Hey, we rank No. 1! But is one carmaker's sales tracker a reliable indicator or just market flummery?

Electric carmaker Li Auto's weekly ranking of new-energy vehicle sales in China has become a lightning rod for industry outrage. Small wonder. Li Auto has topped its own list for 16 weeks.

In the latest ranking, issued on August 13, the Beijing-based carmaker founded by Li Xiang led with sales of 11,100 vehicles, dropping from 6 percent a week earlier. In second place, Leapmotor, with sales sliding 7 percent to 5,400 units, followed by AITO with a 57 percent sales plunge to 3,900.

AITO is a brand incubated by tech giant Huawei and Seres, a Chongqing-based car manufacturer.

Li Auto's cars, as well as the best-selling models of AITO, are extended-range electric vehicles. Extended-range vehicles come with an additional small fuel tank and an electric motor to supply propulsion power when the cars run low on electricity. For this reason, they are currently more popular than pure electric cars that rely solely on access to charging infrastructure.

According to Li Auto's data, electric vehicle makers Xiaomi, Zeekr and NIO trailed behind the three top sellers. Xiaomi sales dropped 8 percent to 3,500 cars; Zeekr fell 17 percent to 3,400; and NIO trailed with a 43 percent plunge to 3,300.

Although sales of electric cars slid across the board in the latest ranking, as consumers trimmed spending on big-ticket items amid times of economic uncertainty, the latest results mark the 16th consecutive week that Li Auto topped its own list for sales generated by "non-legacy" automakers. These are upstart Chinese companies that entered the auto market only as green-car manufacturers.

More strikingly, in sales rankings for luxury brands, also published by Li Auto for the same August 5-11 period, the firm ranked fourth, behind Mercedes-Benz, Audi and Tesla.

Li Auto, which was founded in 2015 by its chief executive officer Li Xiang, began to track weekly new-energy vehicle sales in 2023, a practice repeatedly criticized by some auto executives as "low-level internal competition."

Though some critics allege this practice may exacerbate already heated competition, Li Auto continues to publish the lists. Its more recent rankings come as China's top authorities cautioned against reckless competition.

During a meeting held on July 30 by the Politburo of the Central Committee of the Community Party of China, members emphasized the need to "strengthen industry self-discipline and prevent 'involutionary' vicious competition."

The relatively obscure term "involutionary competition" has gained traction in recent years as a reference to cut-throat, unbridled competition that permeates almost every section of Chinese society, from education to business.

Many in the automotive industry believe Li Auto's weekly sales tracker falls under that definition.

Unlike monthly or yearly sales figures announced by industry associations, market research firms or other third-party data providers, which are believed to be more impartial, Li Auto's weekly rankings are self-published and thus considered biased and self-serving.

When queried about its data sources, Li Auto declined disclosure, citing confidentiality agreements with data providers.

This lack of transparency led skeptics like Huang Honglin, executive of electric carmaker Xpeng to dismiss the authenticity and accuracy of Li Auto's sales data.

Qin Lihong, co-founder and president of electric carmaker NIO, went a step further, questioning the right of Li Auto to use his company's brand in its weekly rankings. He asked it to be excluded.

According to Phate Zhang, founder and editor-in-chief of CnEVPost.com, a news website focusing on China's electric vehicle industry, Li Auto documents the weekly sales of electric vehicles based on insurance registrations.

For their part, industrial associations like China Passenger Car Association publish monthly sales reports based on data submitted by carmakers themselves, including wholesale and retail sales data.

"For 'new forces' players, these two types of data, namely insurance registrations and retail sales, are close," said Zhang. "However, wholesale sales of legacy automakers are usually higher than retail sales due to factors including inventory and exports."

The discontent among Li Auto's competitors is understandable. By issuing weekly updates, Li Auto is practically flaunting its status as the best-selling new-energy vehicle brand – something that can influence consumer decisions while simultaneously undercutting the competition.

However, this provocative approach will almost certainly trigger pushback in a market of intense rivalry where leading automakers are going into overdrive to crush the competition.

Spats are common. Competition grows uglier. Despite their differences, traditional automakers that have expanded into electric vehicles along with those who are upstarts in the market continue to slam Li Auto's weekly rankings as a tactic focused solely on profit rather than on technological advancement.

