The rivalry between two leading Chinese electric vehicle startups, NIO Inc. (NYSE: NIO) and Li Auto Inc. (NASDAQ: LI), has escalated into a public exchange following a controversial comparison video.

Controversial Video Sparks Executive Clash

Recently, Li Auto released a video comparing the performance of its L9 Livis model and NIO's ES9 on a wavy road surface. The test, conducted under the same conditions, reportedly showed the Li Auto L9 Livis exhibiting superior stability with less body sway. Although the video was quickly removed, it drew a sharp response from NIO.

NIO Vice President Ma Lin questioned the video's authenticity on social media, stating that the ES9's performance shown did not match its product specifications. He called on Li Auto to clarify the video's source and the specific test conditions and suspension settings used.

In response, Li Auto's product line head, Tang Jing, fired back with his own post. He questioned the validity of NIO CEO William Li's previous claim that the 48V integrated active suspension in the ES9 was a generation ahead of the 400V/800V split-type solutions used by competitors, a comment widely seen as targeting Li Auto.

From Allies to Adversaries

The current friction is a stark contrast to the early days of collaboration between the two companies. Founders Li Xiang of Li Auto and William Li of NIO publicly supported each other's launches, with Li Xiang even purchasing an early NIO ES8. Li Xiang once stated that if only three new EV makers could survive, he hoped they would be NIO, Li Auto, and XPeng.

However, as competition intensified, the relationship soured. Public remarks have been interpreted as veiled criticisms of each other's technology, such as screen design, and disputes have flared over marketing tactics like weekly sales rankings.

Diverging Financial Fortunes

The companies' current market positions also show a divergence. For Q1 2026, Li Auto reported revenue of 22.98 billion yuan, down 11.35% year-over-year, and swung to a net loss of 2.29 billion yuan from a profit a year earlier. Its vehicle gross margin fell sharply to 6.1%.

In contrast, NIO posted Q1 revenue of 25.53 billion yuan, a significant 112.16% increase year-over-year. While it still recorded a net loss of 496 million yuan, this narrowed by 92.8% from the prior year. NIO's vehicle gross margin rose to 18.8%, a four-year high.

Market Challenges Ahead

Both companies, along with the broader industry, face significant headwinds. The overall passenger vehicle market in China saw a decline in Q1 2026. Rising costs for key components like memory chips and battery raw materials are putting pressure on manufacturing expenses across the sector. The intense competition in the EV space ensures that the battle for market share between NIO and Li Auto is set to continue.