2003: Starting with Foreign Trade

Chapter 1022 Mitsubishi's Withdrawal VS Antitrust Lawsuit

Yu Nagasawa's office is located in Shanghai. He used to come to the Mitsubishi Ningbo factory frequently a few years ago, but he has come less often this year.

This time, Yutaka Nagasawa came to provide assistance, or rather, to discuss with Tan Jincheng how to handle Mitsubishi's assets in China. Mitsubishi has given up hope for the current market.

Mitsubishi's peak sales period was from 2018 to 2019. Leveraging the booming SUV market and the Outlander, a four-wheel drive model 7 priced under 200,000 yuan, it successfully attracted family users through differentiated competition.

At that time, the Outlander was considered a new model, representing Mitsubishi's sincerity towards the Chinese market. Coupled with its extensive sales channels, its market acceptance was to be expected.

Before 2020, Mitsubishi was quite successful in the second-tier car market. If we were to use a brand analogy from the mobile phone industry, Mitsubishi was roughly equivalent to a brand like Meizu. Although its sales volume could not compare with that of first-tier Japanese brands, it was doing quite well.

The Beicang plant, with an annual production capacity of 20 vehicles, is the best positioning for Mitsubishi. Yutaka Nagasawa's plan for Mitsubishi's domestic market is quite clear and well done.

"Please have a seat. Mr. Nagasawa, you've come to discuss Mitsubishi's withdrawal from the domestic market, haven't you?"

When one stops striving for progress, the good days will naturally come to an end.

Joint venture brands have made slow progress in electrification in China. This is not a problem unique to Mitsubishi. However, compared to companies like Toyota and Honda that are constantly investing in new models, Mitsubishi has made no further moves beyond the initial Outlander.

It's been several years since Mitsubishi launched any new models. They're still selling the Outlander that was introduced in 2016. It's like paying for a 2021 model to buy a 2016 model. No wonder it's not competitive.

Nagasawa Yu sighed softly, forced a smile, nodded to Tan Jincheng, and said, "Yes, Mitsubishi already has plans to withdraw from the ZG region market. I came to see you today to discuss the handling of assets and employees."

"Okay, let's talk about it in detail."

Mitsubishi's decline is a microcosm of the situation for joint venture brands. Compared to first-tier brands, second-tier brands like Mitsubishi are less able to withstand market risks. Second-tier brands such as GAC Fiat Chrysler, Yueda Kia, Peugeot and Citroën have all experienced severe market contraction.

Mitsubishi is neither the first nor the last.

In fact, Mitsubishi's problems cannot be attributed to Yutaka Nagasawa. When he first took office, Nagasawa also came with great ambitions. In the early stages, through cooperation with Wei Lai and market positioning, Mitsubishi's development was quite good.

His proudest achievement was introducing the Outlander, which revitalized the Mitsubishi brand in the market.

Unfortunately, although Yutaka Nagasawa is considered "older" in the US, he is only considered a young man within Mitsubishi. Unlike the gradual rejuvenation of management in domestic companies, Japanese companies have a very deep obsession with seniority.

Because of his previous achievements, Yutaka Nagasawa had gained some influence within the company, but his influence was limited. His rigid lifestyle and lack of emphasis on the consumer market made it difficult for him to introduce new models.

"I once had a great opportunity, but unfortunately it was not available."

Chang Zeyu had no reservations in front of Tan Jincheng. Having worked with Weilai for many years, he had witnessed Weilai's rise and its unstoppable momentum in the new energy vehicle market.

He also had in-depth discussions with Tan Jincheng regarding the management of Mitsubishi.

In Tan Jincheng's words, Mitsubishi can actually be positioned as a "new force" among joint venture brands. This topic was discussed by both parties when the Outlander was introduced in 2016.

Mitsubishi's PHEV technology is quite good. According to Tan Jincheng, they started introducing PHEV technology to China in 2016 and gradually entered the pure electric vehicle market through the research and development of PHEV technology.

