — from established startups to Huawei‑aided newcomers — copied the formula and pushed harder on software and EV architectures. Product strategy backfired. The MEGA MPV launch reportedly turned into a PR disaster, and a "doll" product strategy designed to cover price bands cannibalised itself: sales staff say an aggressive, lower‑priced i6 pulled demand away from the higher‑margin i8 (reportedly 80% of showroom traffic looked only at the i6). Internal sources and the company’s filings suggest accounting profit masked operational losses — investment income and interest returns propping up a business that, on an operating basis, reportedly lost money.

Management choices amplified the pain. Founder Li Xiang adopted Huawei’s IPD (integrated product development) system to scale — a move that initially looked prescient but, by insiders’ accounts, institutionalised silos and slowed decision cycles in a market that rewards speed. It has been reported that a mid‑2025 round of layoffs intended to cut costs dented morale further. Publicly, Li conceded strategic errors, scrapped Huawei’s PBC performance model in favour of OKRs and vowed a return to a "startup" decision rhythm. But the damage was visible: targets slid from 700,000 to 640,000 and finished at roughly 406,000 — a failure the company itself characterises as systemic misreading and delayed reaction.

Can Ideal recover?

Ideal is not out of ammunition. It spent RMB 11.3 billion on R&D in 2025 (about half earmarked for AI) and plans RMB 12 billion in 2026, reportedly to fund a more ambitious push into intelligent vehicles. The next major bet is the new L9, slated to ship with an in‑house Mach M100 chip and full drive‑by‑wire chassis — a strategic pivot toward vertically integrated software and silicon that matches Beijing’s broader tech‑self‑reliance push amid U.S.–China tech tensions. But can engineering heft and a still‑substantial balance sheet translate into regained market share and faster decision‑making? That is the question Li must answer quickly — because in China’s cutthroat EV market, speed and clarity beat good intentions.