2003: Starting with Foreign Trade

Chapter 1016 The Troubles of Happiness

Driven by the explosive growth of the A00-class new energy vehicle market, the penetration rate of new energy vehicles in China reached 20% for the first time in September this year.

The rapid development of new energy vehicles does not mean that Zeng Jixiang's expectations can be easily realized. On the contrary, the market competition is the most intense since the promotion of new energy vehicles began in China.

In Tan Jincheng's view, the competition that started in the third quarter of this year is the real competition. In the past, the market was limited, and it was just a few car companies putting on a show, each with their own strengths. The competition was not as fierce as people imagined.

New energy vehicle brands Wenjie and Xiaopeng have achieved monthly sales exceeding 10,000 units for the first time, moving towards annual sales of 200,000 units. Normally, for a car company, annual sales of 200,000 units is a critical threshold for survival.

A car that can't sell 20 units a year is likely to be discontinued at any time; of course, this refers to mass-market models, not niche luxury sports cars.

Zeng Jixiang still has a long way to go, and it remains to be seen whether he can achieve his expected goals for 2024.

The first peak season for new energy vehicles, September and October, saw a surge in activity and competition in the market that far exceeded expectations. The verbal battle between Tan Jincheng and Da Zui was a direct reflection of this intense competition. If it weren't for Ju Hua posing a threat to Wei Lai, he wouldn't have needed to pay any attention to it.

Lei Jun tried to use his PowerPoint presentation to extort money from Weilai Auto, but even Tan Jincheng and Li Xiang couldn't be bothered with them.

"There are still many car companies and models that fell behind in September."

Tan Jincheng held in his hand the sales data of major car companies in September. The biggest change in sales in September was between Wynn and BYD, whose monthly sales both exceeded 7 units, surpassing Tesla's sales in China.

In September, Tesla sold a total of 5.6 vehicles in China. In the past, Tesla was able to suppress BYD in terms of sales in China. However, after September, based on the explosive growth of BYD's hybrid series and the hot sales of Volkswagen models, Tesla could no longer suppress these two companies.

From January to September, among domestic new energy vehicle companies, Wuling, BYD, and Tesla remained in a league of their own. Although Wuling held a dominant position in the A00-class market, relying solely on the Hongguang MINI EV series was insufficient to support its total sales.

As of September, Weilai had sold a total of 49.5 new energy vehicles. BYD, with the Seagull, Dolphin and the Qin DM series after price reductions and promotions, boosted its sales to 45 vehicles, rising to second place.

Tesla's sales exceeded 30.5 units, and together with Wuling's 25 units, apart from these four automakers, no other automaker's new energy vehicle sales exceeded 10 units from January to September.

The combined sales of these four automakers account for nearly 80% of the domestic new energy vehicle market.

While emerging electric vehicle companies like Xiaopeng, Wenjie, Leapmotor, and Nezha have made rapid progress, as Wei Yonghao of Great Wall Motors said, they are indeed not enough to pose a significant threat to traditional automakers.

With the market top-heavy and the market bottom-light, the market structure has undergone a very obvious change, and the market share of traditional fuel vehicles has been severely eroded.

FAW-Volkswagen, SAIC-Volkswagen, and SAIC-GM all saw year-on-year sales declines exceeding 25%, and the three major Japanese automakers are also under severe pressure, with GAC Honda having fallen out of the top 10.

In September, GAC sold only 3.8 vehicles, a truly dismal result.

Yuechi Auto's sales in the gasoline vehicle sector also plummeted year-on-year. The sales of Yuechi A1 this month dropped sharply by 37.2% compared to last year. If it weren't for the timely launch of the Xinghe P1 hybrid model, which sold well after its launch, Yuechi Auto's sales this year would have declined significantly.

That would very likely cause Yuechi Auto, which had been consistently profitable, to fall into a loss-making state again. If Yuechi Auto were to fall into a loss-making state again, it would put enormous financial pressure on Weilai Group.

Although sales of new energy vehicles from the Weilai Group have increased significantly, the investment has also been substantial. Over the years, Weilai has integrated many car brands, upgraded battery technology, expanded factory production, and so on, resulting in significant financial pressure.

"The only good thing is that our cash flow reserves have increased significantly."

In September, many brands disappeared from the market. Zhongtai Automobile, a once well-known car company in Zhejiang Province, had its production completely reduced to zero by September of this year.

Zhongtai's parent company went bankrupt and underwent restructuring, completely withdrawing from the market. Lifan, under the integration of Weilai, also entered a period of transformation and sprint.