Based on the Outlander, Mitsubishi is developing a PHEV version of the Outlander that is more suitable for the domestic market, as well as a pure electric version, targeting the mass-market car segment. With its brand influence, Mitsubishi has the potential to gain a foothold in the domestic new energy vehicle market.

Yuya Nagasawa agrees with this model, although he knows that Tan Jincheng wants to obtain Mitsubishi's PHEV technology. According to the initial agreement of the joint venture, the technology developed by Mitsubishi ZG District belongs to both companies and can be used by Mitsubishi.

Weilai is somewhat behind in PHEV technology. If Mitsubishi had agreed to Tan Jincheng's suggestion at the time, Weilai would have been able to develop PHEV models much faster and enter the hybrid market much earlier.

Given that he was a senior executive who had been based in China for a long time and knew Wei Lai and Tan Jincheng well, he was willing to help Wei Lai out, but the headquarters did not agree.

These short-sighted individuals seem to fundamentally misunderstand that technology is worthless if it doesn't translate into market sales. Even without Mitsubishi's help, the hybrid powertrain was still developed in just a few hours at night.

"I've wondered what the Mitsubishi ZG would look like if the Outlander were to resemble the Mitsubishi L1 and be priced lower?"

This year, the sales of the Weilai L1 alone were 50% higher than Mitsubishi's overall sales. He simply couldn't imagine what would happen to Mitsubishi given its first-mover advantage. Why didn't headquarters understand?

Mitsubishi has indeed provided assistance to Weilai in hybrid technology, but Weilai is not naive. Weilai will also provide assistance to Mitsubishi in pure electric technology, in which Weilai still has a significant advantage.

"Actually, there is still a chance to make a transformation now, but Nagasawa-kun, or rather your company, no longer has the courage, right?"

When it came to the collaboration with Mitsubishi, Wei Lai didn't value the profits from the sales of over 100,000 vehicles that year. Instead, he focused more on the technological breakthroughs that the collaboration would bring, especially in hybrid technology, which was Wei Lai's biggest weakness.

However, after his suggestion to Nagasawa Hiroshi was rejected, he stopped paying attention to Mitsubishi. If he couldn't get the technology, there was no need to continue playing along. From then on, Mitsubishi became a supporting player in the Weilai Group, even less so than BMW MINI in terms of resources.

Although Germans are also very focused on technology, they clearly understand the principle of exchanging technology for market share more deeply. BMW, having also cooperated with Wei Lai for many years, is able to understand Tan Jincheng's intentions.

"Do you think that's possible? Let's get down to business."

Nagasawa Yu gave a wry smile. In fact, Tan Jincheng's words were not without reason. Just look at the popularity of the Hongtu X5. If Mitsubishi were to quickly launch a range-extended electric vehicle through Weilai's channels, its sales would definitely see a qualitative increase.

Compared to the fierce competition in the pure electric vehicle market, the hybrid market is not as competitive. If we don't try to steal market share from Wynn and BYD, we have a good chance of gaining a certain market share.

"Alright, then how do you intend to handle this?"

Tan Jincheng laughed too. Actually, what he just said was just a joke. Regardless of whether Mitsubishi transforms or not, it is no longer in Wei Lai's plans. The title of joint venture is no longer of any use to Wei Lai.

Mitsubishi has already planned to withdraw from the domestic market, and naturally has a complete plan for the withdrawal process, so Tan Jincheng doesn't need to worry about that.

The first step is naturally to deal with the remaining vehicles and inventory. There's not much to say about this; it's simply a matter of price reductions and big promotions. Changze Yu's solution is to significantly reduce the prices of unsold inventory vehicles. For example, the Outlander's terminal price is planned to be reduced to around 12 yuan, in order to quickly clear the existing inventory.

The spare parts inventory is used partly for the after-sales system, and the remainder is allocated by Weilai Group to other brands.

