2003: Starting with Foreign Trade

Chapter 1027 The Troubles of Happiness (Seeking Monthly Tickets)
P.S.: Sorry, I forgot to set the time.

146.93 million vehicles, 66.43 vehicles, 85.25% year-on-year growth in new energy vehicles, and 26.45% growth in total sales – these are some of the figures Weilai delivered in 2021.

Weilai's 85% growth rate in new energy vehicles is not particularly remarkable this year. Many emerging forces, including BYD and Tesla, have growth rates exceeding 100%. However, the size of these companies with growth rates exceeding 100% is completely disproportionate to Weilai's.

Nationwide, only four car companies have achieved sales exceeding one million units and growth rates exceeding 20%: Changan, SAIC-GM-Wuling, Great Wall, and Weilai.

Among the four car companies, and even among car companies nationwide, the growth rate is the most impressive. Changan's sales increase is due to the hot sales of popular models such as the CS75. Wuling's sales are driven by the MINI EV, while Great Wall's sales are driven by price reductions and promotions, as well as the ORA series in the first half of the year.

As for Weilai's growth, it goes without saying that the growth points are all high-priced products, so the financial report has become the most watched product by the capital market in 2021.

After January 1st each year, the Shanghai and Shenzhen Stock Exchanges open the annual report reservation channel. Listed companies are required to submit their reservation disclosure time before the end of January. Among them, it is stipulated that if the year-on-year change in net profit exceeds 50%, a forecast must be issued before January 31st.

汽车整车企业的财报预披多数集中在3月25日至4月15之间，仅有江淮汽车一家因审计流程简化而选择在1月29日披露。

"January 29th is the 1th day of the twelfth lunar month. What a lucky date!"

At the New Year's gathering, Tan Jincheng met many peers in the Anhui Province's automotive industry and gained some understanding of JAC's performance in 2021. JAC's main source of revenue is still commercial vehicles, and its light truck market share ranks second in the industry.

"I don't know how they prepare their financial statements, but I guess they'll use them to turn a profit and boost the stock price."

Commercial vehicles account for 50% of JAC's market share, while passenger vehicles account for only 35% of its revenue, with the remaining 15% coming from OEM manufacturing for Wenjie and other sources.

JAC Motors performed reasonably well in 2021. Although it was dragged down by the decline in the commercial vehicle market, the growth rate of passenger vehicles was still acceptable, and the joint venture project with Volkswagen also enhanced its brand influence.

However, its earning capacity is still very poor. JAC's income mainly comes from government subsidies. According to information Tan Jincheng learned, JAC received approximately 20 billion yuan in subsidies in 2021.

With the commissioning of Wenjie's self-built factory, the OEM business gradually became unsustainable. Without a blockbuster model, the problem was still very serious.

As of December 31, 2021, JAC's stock price had increased by more than 87% throughout the year, but its market value was only 315.4 billion yuan. As a leading new energy vehicle manufacturer that is clearly supported by Anhui Province's 12th Five-Year Plan, its market value of less than 50 billion US dollars is really hard to believe.

The continuous losses in its financial statements have caused considerable trouble for Jianghuai. It is impossible for such a large company to be delisted, so it is reasonable to use financial means to turn losses into profits and disclose the annual report in advance.

However, the choice of this date left Tan Jincheng speechless.

This year, Lunar New Year's Eve falls on the 29th day of the twelfth lunar month, and the 27th day of the twelfth lunar month is a Saturday. We've already entered the New Year's rhythm in a real sense, so who will still pay attention to your annual report?

Weilai is a large group, and the annual report is a very complicated process. Although the net profit growth rate is obvious, it is no longer possible to set the pre-disclosure time earlier as before.

As one of the industry leaders, we can only disclose information according to the normal timeframe, which is mid-March.

However, before the Chinese New Year, Weilai had already entered the statistical stage of annual reports, and Yuechi Automobile was the first to submit its annual report to its parent company.

As the most mature automobile subsidiary of Weilai Group, Yuechi Automobile is able to operate independently not only because its sales volume supports its independence, but also because its revenue is very impressive.

