2003: Starting with Foreign Trade

Chapter 1020 The Big Brother of the New Forces

Xiaopeng's car booth was packed with big names, including Lei Jun, who made a low-key appearance, and Li Bing, who rarely shows up to support a competitor.

Besides these two, there were also two old friends of Tan Jincheng whom he hadn't seen in a long time: Ding Sanshi and Shen Nanpeng.

"Brother Ding, President Shen, what brings you two busy people here today? It's been so long!"

"You little brat, who are you laughing at? We're not going to be as busy as you."

Ding Sanshi patted Tan Jincheng on the shoulder with a hearty laugh. Tan Jincheng, now the richest man in China, was far superior to him in terms of wealth and status. The fact that Tan Jincheng could still call him "brother" so openly in public made him very happy.

Shen Nanpeng, who was standing to the side, also shook hands with Tan Jincheng with a smile. In recent years, Tan Jincheng has reduced his personal involvement in the investment field, and Shen Nanpeng has indeed rarely seen him in public.

However, he was quite grateful to Tan Jincheng. This young man dared to borrow money from him when he first invested in him. His courage and boldness far exceeded those of ordinary people. You know, such a large loan, although interest-free, was not without conditions.

Shen Nanpeng's gratitude is not only for the substantial profits he made from investing in Tan Jincheng, but also for his early involvement in the new energy vehicle, battery, and intelligent driving industries because of Tan Jincheng.

Sequoia Capital has been making great strides in the new energy vehicle sector in recent years, investing in companies such as WILTECH, Xiaopeng, BYD, and Wenjie in the vehicle manufacturing sector, and recently securing Series A funding from JIK Auto.

In addition to Horizon Robotics, which was the earliest investor in autonomous driving, other companies such as MOmenta, Hesai Technology, and Black Sesame Technologies have also invested in the field, covering chip design, algorithms, LiDAR, and more.

In the field of batteries and energy, since last year, Sequoia has also invested in companies such as Zhongchuang Hangxin and SVOLT Energy, betting on the next generation of solid-state battery technology.

Sequoia Capital has also made numerous investments in new energy, energy storage, and smart grids. These investments are closely related to Wei Lai, and almost every company invested in by Sequoia Capital has some degree of Wei Lai's influence.

Sequoia Capital certainly has its own set of rules, but given Shen Nanpeng's many years of investment experience and familiarity with Tan Jincheng, it's safe to follow suit with companies that the Wei Lai Group is involved in. I dare not say that you will make a lot of money, but at least you won't lose too much.

The companies invested in by the Wei Lai Group have grown and are now playing important roles in their respective industries. Sequoia Capital has profited handsomely from its investments, and Shen Nanpeng has been selected as one of Fortune Global's most influential investors.

The two met at a high-level summit hosted by CCTV. Starting with investments, their friendship gradually developed. In the early stages of his career, Shen Nanpeng provided Tan Jincheng with a great deal of help and was an indispensable investor in his series of investments and acquisitions, especially in the field of overseas business.

Without Shen Nanpeng's initial support, Wei Lai and Tan Jincheng would not have been able to grow so rapidly. And after Wei Lai had already established a significant position in the industry, Tan Jincheng was able to provide Shen Nanpeng with even more support in his career.

The relationship between the two can be considered a remarkable story in business history.

"How about we grab a drink later?"

After exchanging pleasantries for a while, Ding Sanshi spoke up. In Guangzhou, he was considered a host. In recent years, Pig Farm had become increasingly laid-back in the eyes of outsiders, as if it were focused solely on making games and earning money.

The global success of Naraka: Age of Extinction has given NetEase its first phenomenal PC game IP, further enhancing the company's global influence in the gaming industry. Furthermore, their music business is scheduled to list on the Hong Kong Stock Exchange in December, giving them even more confidence in their competition with Tencent.

Everything seems so laid-back, but in fact, NetEase has made some efforts in cross-industry collaborations over the years. It has ventured into areas such as the once-popular Metaverse and AI technology.

Although the pig farm is not directly involved in the new energy vehicle business, its subsidiaries provide solutions such as voice and AI customer service for vehicle networking.

However, unlike Shen Nanpeng and Tan Jincheng, Ding Sanshi's appearance at the Guangzhou Auto Show was purely out of personal interest. He was very interested in Xiaopeng's latest G9 and flying car concept.