"Of course, that's no problem. We can promise to provide existing car owners with at least 10 years of parts supply and repair services to ensure the quality of our services."

In terms of after-sales service, Weilai has put a lot of effort into it. According to Tan Jincheng's consumer philosophy, cars are mechanical products, and no matter how great the model is, they will have problems of all sizes. Weilai's cars are naturally not without any problems.

As long as after-sales service is done well and consumer demands are reasonably met, even if a major accident occurs, it will not have much impact, and in fact, it can even gain some recognition in terms of crisis public relations.

The reason why Weilai has been able to increase its sales in the automotive market is not only due to the products themselves, but also because of its excellent after-sales service. Users highly approve of Weilai's after-sales service.

"Another issue is the placement of employees. I wonder what Mr. Tan's thoughts are?"

Mitsubishi has its own plan regarding employee placement, but it first needs to gain Wei Lai's approval. Employees are different from other assets. In the current environment, many companies actually have one face on the surface and another behind the scenes when it comes to employees leaving the company.

Many foreign companies have withdrawn from the market in recent years, and Tan Jincheng has seen some of them.

"How about this: we'll cover the costs for employees who can accept compensation and leave, and those who don't want to leave can transfer to the Aion factory. As for the management and R&D team, some can be merged into the Weilai Research Institute, or they can go to other subsidiaries. What do you think, Mr. Nagasawa?"

Mitsubishi currently has only one production base in China, namely the Meishan Island automobile factory with an annual production capacity of 20 vehicles. This is Tan Jincheng's home base, and setting up a factory with a capacity of only 20 vehicles is not a problem for Tan Jincheng.

Mitsubishi's withdrawal was not without warning. There were plans within the company for this factory, namely to transform it into Aion's third factory to produce Aion's pure electric vehicles. In terms of equipment disposal, some of the fuel vehicle production lines could be dismantled or upgraded to adapt to the manufacturing of new energy vehicles.

This is Mitsubishi's largest asset in Japan, so it's only natural that Wei would take over the factory.

"Thank you for your understanding, Tan. As for the distribution channels, that's fine too."

This is also easy to solve. Mitsubishi currently only has about 300 dealers nationwide. They can gradually close down or transform into 4S stores and withdraw from the network. Most of them will terminate their cooperation, and some can be converted into Aion's sales channels.

They will enjoy the same after-sales service, and this market share will be gradually absorbed through Weilai's internal channels. As for the brand and intellectual property rights, Weilai is cooperating so well that Mitsubishi, in order to exit as quickly as possible, also needs to make some concessions. Mitsubishi still holds the intellectual property rights of the models, but Weilai Group can develop its own models based on the existing platform, such as the Outlander.

Regarding trademark rights, after the joint venture is dissolved, Mitsubishi brand passenger vehicles will cease to be used in the ZG market, and Mitsubishi will completely withdraw from the domestic fuel vehicle market, retaining only some commercial vehicles and import business.

In addition to these, Mitsubishi also has a piece of land in Xiangcheng. Considering its superior geographical location, Weilai also decided to acquire it, and part of the land will be used for Weilai's new energy industry chain support.

For Weilai, the biggest benefit of Mitsubishi's withdrawal is the increase in Aion's production capacity. Eleven months later, the sales volume of the entire Aion series this year will reach 12 units, making it imperative to increase production capacity.

The Aion S is the main model for ride-hailing services, while the Aion Y already has a certain sales base in the consumer market. After acquiring the Mitsubishi factory, production capacity can be guaranteed, and supply chain costs can also be optimized.

With an agreement reached with Tan Jincheng, Mitsubishi's withdrawal is only a matter of time.

On the eighth day of the eleventh lunar month, the second Saturday of December, Mitsubishi announced its exit plan, officially ending its gasoline-powered vehicle business in China. At the same time, its inventory models quietly began to be heavily discounted and promoted.

