2003: Starting with Foreign Trade

Chapter 1032 New Car Preview
P.S.: It's the first day of August, so I'm asking for a guaranteed monthly vote. Guaranteed monthly votes at the beginning of the month are quite important for traffic.

In addition to re-signing a major battery order with BMW, Tan Jincheng also wants to achieve as much technical cooperation as possible with BMW.

For more than a decade, Weilai has been accumulating technical expertise. In addition to focusing on its own research and development, Weilai is unwilling to miss any opportunity for cooperation, especially with top manufacturers.

In the field of hybrid technology, for example, Weilai once tried to cooperate with BYD. Although the two parties did not ultimately follow the same technical route and the cooperation did not yield any results, they still accumulated some experience in the process.

Technological cooperation is different from other forms of cooperation. It doesn't necessarily have to produce something. Even if it fails, we can learn a lot of lessons and provide valuable experience for future technological research and development.

Although BBA's electrification process is slow, it doesn't mean their technology is inferior. Back in the day, Jinshidai's battery standards achieved a qualitative leap through BMW.

Take BMW Brilliance as an example. This domestic automaker, which almost won by default, obtained the license for BMW's N20 and CE16 engine technologies through cooperation, achieving a 30% performance improvement in its own brand engines.

Tan Jincheng spent three days in Zhangjiagang, mainly focusing on the construction and production issues of the Weichi Power factory.

"Currently, our annual production capacity is likely to be stable at 4.8 vehicles. If BMW wants to achieve full production capacity ahead of schedule, it will have to spend a lot of money this year."

Fu Yao has returned to BMW's headquarters in China. The person in charge of receiving Tan Jincheng has been replaced by Qin Zhi. With Li Xiang taking over as CEO, Qin Zhi, an old partner who once worked with Li Xiang, has also seen his status within Weilai rise to a certain extent.

Although they were assigned to work at Weichi Power, Qin Zhi and the others remained affiliated with Weichi Group, and could return to work at Weichi at any time if needed.

"If they want to reach full production ahead of schedule, then let them invest. We can take this opportunity to make more money off them."

Since its establishment, Weichi Power has not done much publicity at the company brand level. It is considered a small-scale automobile company in China, which can be seen from its revenue. In the 2021 annual report, Weichi Power's revenue barely exceeded 20 billion yuan.

A company with an annual revenue of 20 billion yuan has a management team that can be described as luxurious, which is somewhat of a waste of talent. Qin Zhi and others are not particularly busy, and they usually participate in some of the decision-making of Weilai Automobile.

Currently, Weichi Power's business includes automobile R&D, production, sales, parts business, after-sales service, etc., including internal combustion engine vehicles. It is impossible to waste the 4.8-vehicle production capacity. In the case of insufficient new energy production capacity, we will also produce and sell internal combustion engine vehicles.

One of the core tasks of Wychi Power is to jointly develop a new generation of pure electric platform. This platform supports the production of both MINI electric vehicles and Wychi's own brand models. For example, the currently sold MINI Cooper pure electric version uses the Spotlight EV pure electric platform. The chassis design and the layout of the three-electric system incorporate the engineering experience of BMW and Wychi in the field of electrification.

The Spotlight EV pure electric platform not only optimizes vehicle space utilization and handling performance, but also supports future upgrades to 800V high-voltage fast charging technology, aligning with the technical roadmap of BMW's i series models.

BMW's fifth-generation electric drive system can also be indirectly applied to future models through the joint venture, improving power output efficiency and range performance.

"Haha, that's true. BMW is very enthusiastic right now, but I don't know when their enthusiasm will dissipate. Opportunities like this are rare."

Qin Zhi laughed heartily. The BMW technology obtained through Weichi Power was not a simple technology transplant. It covered a systematic range of aspects, from the underlying architecture to the manufacturing process, from the supply chain to brand operation. There was something for Weichi to learn from all of this.

For example, the DHT hybrid technology of the Galaxy P1 borrows to some extent from BMW's P2 hybrid architecture, resulting in a significant reduction in overall fuel consumption. Simply put, in some aspects, Galaxy has taken BMW as its teacher, learning from BMW's advanced experience through participation in research and development and operation.

"Indeed, such opportunities are rare."