"No problem, but first take a look at Mr. He's newly launched G9 and flying car. I'm really looking forward to them. Xiao Peng has made such rapid progress in the past few years."

"Haha, I can't let down the investors of these bosses."

He Xiaopeng laughed. Apart from Li Bing and Ding Sanshi, the people who were there to support him could all be considered his bosses. Lei Jun, Shen Nanpeng, and Tan Jincheng were all investors in Xiaopeng Motors.

"I'm probably going to be teased by the media today. I went to Seres' place before coming here."

As an investor, Tan Jincheng is quite happy to see He Xiaopeng, an entrepreneur with a pragmatic style. Xiaopeng is like a smaller version of Weilai. They only make pure electric vehicles, and their models are basically those of Weilai and Tesla.

Take the G9, which made its debut at the Guangzhou Auto Show, for example. It is positioned as Xiaopeng's flagship pure electric SUV, and it is also comparable to the Weilai ES8 and Tesla Model X. As a flagship SUV, its technical parameters in terms of hardware and software are undoubtedly the best available at present.

However, what Tan Jincheng is most concerned about is that the Xiaopeng G9 is equipped with 800V high-voltage fast charging, which can provide 200KM of range with just 5 minutes of charging. This is a leading technology globally.

“There aren’t many 800V high-voltage charging technologies that are currently in mass production worldwide. This is a great marketing opportunity for you.”

Having personally experienced the G9, I found its intelligent driving and interaction system to be quite stable and smooth, with an overall performance comparable to German luxury cars. The seats are comfortably soft and firm, and the legroom in the back is also quite good, making it suitable for long journeys.

The price has not yet been announced, but it should be over 30 yuan. The specific market performance is unknown, but Tan Jincheng recalls that Xiaopeng's G series does not seem to sell very well, and the main focus is on the P series.

But the biggest highlight of this car is definitely its 800V high-voltage fast charging architecture.

"Hehe, that is indeed our biggest selling point. In terms of luxury, we still can't compare to yours, and there are also some differences in technology."

He Xiaopeng is quite proud of being the first to mass-produce 800V high-voltage charging technology. Currently, there are many companies around the world that have deployed 800V high-voltage charging technology, but few can actually achieve mass production.

So far, only Porsche and Hyundai-Kia have produced two models. Porsche achieved mass production in 2020 and was the world's first electric vehicle based on an 800V high-voltage architecture, while Hyundai-Kia mass-produced a model this year.

Xiaopeng's G9 is the first mass-produced model in China. Although delivery will take a long time, the fact that it is a mass-produced model for the market shows that Xiaopeng's 800V charging technology is relatively mature.

BYD, WILTER, and JIKE, among other automakers, also possess 800V high-voltage charging architecture technology. Tan Jincheng doesn't know when BYD and JIKE will mass-produce their vehicles, but WILTER's technology is relatively mature, and its planned mass-produced models will be launched next year.

As always, Weilai uses mature technologies in Aion, which has always been Weilai's tradition. Therefore, Weilai did not specifically emphasize the 800V high-voltage charging technology, and the actual charging speed is not slow.

In terms of charging technology, WILAY doesn't need to do much marketing, because WILAY currently has the largest number of supercharging stations and public and self-operated charging piles in the country.

By building its own supercharging network, offering free charging benefits, and providing free home charging stations during certain time periods, Weilai has achieved coverage in more than 300 cities nationwide.

In hotels and shopping malls, Weilai also has its own slow charging stations. Compared to Tesla's Supercharger and Destination Charger strategies, Weilai also has a home charging station.

V3-level charging piles can provide more than 250 kilometers of charging in 15 minutes. As one of the earliest OEMs to deploy its own supercharging network, Weilai's charging piles have already covered third- and fourth-tier cities.

When will Wei Lai's technology be put into mass production?

At this moment, Lei Jun, who was standing next to him, also spoke up. Xiaomi, which is very successful in the mobile phone industry, has also been very high-profile after announcing its car manufacturing. Currently, Xiaomi's car factory has been located in Yizhuang, which can be regarded as a substantial step from making cars on PPT.