"The gross profit margin of the entire Yuechi series can be maintained at 17%, so gasoline cars are still very profitable."

When Wang Fengying personally submitted Yuechi Auto's financial report, Tan Jincheng couldn't help but sigh as he reviewed it. He remarked that competition in the gasoline-powered vehicle market was now extremely fierce, with price reductions and promotions becoming commonplace.

As a result, Yuechi Auto has been able to maintain a gross profit margin of 17% overall, while the Tank series, which has seen significant growth this year, has maintained a gross profit margin of 20% to 25% for a long time.

"Yes, it's such a good business opportunity, what a pity."

Wang Fengying was among the earliest people in the automotive industry, and she felt the changes in the market most deeply. No matter what industry it is, any system with a mature industrial chain is very profitable, especially the companies that occupy the top positions in the industry, which live a very comfortable life.

"That's right. In 2021, the Yuechi series generated 864 billion yuan in revenue for Yuechi Auto. How could we possibly give up on such a revenue?"

In 2021, the Yuechi series generated approximately RMB 864 billion in revenue, the Tank series generated approximately RMB 120 billion in revenue, and the Yangzi pickup truck business, along with other businesses including parts, generated a total of RMB 35.2 billion in revenue.

With revenue of 1019.2 billion yuan, Yuechi Auto is undoubtedly a subsidiary with revenue of over 100 billion yuan. If the additional revenue from the brand is taken into account, Yuechi Auto's actual revenue would be even higher. However, these are not fully reflected in the financial report, and Yuechi Auto would not be able to disclose its financial report in such detail.

Even if the business of gasoline-powered vehicles declines year by year, it would be easy for Yuechi Auto to maintain revenue of over 600 billion yuan.

With a gross profit margin of 17.23%, a gross profit of 175.6 billion yuan, and a net profit margin of 55 billion yuan, the net profit margin is less than 6%. However, for a car company whose main business is the mass market, net profit is not that important.

"Currently, we have three subsidiaries with revenues exceeding 100 billion yuan. However, the importance of Yuechi Auto's revenue is declining year by year, which has greatly alleviated the pressure on our transformation."

Wang Fengying explained with a smile that before 2021, as the group's vice president and general manager of Yuechi Auto, she had to balance the interests of the group and its subsidiaries, ensuring stable revenue while also promoting the electrification of Yuechi Auto.

Now, the sales ratio of new energy vehicles to fuel vehicles is close to 50/50, and the group is no longer so dependent on Yuechi Auto's business, so Wang Fengying's work pressure has been greatly reduced.

The total revenue of Weilai Group can be roughly divided into three parts: Weilai Automobile, Weilai New Energy and others. Other businesses include component business other than power batteries, financial insurance, investment, etc.

Weilai Auto's revenue includes both Yuechi Auto and Weilai Auto. Zhidou Auto's financial statements have not yet been consolidated, but Zhidou Auto's revenue is too small to have a significant impact on Weilai's overall financial statements.

Unlike Yuechi Automobile's annual revenue of 1019.2 billion yuan, Weilai Automobile's revenue this year is quite impressive.

In the traditional gasoline vehicle business, making a lot of money is taken for granted by the market, but the question of whether new energy vehicles are profitable has always been a topic of discussion within the industry.

Major automakers all claim that new energy vehicles are not profitable and rely on subsidies, and most consumers and some investors seem to agree with this. However, behind the lack of profitability is the continuous rise in the stock price of Tesla and Weilai Group.

This has led some consumers and investors to believe that sales volume is only one factor driving market capitalization growth, and that it would be more appropriate to call it an auto finance company rather than an auto company.

This is most evident in companies like Tesla and Weilai Group, which are known for their capital operations.

However, this is not the case in reality. While there are certainly strategic factors involved in promoting an industry, the automotive industry is highly market-driven, and its biggest source of profit is still vehicle sales. If you don't make money, why sell cars?
Compared with traditional fuel vehicles, new energy vehicles have more diverse profit models. Although the industry average gross profit margin for vehicle sales is lower than that of fuel vehicles, electric vehicles are more expensive.

