2003: Starting with Foreign Trade

Chapter 1002 The New CEO's Fancy Moves
P.S.: It's the last day of the month, do you guys still have any monthly tickets left?

Before even returning to China, Tan Jincheng already felt the treatment he deserved. The signing ceremony was given 13 seconds of screen time in the evening news.

Tan Jincheng in the photos exudes confidence and composure.

The moment the agreement was signed, Weilai made a huge leap forward. This was the largest automobile manufacturing plant owned by a Chinese company overseas, located in the heart of the European automotive industry, and it was purchased from the century-old Ford.

Domestic media extensively reported on the deal, with supporters considering it a landmark acquisition that marks a new era for the domestic auto industry, its significance comparable to Geely's acquisition of Volvo.

Compared to Geely's acquisition of Volvo and Wei's own acquisitions of Proton and Lotus, the current environment is much more difficult, and the difficulty of acquiring high-quality overseas assets is incomparable.

Opponents, on the other hand, mocked it as nothing more than buying an old factory with little technological content, and that it was simply a move to give Ford a foothold.

"You could say it's being taken over by Ford? You could say that. It is an old factory, but we disagree with the claim that it lacks technological content."

As soon as the plane landed in Beijing, Tan Jincheng was given an exclusive interview to review the acquisition. Most of the core documents had been signed, and it could be said that from now on, the Ford factory belonged to Weilai Overseas Branch.

"Is it possible for these technologies to be introduced to China? Also, Mr. Tan, could you talk about when the factory will start production? Which one will be faster, the factory or Tesla?"

When Tan Jincheng returned to China, it was already July. The new energy vehicle market had undergone tremendous changes in June, and the competition between Weilai and Tesla and BYD was already very fierce.

The first of the reporter's questions was very sensitive: the factory's advanced equipment and technology were the two most important factors in this acquisition.

"Regarding technology transfer, we still need to respect each other's laws and regulations. In addition, in the field of new energy vehicle patent technology, Weilai is not bad either. Ford, with its century-long history, has things we can learn from, and Weilai also has things we are proud of."

In public, Tan Jincheng would certainly not give anyone ammunition to criticize him. The technology transfer back to China could be carried out discreetly, but he absolutely could not boast about it.

The technologies are divided into non-sensitive and non-regulated technologies, and those for which Ford and Weilai have complete intellectual property rights. For example, low-sensitivity vehicle manufacturing processes, such as aluminum-steel hybrid body laser welding process and lightweight stamping technology for battery pack casings, can be localized and adapted through Weilai's ZG Technology Center (Shanghai) to circumvent import controls.

In addition, technologies related to environmental protection and energy consumption, factory energy recovery systems, and supply chain management experience, etc., are all non-sensitive technologies that can be transferred to China through various means, and Ford has tacitly accepted this.

However, this matter cannot be brought up openly. We can use the guise of technical consulting to send overseas experts to China, and then have them reverse-engineer the technology domestically, and that will be the end of it.

Ford's century-old German factory, though criticized by competitors led by Musk as a dilapidated facility, still boasts impressive technology and equipment. While some of its technologies may not be well-suited for new energy vehicles, it's important to remember that gasoline-powered cars have existed for a long time.

Ford is very good in SUVs, hardcore off-road vehicles, pickup trucks and other fields, and these are all useful to Yuechi Automobile. Finding a way to bring them back would be a great supplement to Yuechi Automobile's technology and patents.

"Regarding production, our plan is for 12 to 18 months, which is a bit later than Tesla's. There's nothing we can do about it, since Tesla started preparing much earlier."

Regarding the factory renovation, Weilai's plan was to compress the original 12-month renovation time into six months. During the negotiation process, some parallel projects were already underway, which saved more than a month.

In terms of new equipment procurement, Weilai adopts modular equipment, Siemens digital production lines, which are plug-and-play and save three months compared to customized equipment.

In terms of product compatibility, a platform reuse solution is adopted, directly using the existing EU-certified platform of Weilai, only requiring adjustments to the wheelbase and battery pack, skipping 80% of the R&D testing.

In terms of virtual verification, NVIDIA's digital twin simulation crash and durability testing solution was adopted, reducing the actual vehicle testing time by three months.

The supply chain is even more convenient. In addition to the supply chains in Germany and North America, Weilai has its own battery manufacturing facilities in Germany, and Junsheng Electronics is also a global supplier. The overseas supply chain can be perfectly matched, which directly eliminates the bidding process.

For high-value components such as battery modules and chips, the cost will not increase much, as they are directly supplied locally.

In addition, a green channel can be opened for battery cell certification and EU WVTA whole vehicle certification. The Saarland government is very supportive of this acquisition, not only providing subsidies but also helping out in many ways.