Large corporations frequently adjust their strategies, which is normal business adjustment. However, adjustments to the strategies of joint ventures are much more cautious. Although joint ventures operate independently, their management and R&D personnel come from both companies, so they will definitely hold back some technology.

This is the norm in cooperation. Unless the joint venture truly contains huge profits and both parties can reach a consensus on the distribution of profits, it will not be possible to encourage a significant investment in the joint venture project again.

MINI's sales have become a fulcrum for BMW's accelerated electrification, while Weilai can also use BMW's demand to obtain the market share it wants in power batteries. Both parties have achieved the strategic goal of upgrading their cooperation again.

This is a rare opportunity, and the management of Weichi Power has an obligation to seize it.

Speaking of sales figures, it wasn't just the 8000 pure electric vehicles sold last year that changed BMW's mind; the main reason was also the strong sales of MINI in January of this year.

January is a mini-peak season before the Chinese New Year. In the traditional market, January's sales account for about 7% of the annual sales. January's sales often reflect how well a company has achieved its annual sales targets.

MINI sold 3150 vehicles in China in January, including 900 pure electric vehicles. The penetration rate of new energy vehicles has further increased, which has boosted MINI's overall sales.

Based on MINI's sales figures in January, the company expects to sell around 4.5 MINIs in China this year, with pure electric models accounting for between 1.2 and 1.4 units.

This is already close to the existing annual production capacity of the Weichi plant, far exceeding BMW's expectations.

"You should pay attention to Tesla in terms of sales. The competition between MINI and Tesla is quite obvious."

A striking statistic is that in 2021, female Tesla users accounted for over 30% of the Model 3 users, and the Model Y users accounted for as high as 40% due to their family-oriented nature. These figures are far higher than the average of 26.62% for female users of new energy vehicles.

Tesla is still very popular with female users, similar to the early days of Apple iPhones.

Regardless of MINI's marketing strategy, its main user base still relies on female consumers. In China, another brand that focuses on female consumers is ORA, whose female users account for as much as 70% to 80%.

Through Wei Lai's marketing efforts, 60% of MINI's user base was female in 2021.

Tesla, MINI, and ORA are the three most popular brands among female consumers and are also direct competitors. In addition, A00-class sedans are also popular among female consumers, such as the Wuling Hongguang MINI EV and Zhidou, which have a high percentage of female users.

In the female consumer market, A00-class sedans and ORA have a price advantage, Tesla has brand recognition, and MINI has accumulated its brand image over a long period of time. Relatively speaking, MINI is at a disadvantage, after all, the reputation of being a "mistress's car" cannot be eliminated in the short term.

Besides rebranding, MINI also needs to make a lot of efforts in terms of appearance and performance. For female users, appearance is the most important factor.

After the sales slump in February due to the Spring Festival, the car market was unusually bustling in March.

The first thing to be affected was that Wei Lai unexpectedly released its 2021 annual financial report on March 1.

March is typically the first month of the year for automakers to tease and launch new models, and Wei Lai unexpectedly ignited the automotive industry in 2022.

"Total revenue of 3587.3 billion yuan and net profit of 311.66 billion yuan—this financial report is outstanding. There are very few car companies that make so much money."

This is only what is shown in Weilai's financial report. In reality, Weilai has many subsidiaries, sub-subsidiaries, and invested companies that have not been consolidated into the financial statements. Weilai's performance in 2022 was far more complex than what is shown in the financial report.

"This revenue is already enough to put them in the top ten among private enterprises, right?"

"It should be about the same."

According to the revenue of the top ten private enterprises in 2020, the tenth-ranked enterprise last year had a revenue of 3300 billion yuan. The threshold for the top ten in 2021 may change, but Weilai should be qualified to enter the top ten private enterprises in terms of revenue.

"No doubt about it, it's a sure thing. If a company with revenue approaching 3600 billion yuan can't even make it into the top ten private companies, that would be too exaggerated."

Geely Holding ranked tenth in revenue among private companies in 2020, but based on Geely Automobile's performance in 2021, their revenue should not exceed 3308 billion yuan in 2020.

It was almost inevitable that Weilai Group would replace Geely Holding as the number one private manufacturing enterprise in Zhejiang Province. If it can successfully enter the top ten private enterprises, it will be the first time that Weilai has entered this position.