After-sales services include battery support, software support, energy ecosystem support, and innovative services.

To put it simply, consumers can probably understand which is more profitable: gasoline-powered cars are more like mechanical products, while new energy vehicles can be called electronic products.

Is it even necessary to elaborate on which is more profitable: mechanical products or electronic products targeting the C-end consumer market?
"Mr. Wang went first."

While discussing Yuechi's financial report with Wang Fengying, Li Xiang also arrived. In his first year in office, Li Xiang was reporting the group's financial report to Tan Jincheng for the first time, but today he was not reporting to Tan Jincheng as the group's CEO.

As the group's CEO, Li Xiang is in charge of all the group's operations. However, the group's senior vice presidents have different areas of responsibility. For example, Wang Fengying is in charge of Yuechi Auto, while Li Xiang is in charge of Weilai Auto.

Tan Jincheng, as the president, does not actually manage any business operations. Instead, he plays the role of strategic positioning and product innovator. His daily work includes formulating the company's long-term strategy and participating in technological innovation.

The department directly managed by Tan Jincheng is actually the Weilai Research Institute. Currently, the Weilai Research Institute has formed three major research institutes: automobiles, batteries, and electronics. Some important technical solutions require Tan Jincheng's personal approval.

In society, Tan Jincheng, with the fact that Weilai Automobile has a localization rate of over 90%, promotes the independent control of the new energy industry and plays the role of a spokesperson for intelligent manufacturing. He is also one of Weilai's biggest IPs.

Tan Jincheng, who enjoys immense popularity, is different from other car company founders in that he has always used the newest car his company was promoting in any public setting since he started making cars.

In the private travel photos of Tan Jincheng, he was not seen riding in a Maybach like others. Throughout 2021, Tan Jincheng was either traveling in a Weilai L1 or an ES8, and he was even photographed commuting to and from get off work in a Xingtu S01.

With his immense popularity and his long-term habit of driving his own cars, according to Morgan Stanley's research, at least 40% of Weilai car owners chose to buy their vehicles because of Tan Jincheng's personal charm. Although not as high-profile as Elon Musk, he is still unique among domestic car companies.

Tan Jincheng, with his excellent personal brand image, has a significant impact on the bosses of traditional industries. This is a rare occurrence in traditional manufacturing, where consumers often don't even know who the owners of most everyday consumer goods are.

Although he did not come from a technical background, Tan Jincheng is still able to control the market very well thanks to decades of accumulated knowledge, continuous learning, and a keen sense of market trends.

Take solid-state batteries, which have been touted by various companies in the past two years, for example. They all claim that they will be able to mass-produce them in a long time. Li Bing even released a solid-state battery car in January 2021, claiming that it would be delivered in the fourth quarter of 2022.

In reality, this is nothing more than a publicity stunt by Li Bing, even more exaggerated than Yu Dazui's pie-in-the-sky intelligent driving claims. With their technological capabilities, how could they possibly achieve the first mass production of all-solid-state batteries? Producing a few prototypes would be considered a success. According to the technical assessment of the Weilai Research Institute, the timeframe for truly achieving mass production of all-solid-state batteries is at least after 2026, meaning at least another five years.

"Mr. Wang has delivered a satisfactory result, but I wonder about you, Mr. Li?"

Today's meeting is a small-scale meeting of senior management. Zhang Xuhui will also be coming over later. The main focus will be on reporting financial statements. Zhang Xuhui is also staying in Ningbo for the Chinese New Year this year, so he's taking advantage of the last few days before the holiday to report on his work.

Li Xiang greeted Wang Fengying with a smile: "Yuechic Auto's performance this year has indeed been very good, somewhat beyond our expectations."

The two are not directly subordinate to each other; both report directly to Tan Jincheng and are considered to be at the same level. The success of Yuechi Auto's Galaxy P1 poses a significant threat to Li Xiang's desire to vigorously promote range-extended electric vehicles.

Regardless of the company, once mature hybrid technology is available, range extenders will only become a money-making tool and have no chance of taking the lead. The advantages and disadvantages of the two and their long-term prospects are self-evident.