The Saarland government's proactive approach is not without reason. It has pledged to invest no less than 10 billion euros in the factory in the future, not to lay off employees within five years, to retain at least 2000 jobs, and to create 500 new battery/software R&D positions with salaries 15% higher than those at Ford.

The Saarland government, having received this commitment, was equally generous, offering subsidies of 20% of wages for the first three years. In addition, regarding industrial upgrading, the government will establish a European intelligent driving R&D center at the Saar Louis factory, committing to invest 200 million euros within five years, co-building an automotive AI laboratory with Saarland University, and training 100 local engineers annually.

Regarding the supply chain, it has committed to increasing the proportion of European suppliers from 65% during the Ford era to 85% within three years, especially by supporting local businesses.

Similar to the battery factory in Thuringia, where the highest hourly wage in Germany was offered in exchange for a series of locally developed incentives to secure the support of the state government and to veto local environmental lawsuits.

The fact that the Thuringian battery factory didn't cause as many problems as Tesla is largely due to these two points. In fact, the most troublesome thing about investing overseas is not being cheated out of money or spending more money, but endless lawsuits.

A single lawsuit can ruin everything for you.

There are also some commitments regarding finance and taxation, which are basically the same as the terms Tesla agreed to when it set up a factory in Shanghai. We cannot refuse Tesla, and Saarland cannot refuse Weilai either.

"So it seems that Weilai's factory in Europe will start production at least a quarter later than Tesla's. I wonder what kind of impact this will have on the competition between the two companies?"

"There will definitely be an impact. Timing is crucial for competition in modern enterprises. A quarter can change a lot, but we have prepared corresponding policies."

The growth of new energy vehicles in June was very significant, and the outstanding performance of car companies and individual models was no longer limited to just Tesla, BYD, and Weilai, as it was before May.

In June, the entire Weilai series sold 53,000 vehicles, of which the Exeed S01 delivered 17,000 vehicles, accounting for 32.69% of the total sales. In July, the production capacity of the Exeed S01 will continue to ramp up, with a delivery plan of 20,000 vehicles.

If there are orders, we must solve the production capacity problem as quickly as possible; otherwise, we will have to ask customers to cancel their orders and lose those orders for nothing.

In addition, besides the Exeed S01, the most outstanding performer this month was not the ET5 or ES3, but the L1. Hybrid models sold very well in June, and the BYD Qin DM had a big surge, delivering 9262 units in a single month.

Meanwhile, the only hybrid model under the Weilai brand to date, the Weilai L1, also saw a surge in sales, with a record of 7713 units delivered in a single month, a month-on-month increase of 321%.

The start of deliveries for the new 2021 L1 model is a major factor in the sales rebound, and another major factor is Li Xiang.

Li Xiang personally participated in the research and design of the L1 range-extended electric vehicle. If you ask which model Li Xiang is most familiar with, it would definitely be the L1. He has a special feeling for the L1.

The popular Exeed S01 has a steady stream of orders; all we need to do is increase production capacity, and I don't need to worry about anything else. However, the L1, which is currently undergoing a facelift, has actually seen relatively unstable sales this year.

February was not a concern due to the Chinese New Year. 4900 vehicles were delivered in March, and sales rose to 5539 in May. However, sales dropped to 4323 in June. This was partly due to the model update, but sales are ultimately unstable.

The updated Weilai L features an upgraded range extender system and improved configuration. Although it is 10,000 yuan more expensive than the old model, it offers excellent value for money, thanks to its intelligent driver assistance system and larger fuel tank.

In terms of marketing, Li Xiang first refined the positioning of L1, changing the advertising to highlight it as a family car, emphasizing its six-seat space, lack of range anxiety, and child safety features, etc.

In response to market skepticism about range-extended electric vehicles, Li Xiang frequently posted lengthy articles on Weibo to explain the technical roadmap of range-extended electric vehicles, directly addressing the doubts and using technical popularization to help users better understand technologies such as range-extended electric vehicles and pure electric vehicles.

The newly appointed CEO, Wei Lai, is building his image as a straightforward tech guy to enhance user trust. He answers questions about configuration, delivery progress, and even replies to complaints late at night in the comments section of Weibo.

In terms of public relations, Li Xiang was also at the forefront. Taking the recent hot topic of Wei Lai's acquisition of the Ford factory as an example, Li Xiang also became Wei Lai's public relations spokesperson, personally taking the lead and responding to Musk on Weibo.

Regarding the chip shortage issue that consumers are most concerned about right now, Li Xiang has even created a unique approach by updating the supply chain progress every week. For example, he mentioned that there is a shortage of 1000 millimeter-wave radars this week and that alternative solutions have been coordinated.

Using high-frequency, transparent, and controversial content, they leveraged traffic at low cost to convert the CEO's IP into actual sales, with the recovery of L1 sales being their biggest KPI.