Lifan's former gasoline vehicle business also completely disappeared in September. In addition, Haima Automobile's sales in September were less than 1,000 vehicles, and it has completely become a contract manufacturer for Xiaopeng Motors.

Among the joint venture brands that failed to transform, GAC Fiat Chrysler Automobiles sold only 800 vehicles in September, and the discontinuation of Jeep models such as the Cherokee, which were once well-known in the market, is imminent.

Other brands such as Borgward and Qoros have successively ceased production, and Skoda's market share in China has also fallen to 0.1%, while the sales of French cars in China as a whole have fallen below 1%.

Every single one of these car companies was a standout performer in the market back then, but now they've quietly disappeared from the market.

What is our current production capacity like?

In the first nine months of 2021, the Weilai Group achieved sales of 49.5 vehicles, excluding the Yuechi series, which is a remarkable performance.

The market expects Weilai to sell around 60 new energy vehicles this year. However, according to Weilai's internal order system, the sales volume of new energy vehicles this year may reach 70.

The direct sales model, coupled with a surge in sales, has increased Weilai's debt ratio to 65%, only slightly lower than BYD's 68%.

However, it also brought a lot of cash flow to Weilai. Compared with BYD's dealer network, Weilai has to bear the operating costs of the direct-sales model, but the advantages of controlling cash flow and net profit margin are equally obvious.

Currently, Weilai Group has nearly 600 billion yuan in cash reserves, making it the domestic independent brand with the largest cash reserves.

However, the biggest problem facing Weilai right now is the pressure on production capacity and supply chain. This year is still a special period, and everyone is quite pessimistic about the macroeconomy.

Major automakers have generally been relatively conservative in their market response to the macroeconomic situation.

The so-called chip shortage is less a problem with the supply chain and more a result of the choices made by major automakers themselves, including global automakers, who have significantly reduced their chip orders.

Chip orders take time to process, and when they find that the market is not what they expected, it is naturally not so easy to get on the waiting list.

Tan Jincheng's stockpiling of chips in the past two years, as well as his choices regarding chip orders and factory expansion, went against the trend of major automakers.

At the time, not only people in the industry thought Tan Jincheng was being reckless, but there were also voices within Weilai that didn't understand. Tan Jincheng's reasoning was that by the time the market recovered, it would be too late to catch up.

It's like investing in stocks. Once you know the price has fallen to a low point, there's no need to worry about whether it's the absolute bottom.

The surge in sales for Weilai this year is due to Tan Jincheng's counter-cyclical strategy in the previous two years, but Weilai is also under great pressure.

The primary issue is production capacity. Having both the Exeed S01 and the Galaxy P1, two popular Volkswagen models on the market, is definitely a happy problem.

The Exeed S01, Galaxy P1, Weilai ET5, Weilai L1, and Aion S are Weilai's current main models for boosting sales volume.

Apart from the L1 being overpriced, the others are all top sellers, especially the Exeed S01, whose current production capacity can no longer keep up with the increase in orders.

Since its delivery volume exceeded 10,000 units, Exeed S01 has been breaking the delivery record for new energy vehicles.

In just four full months since its launch, it has achieved a delivery volume of 50,000 vehicles, which is a new and global record for new energy vehicles, and also breaks the delivery record for pure electric vehicles.

Also in October, the 10th Exeed S01 officially rolled off the production line, taking only 210 days from mass production to the 10th unit.

This astonishing speed shocked the market, but at the same time it severely squeezed the production capacity of other models.

The decline in deliveries of the Weilai L1 this month is an internal adjustment to production capacity.

Unfortunately, within the Weilai vehicle lineup, pure electric vehicles still take precedence over range-extended vehicles.

In fact, the experts were not wrong. Range extenders are indeed a transitional product, it's just that this transition period is a bit long.

However, the rapid growth of the Xingtu S01 has put Wei Laiye in a dilemma.

They are under pressure on their own production capacity, and the supply chain is also under pressure, with the pressure on batteries and IGBT chips being particularly evident.

Even BYD cannot withstand this. BYD's battery production capacity is insufficient, with a self-sufficiency rate of only 70%, and it also needs to purchase chips from external sources.

The soaring cost of raw materials is also a reason for the impact on battery supply. The price of lithium carbonate has soared from 50,000 yuan per ton at the beginning of the year to more than 200,000 yuan.

Weilai has some upstream material suppliers, but between companies, normal procedures must be followed. Weilai's battery costs have also skyrocketed, just like other companies.

"Aside from sales volume and profit, Wei Lai chose sales volume."

