Chinese EV maker LiAuto granted 35 million Class A common stock options to three top executives-CFO Li Tie, President Ma Donghui, and CTO Xie Yan-with vesting tied entirely to market capitalization milestones. The full package requires the company to hit a HK$1 trillion (roughly 194 trillion won) valuation, nearly nine times its current HK$115 billion market cap.
The incentive plan, reported by Caixin on June 18, replaces time-based vesting with performance thresholds. A portion of the options unlocks once market cap exceeds HK$200 billion, and the remainder vests only at the HK$1 trillion mark. The structure directly links executive compensation to share price growth, a signal the board is betting hard on a long-term turnaround.
Financial deterioration behind the bold targets
LiAuto became the first of China's new-generation EV makers to post a full-year profit in 2023. That milestone has unraveled. First-quarter 2026 revenue dropped 11.4% year over year to 23 billion yuan (about 5 trillion won), even as vehicle sales ticked up 2.5% to 95,000 units. Lower average selling prices across key models drove the decline.
The company swung to a net loss of 2.3 billion yuan in Q1. Gross margin fell to 7.9%, the lowest since listing, and the stock has shed more than 15% of its value this year. An operating loss in 2025 preceded the quarterly loss, marking a clear downward trajectory that the HK$1 trillion target-and the option grant meant to motivate its pursuit-stands sharply against.
The embodied AI pivot as a second engine
Founder and CEO Li Xiang has publicly recast LiAuto as an embodied intelligence company, a term for AI systems that take physical form and interact with the real world. At a briefing on June 15, the company said, "Cars and embodied intelligence are not separate businesses, and intelligent cars themselves are the direction of embodied intelligence." The vision extends to vehicles functioning as chauffeurs and personal assistants.
Li views cars as a type of robot already capable of autonomous action and human interaction. The strategy encompasses humanoid robotics alongside the core auto business, positioning AI as the competitive moat for future vehicles. But the pitch has not landed well with investors. Caixin cited a local investor who said, "The AI transition strategy presented by CEO Li is too macro, making it difficult to judge what specific impact this shift will have on current products and market competition."
Talent exodus compounds execution risk
Key departures are thinning the leadership ranks needed to execute on both fronts. After 2025, a former CTO and the head of autonomous driving R&D left to launch an embodied intelligence robotics startup. In March 2026, former Senior Vice President Lang Xianfeng departed and founded a general-purpose humanoid company. Each exit pulls specialized knowledge out the door at a moment when LiAuto must simultaneously fix its auto margins and build an AI organization.
Caixin interpreted the stock option grant partly as a retention tool, aimed at stemming further defections among senior leaders while signaling board commitment to the AI strategy. The dual purpose-retention and market confidence-underscores how much credibility the company needs to rebuild with both talent and shareholders.
Why this matters for executives and strategy
LiAuto's move is a case study in using equity compensation to align leadership around a deliberately audacious valuation target while the core business is losing money. The structure forces executives to deliver share price appreciation-not just operational milestones-to realize compensation. That alignment carries risk: if the auto business cannot restore profitability, the AI narrative that justifies the HK$1 trillion target may lose whatever credibility it has left, and the options become worthless paper. For boards and compensation committees, the lesson is that moonshot equity grants only work when the market believes the underlying business can fund the journey.
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