Besides these, Li Xiang did something that drew criticism from his peers in the automotive industry: he created a weekly sales ranking list, which Wei Lai has been publishing weekly delivery figures since Li Xiang took office.

The advantages and disadvantages of weekly sales rankings are very clear. Compared to monthly rankings, weekly rankings are more sensitive to short-term fluctuations in vehicle models. The increased transparency helps assist consumers in making car purchase decisions. For automakers, it also allows for real-time feedback, strategy adjustments, and more accurate competitor benchmarking. Labeling a product as a bestseller also helps boost brand momentum and can serve as a basis for crisis public relations.

Its value to the industry lies in accelerating the survival of the fittest. For example, after the weekly rankings are released, the first to suffer are models with poor sales, such as the WM EX5. WM, which was once the absolute leader among new energy vehicle companies, is now struggling, declining year after year.

Besides impacting the industry and consumers, the weekly rankings also have a significant influence on the capital market. For emerging electric vehicle companies that are more prone to bankruptcy, their weekly sales data directly affects their stock prices. For example, when Wenjie's weekly new car deliveries fell short of expectations, its stock price dropped by more than 5% in a single day, showing significant volatility.

Besides the advantages, there are also many disadvantages, such as misleading consumers, excessive focus on short-term indicators and data-driven competition, which has accelerated the involution of competition within the industry and has also had a significant impact on some traditional car companies that are slower to react.

During Lotus's tenure, Li Xiang's performance was not so "arrogant," but after taking office, Li Xiang's performance became much more outstanding. In the past few months, Li Xiang has been very active on Weibo.

At the beginning of the year, Li Xiang had only 100 million followers on Weibo, but by the end of June, he had nearly 200 million. He gained 100 million followers in just two months after taking office, and the activity level in his Weibo comment section increased by 30%.

"On a side note, we've noticed that the new CEO of Weilai is much more vocal on the internet than the previous CEO, Zhang Yong. Is this a strategic shift by Weilai in the face of fierce market competition?"

"That's not quite right. Competition in the new energy sector is becoming increasingly fierce, so it's normal for marketing strategies to change. However, Weilai still focuses on technology-driven development. As for your claim that President Li is more aggressive, that's not true."

"Mr. Li and Mr. Zhang have different backgrounds and personalities, and each has their own style, which is normal."

A-segment cars are judged by sales volume, while B-segment cars determine brand image. The Exeed S01 has no rivals in the current A-segment, but the combined sales of the BYD Qin EV and DM models are not much different from the overall sales of the Exeed S01.

The combination of hybrid and pure electric power, coupled with the price reduction of the DM series to the 10 yuan range, makes it extremely competitive. In addition, the Xiaopeng P5, which has attracted attention and started delivery in September, is also a force to be reckoned with, even though the competition in the B-class car market is not as fierce.

However, in this year's A-class sedan market, BYD is indeed dominant. The BYD Qin series, Exeed S01, and Aion series occupy more than 80% of the A-class sedan market share.

In the A-class sedan market, the current market structure consists of WooLong, BYD, and others.

Great Wall's ORA Good Cat also sold relatively well, with 3405 units delivered in June. This model, which is closest to an A-class sedan, is one of the few sedans from Great Wall that has been relatively popular.

During the marketing process, Great Wall Motors has mentioned the Exeed S01 quite a bit to ride its coattails. At one press conference, a senior executive of Great Wall Motors even belittled the Exeed S01.

After a large number of deliveries, the Exeed S01 has indeed had quite a few problems. First of all, there is pressure on after-sales service. We are still in a special period, and service in some areas is indeed not keeping up.

In addition, many car owners have reported serious low-frequency resonance issues with the Exeed S01, as well as minor problems such as blind spots in the rearview mirrors and seat comfort.

This executive from Great Wall Motors used the problems reported by Exeed S01 owners to attack the quality that Wei Lai had been touting. Li Xiang directly implied that Great Wall Motors hadn't been able to make good sedans for so many years, yet still had the nerve to criticize its competitors.

However, Li Xiang also knew that this condescending attitude could easily offend car owners, and he publicly stated on Weibo that he would resolve the issues raised by car owners as quickly as possible.

"However, on the other hand, Weilai has always insisted on communicating with users. Mr. Li may have made some inappropriate remarks, but we don't think there is a big problem. Insisting on putting users first is what Weilai has always been doing."

"The Exeed S01 is our first mass-produced sedan targeting C-end users. We take all feedback from consumers seriously, whether it's about vehicle issues or after-sales service."

The Aion series dominates the B-end ride-hailing market. Although it has accumulated a lot of experience in manufacturing sedans for Weilai, and the development process of the Exeed S01 also drew on the Aion series, ride-hailing vehicles are still somewhat different from family cars.