Li Auto CEO hit back at his critics, posting a "shush" emoji on his WeChat account as well as an image of the ancient Chinese fable "covering one's ears while stealing a bell."

The message cannot be clearer: The moral of the fable is to mock the self-deception of some individuals.

Anyone familiar with the history of China's electric vehicle revolution will remember the famous photo in which the founders of NIO, Xpeng and Li Auto sat shoulder-to-shoulder as trendsetters in a once fledgling industry, exhibiting solidarity and bonhomie.

Such camaraderie has long evaporated into recrimination, bad blood and backstabbing as bitter competition threatens to spiral out of control.

Since 2023, major Chinese automakers have engaged in a series of price slashes to gain or just maintain market share.

Tesla's price cuts earlier this year unleashed a new round in the price wars, squeezing profit margins and generating headlines about intrigue and machination plaguing the industry.

Industry associations tried to intervene, convincing 16 automakers to sign a July 2023 commitment that included a promise not to engage in price or public relations wars.

Hardly had the ink dried on the commitment when the pledges began crumbling two days later, ostensibly over concerns that the agreement ran afoul of China's antitrust laws.

In the face of a ruthless market, attempts by industry associations to garner support for non-binding agreements have proven ineffectual.

Caught up in price wars started by BYD and Tesla, automakers – many already piling up heavy losses – are often compelled to follow suit, lest they fall further behind or even get pushed from the market.

Price wars are not uncommon in many Chinese industries, mainly triggered by lack of product differentiation. Consumers have shown they are unwilling to pay extra for features they don't think set products apart.

In the new-energy vehicle realm, the focus is now shifting to autonomous driving and in-car intelligence.

On the self-driving front, many Chinese electric carmakers like Xpeng are pivoting toward "end-to-end" solutions that shed the straitjacket of traditional autonomous-driving perceptions in favor of new development modes powered by large language models.

A large language model is a type of artificial intelligence algorithm that uses deep learning techniques and massively large data sets to understand, summarize, generate and predict new content.

This approach deviates from reliance on pre-compiled algorithms, manual planning and rules-based programming. Heavy investments in this new technology may have eaten into Xpeng's profits and slowed down its sales growth.

But Xpeng is betting that the scales will tip in its favor as it continues to invest in the new technology.

The next key development to watch in China's NEV space will be whether end-to-end iterations are fast enough to be commercialized at a competitive price.

Li Auto is a latecomer in the emerging technology. It was reportedly only in July that the firm established an end-to-end unit comprising some 200 employees, lagging far behind its rivals.

In a dig at Li Auto, Xpeng's He said on July 30 that some Chinese competitors, compared with US counterparts, "are still busy with sales rankings, obsessed only with making money rather than focusing on tech innovation and breakthroughs."

His remarks may have been a touch spiteful, coming as they did after Xpeng's weekly sales only hit 2,200 units – or more than five times fewer than Li Auto's 11,800 – during the week from July 29 to August 4.

Surprisingly, Xpeng wasn't even included in Li Auto's latest ranking, suggesting that its sales had fallen below that of 10th-place Denza, which delivered 1,800 units.

What can we make of this escalating war of words among China's electric carmakers?

As consumers, we stand to benefit in the short run from unrelenting competition on price and technology.

However, from a long-term perspective, the ceaseless cycle of price cuts will bode ill for the health of the sector. This industry is already characterized by rapidly shifting dynamics. First-mover advantages can quickly erode. Market domination can be lost within weeks.

Worse, a no-holds-barred contest might descend into a chaotic race to the bottom, to the detriment of product quality, business interests of ecosystem partners and eventually, consumer benefits.

Li Auto does have luck on its side. Its extended-range vehicles remain popular for the time being. But as the industry embraces new challenges, the tide could turn unexpectedly, disrupting the competitive landscape overnight.

Recent history is littered with dramatic comeback stories where former underdogs rose rapidly above market incumbents on the back of revolutionary technologies. With the vantage of hindsight, Li Auto would do well to look beyond its current success.

Without any doubt, the second phase of China's new-energy vehicle revolution will be even more brutal. There is no room for complacency. Will Li Auto regret its acts of provocation when it slips one day to the bottom of some ranking published by rivals?

What goes around comes around.

(The author, a former Shanghai Daily opinion writer, now works as a business analyst and communication strategist. He has no conflict of interests to declare.)