However, within the automotive industry, Xiaomi still hasn't shaken off the skepticism. Most believe that Xiaomi's move to build cars at this time, choosing the "new force" approach, is somewhat too late.

According to Xiaomi's mass production expectations, deliveries will not begin until 2024. The market was already so competitive in 2021, so the market is not optimistic about Xiaomi's chances of breaking through. Lei Jun is also under a lot of pressure now.

For the past six months or so, he has been traveling among various car companies to learn and has attended countless auto shows. Large-scale international auto shows like the Guangzhou Auto Show are often the best places to do business.

Many cooperation agreements have been reached during large-scale international auto shows, just like the Canton Fair. Large-scale auto shows are the best opportunity for companies to reach cooperation agreements.

Tan Jincheng's visit to the Guangzhou Auto Show this time mainly involves supply chain and globalization strategy. He needs to talk with suppliers including Shell, as well as some domestic chip manufacturers.

"We'll probably start mass production around next year, but that's not our focus in our marketing, so it doesn't conflict with what Mr. He is saying."

Tan Jincheng smiled. If his memory served him correctly, the G9, touted as Xiaopeng's flagship pure electric SUV, probably didn't sell very well. In reality, its supposed competition with the ES8 posed no threat whatsoever.

Furthermore, Tan Jincheng believes that in the pure electric vehicle field, only Tesla can currently compete with BYD. BYD's pure electric vehicles have made rapid progress, with the Han EV series stunning the market. However, the boatman has gone down the old path again.

In an effort to boost sales, the Han EV has entered the ride-hailing market, following the same path as the Qin series. Although it's the high-end ride-hailing market, it's still ride-hailing, which inevitably damages its newly established premium image. This hasty move left Tan Jincheng bewildered, as if he were possessed by a Baidu search engine. This is probably why the Han EV's premium image has always been difficult to establish. However, from the perspective of the boatman, sales are undoubtedly the most important thing right now.

After all, they have been lagging behind in the gasoline car market for many years, and their sales of new energy vehicles have been suppressed by the US, making it difficult to promote them. Ride-hailing is their best way out and one of the fastest ways to accelerate their market share.

BYD's only problem is that it didn't focus on pure electric vehicles from the beginning, and its hybrid models weren't mature enough. Its early models were basically just converted gasoline cars to electric ones, which caused it to fall behind in the competition with companies like Tesla and others.

However, this year is definitely a big year for BYD. There have been two years of explosive growth for new energy vehicles so far. The first was 2015 and the second was 2020. Since 2015, pure electric and hybrid vehicles have always accounted for the majority of sales in the new energy vehicle market. The sales share of pure electric vehicles has remained above 70% in recent years.

After all, pure electric vehicles receive more subsidies. However, since last year, the rise of range-extended electric vehicles has gradually led to the market acceptance of hybrid vehicles. BYD's DM technology has also matured, and hybrid vehicles have become one of the hottest products in the market this year.

The price reduction is another factor contributing to the increase in the market share of hybrid vehicles. With subsidies decreasing year by year, BYD's market share in the hybrid market will further increase in the future. This is one of the reasons why Yuechi Auto launched a hybrid vehicle as its first step.

"Haha, this is President Tan giving us some market space, not competing with us for the marketing focus."

In today's pure electric vehicle market, there are two insurmountable hurdles: WILTE and Tesla. Originally, WILTE only competed with Tesla in the market above 25 yuan, leaving huge market space for domestic new energy and emerging companies.

However, since the Exeed S01 became a hit, and the Galaxy P1 also performed well, the pressure on other car companies has increased sharply after the release of these two models aimed at the mass market. With the addition of the newly acquired Zhidou Auto, Weilai has now achieved full price coverage from 3 yuan to 50 yuan.

Among the models currently on sale by Weilai, the most expensive is the ES8, with the 70 kWh battery pack priced at 46.8 yuan and the 100 kWh battery pack priced at 52.6 yuan. There are also some special versions priced up to 60 yuan.

This is currently the representative of WILAY's high-end flagship models, and it also represents WILAY's high-end image. Apart from the ES8, the most expensive models are the ES6 and L1, both priced above 30 yuan.

As the first pure electric vehicle in China with a maximum price exceeding 50 yuan, the ES8 has proven the feasibility of local high-end development. Coupled with the fact that there were almost no competitors in the past few years, the ES8 has gained a firm foothold.