"Wei Lai expressed his deep regret over Mitsubishi's withdrawal. On behalf of our partner company, we would do everything in our power to help resolve the issues surrounding Mitsubishi's withdrawal, handle the aftermath properly, and ensure the interests of car owners, employees, and dealers."

When Mitsubishi officially announced its withdrawal, Tan Jincheng immediately expressed his opinion on social media, saying that Mitsubishi, once a king of its time and a major contributor to the development of the domestic automobile industry, ultimately could not escape the tide of time.

"Back then, almost all domestically produced cars used Mitsubishi engines, and Mitsubishi engines were a key focus of domestic car marketing. What a pity."

When the first Yuechi A1 was launched, it was advertised as being equipped with Mitsubishi's latest engine, which was one of the main reasons why the Yuechi A1 quickly opened up the market. For Yuechi A1, Mitsubishi is like a microcosm of an era.

"Let the Aion team take over the Mitsubishi factory. You can assist them with the specifics."

Changze Yu will stay in Ningbo for a period of time to cooperate with Wei Lai's work.

In December, special events saw an explosive increase, with some cities experiencing severe outbreaks. For example, BYD's factory in Chang'an was affected in terms of production.

Cases are also increasing in Zhejiang Province, but the situation in Ningbo is relatively stable due to effective control measures. The factory in Weilai has not been greatly affected, but Tan Jincheng still dares not be careless.

In his previous life, when he encountered this situation, he only needed to worry about his family and he wasn't short of money. At worst, he could just stay at home and not go out. But now it's different; the factory's production cannot stop for a moment.

Fortunately, after Li Xiang returned to the group company, he relieved a lot of pressure on Tan Jincheng.

"Okay, headquarters will cooperate with them."

With sales exceeding 100,000 units, the Aion series has already attracted enough market attention and even has the potential to become an independent subsidiary like Yuechi Auto. However, Weilai currently has no such plans.

Although sales have increased significantly, the B-end ride-hailing market accounts for 50% of sales. Once the B-end market becomes saturated and the Aion series faces difficulties in transformation, the subsidiary will face great difficulties and will need to undergo another major adjustment.

Although there are internal voices calling for the Aion series to become independent, Tan Jincheng has no such plans.

Due to the removal of the app from app stores, Didi's market share shrank rapidly, dropping from 90% to 70%, while smaller platforms such as Gaode, T3, Caocao, and Meituan saw their market share increase.

Compared to the overall market penetration rate of 20% for new energy vehicles, the penetration rate of new energy vehicles in the ride-hailing market has reached as high as 80%. Aegis alone provides as many as 60,000 customized vehicles for the ride-hailing market each year.

With nearly 3500 million registered drivers and only 200 million compliant drivers, the ride-hailing market still has huge potential. Aion, which holds nearly 70% of the ride-hailing market share, has been planning to increase its production capacity for quite some time.

“Mitsubishi’s decision to withdraw is their own business. The factory can sign an agreement with them first and carry out initial renovations.”

The renovation of the Lifan factory is all for the OEM production of the Aion series. According to market analysis and order inventory, the sales volume of the Aion series is expected to reach more than 20 units next year.

A 100% growth rate requires ensuring that production capacity keeps up. Mitsubishi's decision to withdraw at this time may be due to its recognition of the production capacity requirements of the Aion series. Compared to building a new factory, the transformation is obviously much faster.

Both parties get what they need, and can reach an agreement on the withdrawal more quickly.

Mitsubishi's withdrawal only caused a small ripple on the internet. This was based on the fact that Wei Lai and Tan Jincheng had already done so. Sales figures of tens of thousands or hundreds of thousands of vehicles a year are quite crucial for a small to medium-sized car company.

However, for a major car-consuming country with total annual sales exceeding 2500 million vehicles, this is just a negligible, cold figure. Apart from the consumers and related stakeholders, no one pays much attention to this topic.

What everyone is really interested in is the recent dispute between Weilai and Tesla over open charging technology.