In terms of specific functions, a model designed purely for ride-hailing may not be suitable for family use, because the usage scenarios and frequency of use are completely different. On the one hand, Exeed S01 needs to speed up production to capture the market, and on the other hand, it also needs to accelerate the construction of its after-sales service network.

These all take time.

"I would also like to take this opportunity to advertise: regarding the issues raised by Exeed S01 owners, after we release our hardware upgrade plan, owners can have their vehicles repaired and replaced free of charge at 4S stores. Please give us some time."

"Regarding software, we will be releasing an OTA update soon. Please check and update your vehicle's infotainment system. Before the current plan is announced, we will also release a temporary measure to ensure the safety and enjoyment of our customers."

Here it comes again, the reporter thought to himself.

The reporter who interviewed Tan Jincheng this time was from XH News Agency, who had previously had several encounters with Tan Jincheng.

Whenever I interview such a young boss, as long as I can schedule an interview, the process is actually quite relaxed. He is very cooperative with questions that are within the interview outline or even those added on the spot, including some sensitive questions.

Such interviews are what make them sensational, but one thing that leaves reporters speechless is that Tan Jincheng always "advertises" during the interview process, regardless of the level of the media, he has to use their services for free.

In short, I'll take advantage of any opportunity I can, as for cutting these things out?
Haha, then there won't be a next time.

Given Tan Jincheng's current market position, he has the right to conduct interviews arranged by the media themselves, as long as they are not specifically requested.

"Okay, Mr. Tan, as always, after focusing on the competition in the complete vehicle market, could you talk about the progress of chip development that we've been paying attention to? As you know, Tesla even experienced a brief chip supply shortage in June."

"We haven't encountered this problem yet, but that doesn't mean it won't happen in the future. We, as well as our consumers, would like to know how We will address this issue."

"I would also like to ask Mr. Tan for his views on the domestic substitution of chips."

Tan Jincheng smiled and said, "This is a rather complicated issue. Weilai is a young company, and what we need to do is learn from our predecessors. In terms of chip supply, we need to learn from our predecessor, BYD."

The brief chip supply shortage in June was mainly due to a lack of electronic stability systems (ESP). The first to suffer were naturally the emerging electric vehicle companies. Although their production capacity and sales volume have increased significantly, they have little autonomy in the supply chain. When production capacity is insufficient, these companies without any say in the supply chain are the first to suffer.

As for Tesla's temporary setbacks, one reason is the significant increase in Tesla's deliveries, and the other is that it is somewhat related to the incident at their Berlin factory.

Like Tesla, Tesla currently relies mainly on Bosch for its ESP supply chain. Tesla's over-ordering of ESP chips has increased the pressure on Bosch in terms of allocation. Unfortunately, the escalation of the special events in Southeast Asia has limited the production capacity of Bosch's factory in Malaysia.

Weilai's stockpiled orders came earlier and its production capacity schedule is more complete. As a leading company in the new energy vehicle industry, Bosch will definitely prioritize ensuring Weilai's supply.

In a sense, if special events continue to unfold as they are now, and remain uncontrolled overseas, other businesses will continue to be affected, especially given the large-scale stockpiling by companies like Wei Lai.

"The competition in the whole vehicle industry is not only about the car manufacturer's manufacturing capabilities, but also about the integration capabilities of the supply chain. We acquired National Technology in 2019, and we have made some breakthroughs in the integration of automotive-grade chip supply chain."

BYD began its IGBT development in 2004, but it wasn't until 2018 that it achieved mass production of IGBT 4.0, taking 14 years. Last year, BYD spun off its semiconductor division, and this year its MCU division has already achieved mass production.

This is BYD's most competitive advantage besides its batteries, and it's also something that many other automakers envy.

It is basically impossible for BYD to achieve mass production in the short term, and it will still have to rely on external suppliers. However, mass-producing basic automotive-grade MCUs to replace the low-end functions of Bosch ESP chips should not be a big problem.

Whether it's standing on the shoulders of giants or integrating through capital mergers and acquisitions, these efforts have never stopped since the acquisition of National Technology. National Technology has now completed the upgrade of consumer-grade/industrial-grade MCUs to the AEC-Q100 automotive standard.

The automotive-grade production line upgraded using existing production lines has already met the standards in terms of cleanliness and process control. Although advanced processes are not yet available, mature processes are still in place.

"By the end of this year, National Technology will be able to mass-produce basic automotive-grade MCUs such as window control and seat adjustment chips. We have achieved this in the low-end replacement field."

Indeed, besides summarizing this acquisition, the biggest point of today's interview is that, given the current chip shortage, Tan Jincheng needs to give consumers in Weilai a boost of confidence.

National Technology, the Beicang factory, the Infineon domestic team that was acquired a long time ago, and Horizon Robotics—these three can provide basic replacements without any problems.

Weilai still has a long way to go in achieving self-sufficiency in the chip supply chain, but taking the first step is equally important.

(End of this chapter)