The ES8 now averages over 1500 units per month, with October sales climbing to over 2000 units, making it a very competitive vehicle in its segment.

"That's not true. You've done a great job. Your sales this year should reach 10 units, right?"

Aside from the newly launched G9, Xiaopeng Motors currently has three models on sale: P5, P7, and G3. Xiaopeng's P series is a sedan series, while the G series is an SUV series. Although its product matrix is ​​somewhat thin, its sales are very good.

A large part of the reason is that He Xiaopeng has concentrated all his resources. On the one hand, he is fully committed to the research and development of charging and intelligent driving solutions, with R&D accounting for 20% of revenue throughout the year. On the other hand, the Zhaoqing factory with an annual production capacity of 10 vehicles is operating at full capacity. The Jiangcheng factory is also in the planning stage and is expected to be put into production in 2023.

In terms of battery supply, Jinsheng New Era provides a guarantee for Xiaopeng's battery supply. At the same time, Xiaopeng is also actively developing secondary battery suppliers. Manufacturers such as CALB have entered Xiaopeng's supply chain, which has solved the problem of supply chain tension.

In July of this year, Xiaopeng Motors listed on the Hong Kong Stock Exchange, raising HK$140 billion, which provided a guarantee for the company's development. From funding to industrial layout, He Xiaopeng has made good use of limited resources.

Currently, Xiaopeng Motors is the top-selling new energy vehicle brand. On the other hand, Li Bing's situation is completely different. Although his sales are also approaching 100,000 units, Li Bing has been very active in making moves after getting rid of financial difficulties.

Leaving aside the normal investments in ecosystem-building elements such as battery swapping, services, and community building, which all have legitimate reasons, Li Bing also consumed a considerable amount of resources in other miscellaneous industry investments.

For example, Wenjie planned to start export business in the second half of the year and went to Norway to build channels. Tan Jincheng once advised him that Wenjie did not have the export capability at present and there was no need to waste money and energy to do so.

Why bother if you can't even sell a few cars a year? With the current size of the domestic market, supporting Wenjie is not a problem at all. New energy vehicle brands should first and foremost establish themselves in the domestic market, and He Xiaopeng is very smart in this regard.

Tan Jincheng already has a plan. By the end of the year, he will gradually reduce his holdings of Wenjie's shares and decrease his investment in Li Bing. Some people's old habits are indeed hard to change. Just like the joke on the Internet, Wenjie's biggest problem is actually Li Bing.

The situation was originally very good, and investors were optimistic about him, but alas.

"Hopefully, but I don't know if we can finish it in the next two months. Even if we don't reach 100,000 vehicles, it shouldn't be too far off. It's mainly limited by production capacity and the supply chain."

2021 was a year of celebration for new energy vehicles. Xiaopeng Motors, which went public for the second time, had a market value of over 500 billion US dollars, ranking second among the new energy vehicle companies. Even Nezha's valuation reached 80 billion US dollars. Li Bing and He Xiaopeng, the founders of these car companies, can be said to be enjoying great success.

The company with the highest market capitalization among emerging companies is Wenjie, founded by Li Bing, with a market value of nearly 620 billion US dollars. Given the frenzied capital market, it is perfectly normal that Li Bing cannot heed Tan Jincheng's opinions.

"It's already very good. The 100,000-level price range is enough to enter the mainstream brands. However, the problem of overlapping gross profit margins and vehicle prices still needs to be addressed."

Xiaopeng's P5 and P7 are severely competing on price. The P5 is priced between 17 and 24 yuan, while the P7 is priced between 25 and 40 yuan. In particular, the P5 LiDAR version is priced above 24 yuan, which has diverted P7 users. The two models do not have a clear differentiated positioning.

Users' complaints about the P5 and P7 are that the P5's interior quality is inferior to that of the P7, and that its intelligent features are overhyped. However, the two models overlap in price, which makes it difficult for users to choose between them.

Since there's no choice, then just don't choose. Switching to other brands is the same. There aren't many options in the 20 yuan price range anymore, especially after the Exeed S01 came out, which had a significant impact on Xiaopeng's sales.

"We've noticed this as well, and it will be a key area for optimization next year. Does Mr. Tan have any other suggestions?"