News from Europe indicates that Tesla has sued Wynn, alleging that Wynn "monopolizes charging standards" and requesting an antitrust investigation. They have also launched adapters, offering them free to car owners in an attempt to delay Wynn's open charging rollout.

"The lawsuit itself is not the point. We strongly condemn Tesla's abuse of its market dominance and will actively defend ourselves. This is destined to be a meaningless lawsuit, and Tesla's lawsuit is doomed to fail."

On Twitter, WILRA's overseas branch also gave Tesla the fiercest response. In addition to commenting on the lawsuit itself, WILRA's overseas branch also announced cooperation with BMW and Ford to establish an open charging alliance ecosystem in Europe and even North America.

Commercially, it offers preferential terms to North American automakers such as Ford and GM, such as free access to battery swapping stations, in exchange for their public support of the compatibility of the charging system. In addition, it has announced cooperation with several well-known third-party companies engaged in battery swapping operations to launch an "anti-Tesla charging pack" that is compatible with the charging system and has no power limitations.

Mercedes-Benz is also interested in joining this business alliance. In addition, in Europe, in areas with a high concentration of Tesla Superchargers, it has launched targeted price reduction policies, such as free charging for the first year, to attract Tesla owners to switch.

Tesla dares to implement the OTA (Over-The-Air) update ban policy in China, but they wouldn't dare to be so bold in Europe. Apple, Microsoft, and other companies have been fined quite a few times.

In addition to these, Yu Liguo, the head of Weilai's overseas branch, also actively lobbied the EU to exclude Tesla's Supercharger from the subsidy list, arguing that it would not allow full-power charging.

Having come from a background within the system and having served as a high-ranking leader, Yu Liguo has extensive experience in dealing with government agencies.

Musk initiated the lawsuit largely out of necessity. Tesla's plan to open up its charging network was originally expected to be completed by the end of 2022, with the network gradually opening up starting in 2023.

The fact that Tesla's plan was a year later than the one it had been developing has made its response seem somewhat chaotic and disorganized. The ban on OTA access in China is actually a major blunder in the midst of this panic. Apple dared to do the same back then because of the market environment at the time.

In today's public opinion environment, apart from Tesla owners, other consumers will not tolerate you. Recently, Tesla has been heavily criticized in China, and the news has also spread to Europe.

For Tesla, which has already made ample preparations, there is currently no good countermeasure other than trying to win over more business partners. Apart from competing in strength, the only thing the two sides can do is litigate.

In business competition, lawsuits often play a very important role. Whether a winner is determined is not important; what is important is to delay the opponent's time. HTC, which was once invincible in the mobile phone market, was dragged down step by step by lawsuits.

Of course, HTC brought this upon themselves; they didn't value their patented technology, so they can't blame their competitors for stopping them.

"Before founding the Weilai Group, I never imagined we would go through an antitrust lawsuit. I am very grateful to Mr. Musk for giving us exposure all over the world."

The dispute between the two sides over charging standards has escalated to the point of litigation and has entered a heated phase. Tan Jincheng no longer avoids the topic and has publicly responded to this business competition.

Which companies worldwide have undergone antitrust adjustments?

These include multinational giants like Microsoft, Apple, and Samsung; well-known companies in the automotive industry such as Toyota, BMW, and Daimler; and even domestic Chinese companies that have undergone antitrust investigations.

There are companies like Ali, Tencent, Didi, ByteDance, and Meituan, but most of them are concentrated in the internet industry, and in China, ByteDance is probably the most well-known in the world.

In the manufacturing sector, there are not many domestic companies that have undergone antitrust investigations worldwide, and there are none in the automotive industry at all; this is the first time for Wei Lai.

Although Tan Jincheng responded to Tesla's lawsuit with a joking attitude, it was also a source of pride.

"The best defense is offense. Let's stop holding back and go all out."

In responding to the lawsuit with Tesla, Tan Jincheng also conveyed his attitude towards Liguo.

(End of this chapter)