"No, Yuechi can only do its best to ensure smooth operation. The real surprise will come from Weilai Auto."

Compared to 2020, Yuechi Auto's overall revenue growth in 2021 was not very significant, remaining at the industry average level. The main growth driver came from the Tank series.

In contrast, Weilai Auto, whose sales have exploded this year, is much more interesting.

First, there's the Aion series, which has a stable output. As the king of ride-hailing with a market share of nearly 70%, the Aion series has a very high level of social discussion. However, the excessive proportion of B-end vehicles has seriously affected the image of the C-end consumer market, resulting in mixed reviews overall.

However, the Aion team did make efforts, such as associating with popular models from the last century, like the Santana and Hyundai Elantra, in their marketing to make Aion's image accepted by the C-end consumer market.

In addition, in terms of design and development, the Aion series also plans to launch models that are different from ride-hailing vehicles. There are still significant differences between B-end models and C-end models in terms of the treatment of drivers and passengers.

In addition, when dealing with potential C-end consumers, the Aion brand requires its store staff not to deceive consumers for the sake of sales targets, such as selling ride-hailing vehicles to ordinary consumers. This behavior is absolutely not allowed.

Therefore, the offline and online teams of the Aion series, which are targeting the C-end market, have no KPI assessments. All this effort is simply to optimize the reputation of the Aion series and reverse its image.

Although the process was difficult, thanks to the efforts of the Aion team, the market share in the consumer market has indeed increased to some extent.

The Aion series, which has been consistently delivering revenue, contributed 172.65 billion yuan to Weilai Auto in 2021. Meanwhile, the Exeed S01, which has been on the market for less than a year this year, has brought Weilai 208 billion yuan in revenue with just this one model.

“A very impressive result. This year’s outstanding internal team is going to be a tough one for you.”

In just nine months since its launch, the Exeed S01 has generated 208 billion yuan in revenue. During the production ramp-up phase, the gross profit margin per vehicle has already reached 12%, and the net profit margin has exceeded 3%. With subsequent battery price reductions and supply chain optimization, the gross profit margin of the Exeed S01 could increase to 15%, and the net profit margin could reach 8%.

This series of data and future prospects are phenomenal for any company, and could even stand alone as a new force brand, easily claiming the title of the top new force brand.

However, within Weilai, it is just a project team, and currently the youngest project team in Weilai.

"That's right, the Exeed S01 is performing so well that it's actually putting us in a difficult position."

Li Xiang also had a wry smile on his face. The Exeed S01 is undoubtedly the king of domestic pure electric vehicles this year, without exception. Not to mention companies like Geely and Great Wall with slow progress in electrification, even BYD is extremely envious.

Even by BYD standards, the Exeed S01 would definitely be the most eye-catching car this year, but who can blame them when there's another oddball inside the company?

That is the Weilai L1, which also only has one model. This range-extended electric vehicle, which makes BBA (BMW, Mercedes-Benz, Audi) unable to raise its head, is not only the sales champion of the Weilai brand, but also the profit king of Weilai Automobile.

The L1 provided Weilai Auto with 270.1 billion yuan in revenue throughout the year, with an average price of about 29.8 yuan per vehicle. In terms of gross profit margin, Weilai L1 was as high as 21.3%, far surpassing many other emerging car manufacturers.

"Haha, this will give you a headache."

Every year, Weilai Group selects outstanding employees and teams. During the era of gasoline-powered vehicles, the Yuechi team held the top spot, which led to the Yuechi team being arrogant and domineering for a considerable period of time.

At that time, Wei Lai's team had no temper. Their sales and profits were not as good as others, and they had huge investments. Rumors such as "you are being supported by us" were circulating in the company.

The decision to separate was due to the size of Yuechi Auto, as well as signs of internal discord within the company.

Now things are much better. Weilai Auto has completely stood up. Compared to the declining sales of gasoline-powered vehicles, the two are now on par in terms of sales volume alone.