The capital market is paying close attention to Weilai's third-quarter report. Although the Xinghe P1 is not as impressive as the Xingtu S01, its sales are still very impressive for a model that is still in the production ramp-up stage.

The market has already compared the sales of the Galaxy P1 with those of the BYD Qin. It's worth noting that the BYD Qin DM series, after price reductions and conversion subsidies, can be as low as 8.5 yuan.

An SUV that is priced significantly higher than the Qin series is actually able to compete in terms of sales volume.

Sales figures are transparent, and Weilai performed brilliantly in the peak sales season of September, but the decline in L1 deliveries has also attracted attention.

The surge in Exeed S01 deliveries, coupled with a decline in L1 deliveries, has made the capital market realize that Exeed is clearly more inclined to increase sales and market share. Range-extended electric vehicles have much higher profit margins than pure electric vehicles, and the fact that Exeed is choosing to sacrifice some short-term profits in favor of a long-term pure electric vehicle strategy is understandable to most institutions.

At the same time, they also saw an opportunity.

Currently, in terms of price range distribution, the market segment of 30,000 to 50,000 yuan is represented by models such as Wuling, Changan Benben, and Zhidou Rainbow.

这几款A00级市场销量占比大约在35%左右，10万至20万的大众市场，整体销量占比为30%左右。

This 30% market share is firmly held by BYD Qin/Song, Aion S, Exeed S01, and the newly launched Galaxy P1.

The market for vehicles priced above 25 yuan accounts for approximately 25% of the market share, and the main players in this market are currently Tesla and Wanda.

In the mainstream mass market, BYD went from dominating the market to sharing it with WILK. WILK's strategic intention is also very clear: to capture users' minds in this market.

“In the future, in the market segment between 10 and 20 yuan, consumers will think of not only BYD, but also Weilai. Weilai has never hidden its ambition.”

Last month, Tan Jincheng punched Da Zui, and this month he went all out against BYD, launching a large-scale publicity campaign as the 100,000th production car of the Exeed S01 rolled off the production line.

Actually, the verbal battle with Da Zui in September was quite useful for boosting Wei Lai's popularity.

Tan Jincheng and Wei Lai never marketed the "Love G" persona, and Tan Jincheng suppressed Zhou Ao's attempts to probe.

Whether or not it's a marketing tactic, this is their image, and the image of a company fighting against the world adds to the sense of sympathy.

With this image and its own product strength, it is no exaggeration to say that Chrysanthemum is known to 14 billion people, both in terms of product quality and brand awareness.

In this dispute, Wei Lai and Ju Hua, or rather, the big mouth representing Ju Hua, stood on opposite sides, but Tan Jincheng did not do anything wrong.

Therefore, not only Juhua benefited from the confrontation with Dazui, but Weilai also benefited.

The increase in sales of Weilai last month cannot be ruled out in part by this. Chrysanthemum has indeed become a household name, but not everyone likes it.

Or rather, not everyone likes Big Mouth, just like those who dislike Tesla; they will choose brands that oppose these brands.

The dispute with Da Zui subjected Tan Jincheng to a lot of attacks, but it also increased his popularity among his original fans and those who disliked Da Zui.

To some extent, this is an attempt at the fan economy, using the "big mouth" as an anchor point to filter fans.

Li Xiang has made no secret of his intention to compete with BYD in the 10 to 20 yuan market on multiple public occasions.

He probably saw the benefits of last month's controversy, as many companies actually have overlapping user groups.

Take Chrysanthemum and Weilai, two companies that are quite different, as examples. Their user groups actually overlap considerably, especially in the field of autonomous driving.

Chrysanthemums are deeply rooted in people's hearts with their image of technology, while Weilai is the king of domestic new energy. Choosing which one to choose has put people in a dilemma.

In a sense, those who stand in opposition to big mouths can attract more loyal users, and this is also true for big mouths themselves.

Whether it was provoked by Tan Jincheng or not, Da Zui, who was hit hard in mid-September, went on a crazy promotion of his intelligent driving technology in late September.

They conducted road tests in Shanghai and other cities, claiming that they could achieve NCA (Navigation-Assisted Driving) in urban areas, and also expanded their network of partner companies.

In late September, Chrysanthemum (a brand name) negotiated cooperation with automakers such as FAW and Changan on the HI model, providing a full-stack solution from chips to software.

All the car models that have partnered with Chrysanthemum are from major automakers, and the number of them is increasing. If Tan Jincheng hadn't secured FAW in advance, FAW would probably be negotiating with Chrysanthemum right now.