After the dinner party organized by Ding Sanshi ended, He Xiaopeng met with Tan Jincheng alone to humbly listen to his advice. To a certain extent, the launch of the Exeed S01 caused a lot of trouble for Xiaopeng. The two were competitors, but in terms of car manufacturing, Wei Lai played the role of the elder brother of Xiaopeng Motors.

He Xiaopeng knew that Xiaopeng Motors' early strategy of targeting the mass market was the most difficult among the new energy vehicle startups. Before the launch of the G9, the prices of their several models did not exceed 30 yuan. Even without the Exeed S01, Xiaopeng would still face the dilemma of competing with traditional models such as BYD for market share.

Therefore, He Xiaopeng followed Wei Lai's lead in cooperation. While the two parties signed a supply chain strategic alliance, they also fully listened to Tan Jincheng's opinions on some business vehicle operation opinions.

In He Xiaopeng's view, this is not the case that traditional car companies are worried about losing their soul; on the contrary, it is like having a powerful backer to provide shelter.

Whether it's peers or supply chains, aside from acquired companies, Tan Jincheng has little interest in controlling other invested companies, and the size of his shareholding is also a matter of strategic consideration.

One of the earliest strategic investors in Bafang Electric, Tan Jincheng returned control of the company to the founder during the listing process. The same was true for Inco Medical in 2019. Investments in Xiaomi were also withdrawn in an orderly manner. Therefore, He Xiaopeng is not worried about the struggle for control of the company, and besides, he has a lot of shares.

Since signing a supply chain strategic alliance with Weilai, Xiaopeng's overall vehicle costs have decreased significantly, with battery supply costs alone decreasing by 15%.

While the surge in Xiaopeng's market value in the fourth quarter may be partly due to a bubble in the capital market, it is clearly related to its increased gross profit margin. Xiaopeng Motors currently has the lowest gross profit margin among the leading new energy vehicle startups.

In the first quarter, Xiaopeng Auto's overall gross profit margin was only 11.5%, but by the time the third quarter report was released, its overall gross profit margin had risen rapidly to 13.5%, getting closer and closer to a gross profit margin of 15%.

The increase in gross profit margin has greatly improved Xiaopeng Motors' finances and cash flow.

"Then let me give you a few suggestions. First, in terms of product optimization, you should cut the LiDAR version of the P5 and upgrade the P7. You need to make consumers realize that the P5 is the P5 and the P7 is the P7. You can't make them have difficulty choosing."

"In addition, you need to speed up the development of your intelligent driving solutions. Also, your 800V high-voltage charging architecture probably isn't progressing as fast as advertised, is it?"

He Xiaopeng gave an awkward smile: "As expected, I couldn't hide it from President Tan."

In terms of marketing, Xiaopeng Motors has the same problem as Dazui (a famous Chinese automotive media outlet): it makes grandiose promises. While Xiaopeng's intelligent driving solution and charging platform are indeed capable of mass production, the progress is far from what is advertised.

This isn't just a problem for Xiaopeng alone. New energy vehicle startups, including Lei Jun, are all masters of making empty promises. This is probably a common problem among internet entrepreneurs. Traditional car companies, on the other hand, are relatively more cautious in their marketing efforts.

Wei Lai also makes empty promises, but not to such an extent. According to Xiao Peng's consistent tradition, it would be good if a few hundred vehicles were delivered in the first month of mass production. In the era of PPT car manufacturing, delivering a few hundred, or even a few dozen, vehicles in the first batch is not a problem.

However, it is now the end of 2021, and the so-called mass-produced models, with an initial delivery volume of less than a thousand, are hardly making a splash, and this is only for high-end models.

"In addition to optimizing the P series, we also need to make some adjustments to the G series. We must differentiate between the mass-market and flagship models. Also, there is the issue of production capacity. I think it would be best if the Jiangcheng factory could start mass production ahead of schedule."

He Xiaopeng's approach to factory construction is similar to Li Bing's. Although both initially adopted the OEM model, they have gradually withdrawn from it since the beginning of this year. It's true that you can't always rely on OEM for cars.

"Understood; by the way, I heard that you, Mr. Tan, plan to open up Weilai's charging stations to third parties? Is that true?"

(End of this chapter)