If we go by Tan Jincheng's idea, this year's outstanding team should be the Exeed S01 project team. In nine months, they managed to achieve 208 billion yuan in revenue. Not to mention the sales of tens of thousands of vehicles, the strategic insertion into the mass market alone is immeasurable.

However, the L1 also performed well. As one of WELI's high-end series, it maximizes profits with the lowest cost, and it will remain WELI's focus in the hybrid market in 2022.

It all depends on what Li Xiang decides.

For Li Xiang, selecting outstanding teams is a happy dilemma. In addition to the excellent performance of Exeed and Weilai L series, the main brand's E series is also very impressive.

As a leading exporter of domestically produced new energy vehicles, the company sold 22.13 vehicles (excluding L1 models), generating 613.9 billion yuan in revenue for Weilai, accounting for 48.55% of Weilai Auto's total revenue of 1264.5 billion yuan.

"In terms of strategic importance, the E series, L series, and Exeed are all different, but it's hard to say which one is the most important. In terms of performance, all three are excellent, so President Li should indeed have a headache."

Wang Fengying, who was listening in, also joked that, in fact, the Aion series performed quite well. Although the reputation was highly polarized, the Aion series was the biggest asset of Weilai in the B-end market.

Apart from a small portion of official vehicles, the majority of Weilai's B-end clients are the ride-hailing services provided by the Aion team.

2021 was also a year of different significance for the Aion team. After Zhang Yong, CEO of Weilai Group and a master in the commercial vehicle field, who was directly in charge of the Aion series, left his post, the Aion series was still able to maintain its market share.

For this reason alone, the Aion series deserves high praise. It's simply not inferior to other teams.

Li Xiang smiled and said, "We'll talk about that later. Boss, what do you think of this financial report? Is there anything that needs improvement for 2022?"

Tan Jincheng pointed to the average selling price of a single bicycle: "While ensuring sales volume and profitability, let's bring this down a bit more in 2022."

Zhidou is not included in the statistics, and the sales of Xinghe P1 are also removed. The actual total sales of Weilai Auto this year are 55.95 vehicles, which is lower than BYD's total sales of 59.4 vehicles for the whole year.

According to some detailed rankings, BYD was the number one seller of new energy vehicles in 2021, and some rankings also show this. However, consumers don't recognize this at all. Even though BYD is a smaller brand, it still has some pride and is too embarrassed to promote itself.

At the New Year's gathering, Tan Jincheng also learned from the boatman that Dizi's revenue from its automobile business in 2021 was approximately 1200 billion yuan, and its revenue from its new energy vehicle business was approximately 800 billion yuan.

With 59.4 new energy vehicles sold, the average price per vehicle was approximately 13.46 yuan.

As for the Weilai, although the average selling price per vehicle has dropped significantly due to the increased sales of the Exeed and Aion series, it still has an average selling price of 22.6 yuan. In Tan Jincheng's opinion, this price is still a bit too high.

“Our prices are actually not very consumer-friendly. The price war will continue in the future, and it will be difficult to increase revenue if the average selling price per vehicle remains the same. Therefore, it is still necessary to optimize the prices.”

In terms of price, the main brand is not very friendly to the market at present. Since it is touting the equality and accessibility of technology, then Weilai needs to make the price of its models in the same class more competitive.

“Our industrial chain has been significantly optimized, and we should indeed offer consumers greater discounts.”

Wang Fengying also agrees with this point. When she was at Great Wall Motors, she was in charge of the Volkswagen brand, and the same applies to Yuechi Auto.

"What Weilai wants is brand premiumization, not price premiumization."

Apple's strategy is pretty much the same. In the early stages, Apple maintained high-end pricing, but after a price increase, its market share plummeted. After that, the price was maintained at a relatively reasonable range, and it gradually regained market share.

Weilai has already established the image of a high-end domestic brand. Now, what it needs to do is not to leave consumers with the impression of being "expensive." The public opinion that domestic brands are becoming more and more expensive and that they are exploiting consumers is becoming rampant. Weilai cannot give its competitors any reason to attack it.

Consumers' tolerance for any brand is based on the premise that the price matches the quality.

"Okay, we will come up with a new solution as soon as possible."

(End of this chapter)