Compared to Weilai Group, Geely Holding's business is more complex. In addition to automobiles and related businesses, Geely's investments cover industries such as finance, technology, education, and new materials, and even aerospace.

In contrast, Weilai is more focused on pure business. Apart from strategic investment and mergers and acquisitions, Weilai does not engage in other investment activities, which are handled by ByteDance's advertising platform. This approach ensures the group's purity.

The current special events are becoming increasingly serious, with major economic centers, including the Shanghai Stock Exchange, experiencing a large number of outbreaks. Tesla's Gigafactory was forced to shut down for ten days. The economic recovery process is slow. If a group company's business is too diversified, it is easy for changes to occur during the economic downturn.

You can tell just by looking at the increasingly abstract marketing methods of the car business under the "Comfort Guy" (a famous Chinese businessman).

By focusing on its core business, Weilai can better concentrate its resources. In any case, as long as there are no major changes in car sales, such a large company will not have too many problems. Investment matters can be left to ByteDance.

Weilai's annual report sparked enthusiasm in the automotive market, but it didn't significantly impact its stock price. After all, this reflects last year's performance, and the market is actually more focused on Weilai's Q1 2022 report in April.

"With its three major subsidiaries and the consolidated Zhidou, Weilai's revenue is expected to be at least 6000 billion yuan in 2022, as can be seen from its performance in the first quarter report."

What level is 6000 billion in revenue?
腾迅2021年度的营收预期大致在5500亿元至5600亿元之间，2020年营收4820.64亿元。    除了尉来的财报之外，三月份汽车市场讨论度最高的话题就是涨价。

The price of lithium carbonate broke through 50 yuan per ton in 2022. With the surge in raw material prices and the continued shortage of chip supply, many car companies announced price increases for their models in early March.

BYD's Dynasty series and Ocean models have all seen price increases ranging from 3000 to 6000 yuan.

Wenjie's models have increased in price by 10,000 yuan, while Xiaopeng Motors' P series, including the G3i model, has seen price increases ranging from 10,000 to 30,000 yuan, making it the brand with the largest price increases in this wave of price hikes. Even Tesla, which just announced a price reduction at the beginning of the year, has adjusted the discounts on its models, which can be considered a disguised price increase.

"There's no need to raise prices; we have advantages in the industrial chain."

There is also internal discussion within Weilai about whether to take this opportunity to raise prices. Everyone is raising prices, so following suit won't cause too much resentment. Even if prices aren't raised, adjusting discounts like Tesla does would be acceptable.

"There is really no need for that. The boss said in an interview that the new energy vehicles under Weilai would not increase in price, but he changed his mind in just a few months. It is somewhat deceiving consumers."

For entrepreneurs, telling a few small lies is perfectly normal. However, they should be more cautious when it comes to sensitive issues like price increases. Xiaomi's repeated tentative price hikes have already drawn criticism from many fans.

"Our main model, the Exeed S01, doesn't have any discounts. It would be unreasonable to raise the price again."

In January, Exeed S01 sales exceeded 20,000 units. Although February is a slow season, Exeed S01 still achieved sales of 15,200 units. In its second year on the market, Exeed S01 has completed its production ramp-up and is in its growth stage. With few competitors, Exeed S01 has achieved steady sales growth.

Raising prices now would be extremely unwise.

Based on the sales plans for January and February, the Exeed S01 is very likely to bring surprises to consumers this year, barring any major changes.

In terms of competitors, Exeed S01 dares to say that apart from the EVO 3, none of them can compete with it. However, the team that is most enthusiastic about raising prices is the L series team, while Exeed S01 only tentatively mentioned it.

“Your gross profit margin is already high enough. Price increases will indeed have a significant impact on overall revenue, but if you want to achieve your sales targets, you need to bring up the issue of price increases.”

Tan Jincheng expects the L series to sell less than 15 units this year. No one knows better than him how competitive Seres is, with the full endorsement of the Chrysanthemum brand. No matter how high the price is, there will still be a large number of people willing to buy it.

To paraphrase netizens, before Seres became a bestseller, Mr. Zhang from Xiaokang didn't even have a chance to sit at the table. After it became a bestseller, he took the seat of honor. If the L series wants to boost sales, it can't damage its reputation.