"We can have a war of words with Big Mouth, but we don't need to take it to heart. We should just focus on doing our own thing."

Li Xiang has been overly active lately, not only making no secret of his ambition for the mass market, but also frequently getting involved with Da Zui.

Da Zui's road tests claimed to achieve NCA in urban areas, prompting Li Xiang to sarcastically remark on his WeChat Moments that technology without formal commercial application should not be excessively promoted.

Weilai also has this technology, but it is taking a cautious approach given the immaturity of the market and the lack of user awareness.

"Haha, I get it. Actually, it's quite interesting to have a verbal battle with companies like this."

Li Xiang is now practically Tan Jincheng's mouthpiece. He's active on Weibo, and whenever someone tries to extort money from him, he'll selectively throw out a couple of sarcastic remarks.

"Actually, Big Mouth isn't very high up in Chrysanthemum's ranking. If he wants to promote his strategy, he has to increase sales."

There are actually two teams within the company responsible for the car manufacturing business. One is the HI model team led by Xu Zhijun, which is aligned with Ren Zhengfei's strategic intentions, namely to become a core component supplier in the field of intelligent vehicles, the Bosch of the intelligent vehicle era.

Just look at the level of the companies that cooperate with the HI model; FAW, Changan, and other car companies with extremely high standing in the industry.

The other team, led by Big Mouth, is more inclined to directly engage in car manufacturing, but Big Mouth's influence within the company doesn't reach that level.

Xu Zhijun has always been Da Zui's direct superior and has long held the position of the number two figure in Chrysanthemum, while Da Zui's highest rank within Chrysanthemum is only seventh.

Just look at the car companies that Da Zui has partnered with; he could only choose a little-known car company like Seres.

To increase his influence, the first step for Da Zui is to increase Seres' sales. Without sales, no matter how loudly he shouts, it's useless.

However, once Big Mouth boosts Seres' sales, the number of manufacturers cooperating with the HI model will inevitably decrease.

As Tan Jincheng said internally, no large car company wants to become a "contract manufacturer" like Seres.

Sales of Seres' Smart Choice models are sluggish, and the company has announced that the revamped Hongtu X5 will be launched next year.

If nothing unexpected happens, the redesigned Hongtu X5, handled entirely by the Da Zui team, will sell well in the market as a range-extended vehicle.

The Hongtu X5 will squeeze the market space of the Weilai L1 to some extent, but this squeeze will not have a significant impact on Weilai.

In a sense, Tan Jincheng hoped that Da Zui could gain more influence within their organization by directly confronting them, which was essentially a way to generate buzz.

Only when the sales of Hongtu X5 increase and the influence of the "big mouth" (referring to a specific brand or model) rises can the survival space of the HI model be squeezed.

You should know that Da Zui has always had a dream of building cars.

Speaking of which, this guy is even more belligerent than Li Xiang. In September, he clashed with Tan Jincheng, and in October, when the Chrysanthemum's intelligent cockpit was released, he also exchanged barbs with Wei from Great Wall Motors.

Big Mouth still spouts the same old rhetoric: traditional automakers lack software expertise, and the future of smart cars belongs to tech companies.

Wei, the founder of Great Wall Motors, responded by quoting Tan Jincheng's remarks from last month: "Cars are not like mobile phones; safety and manufacturing experience require long-term accumulation and cannot be overturned by mere slogans."

It must be said that Tan Jincheng's remarks about safety and providing a safety net were attacked by his fans.

However, within the industry, it's like handing a knife to their peers; now, whenever someone boasts or brags, Tan Jincheng's remarks will be cited.

It's only because of his outspoken personality that a typical car company leader would be embarrassed to continue bragging.

"We have also noticed Mr. Yu's remarks. In fact, we can all see the efforts that Chrysanthemum has made in promoting intelligent vehicle manufacturing, and we admire that very much."

"The progress of chrysanthemums is also very obvious, but as I said before, safety is no small matter, and we must take full responsibility."

The second stage of new energy vehicles is the struggle for discourse power in intelligent driving. If we want to win the discourse power, simply engaging in verbal battles will not be useful.

On October 16, a month after his last direct confrontation with Da Zui, Wei Lai also held a press conference on autonomous driving domain technology.

At the start of the press conference, just like his outspoken and sarcastic manner, Tan Jincheng also made a joke.

Chrysanthemum has strong technological reserves, but Wei Lai's many years of research have not been just a waste of money. It's time to produce something and let the market see it.

(End of this chapter)