The market for range-extended electric vehicles is actually only so big. With some of the market share taken by domestic automakers and other companies entering the range-extended electric vehicle market, the competition to maintain the leading position is still very fierce.

The sales target for the L series is less than 15 units, but this sales target was set by Tan Jincheng and is not widely accepted by the L team. They believe that the sales of the L series this year will reach 20 units.

The team's achievements in 2021 boosted their confidence to an unprecedented level, and the huge bonus on New Year's Eve further motivated them.

Within Weilai, Tan Jincheng has never been stingy with rewards for teams and individuals who have made significant contributions to the company. In addition to the huge bonuses on New Year's Eve, a total of 40 people from Weilai's three major teams and Xinghe team received stock awards, ranging in value from 100 million to 300 million yuan.

Besides the success of last year, the launch of the new L series cars has made the team members very optimistic about this year's sales.

Weilai is now strictly controlling the release of new models, mainly focusing on the replacement of existing models, such as the ES and ET series. Since these models are quite mature, no new cars have been released for two years.

Upgrading older models and focusing on existing ones not only makes them more user-friendly but also helps retain existing customers.

The new car launch plan is, in principle, one model per year from the three major subsidiaries: Yuechi, Weilai, and Zhidou. Last year, Weilai launched Exeed, Yuechi launched Galaxy P1, and Zhidou launched the Rainbow series.

This year, Zhidou has no plans to launch new cars due to objective reasons. Like Exeed, Rainbow is in its growth stage, so they will sell cars first.

As for Yuechi and Weilai, their new car plans for this year are dedicated to the Tank series and the L series, respectively.

The Tank series launched the Tank 500, which was officially delivered on March 18. The Tank 300's popularity and the supply shortage accelerated the launch of the new Tank model. Positioned as a mid-to-large-sized luxury off-road SUV, the Tank 500 also performed brilliantly in the early stages of its release.

Within 72 hours of the pre-sale opening, orders exceeded 12,000 units, and the cumulative orders in the first month exceeded 30,000 units. The minimum price of over 330,000 yuan did not dampen the enthusiasm of off-road enthusiasts. However, the Tank series still followed its previous strategy, which was to use the "hunger marketing" tactic.

In these niche markets, the strategy is essentially the same: it's all about creating a high-end image. If you give them readily available production capacity, they might not sell as well.

Therefore, the sales of Tank 500 in 2022 were mainly driven by fulfilling the accumulated pre-sale orders, while the main product was still Tank 300, with 10363 Tank 300s delivered in January.

In December of last year, the Tank 300 achieved monthly sales of over 12 units for the first time. This off-road vehicle sold the same volume as an urban SUV. In addition to price, quality, and marketing, it was also affected to some extent by special events.

Given the special circumstances, travel has become a luxury for many. Travel bloggers and self-driving tours along National Highway 318 on Xiaohongshu (Little Red Book) are extremely popular, which has boosted sales of the Tank 300. Xu Xinglei also bought a Tank 300 last year.

With monthly sales exceeding 10,000 units, the Tank 300 has already achieved annual sales of 100,000 units. It can be said that while the A-series gasoline cars are losing popularity, the Tank has supported the sales of gasoline cars.

Meanwhile, the flagship model of the L series, the L9, will officially begin delivery this year.

As can be seen from its name, the L9 is positioned as a flagship model, used to elevate the prestige of the L series. The pre-launch campaign started in March, it was released in June, and deliveries began at the end of August, giving it a promotional period of up to six months.

The L team attaches great importance to the launch of the L9. In addition, since Weilai Auto only launched the L9 this year, it has also received the most internal support in terms of resources.

Including Aion and Yangzi Motors, the three subsidiaries of Weilai are all focused on concentrating resources to fight tough battles, launching two new models a year, which allows them to better concentrate resources and create blockbuster products.

The "car swarm" tactic has its advantages, but there are also ways to play it.

March was a busy month for new car launches and pre-launch announcements. On one hand, there was the Tank 500 and L9 from Weilai; on the other hand, there was the Seal from BYD; on the other hand, there was the P5 with new additions from Xiaopeng; and on the other hand, there was the domestically produced BMW X5 from Changan.

Both new energy vehicles and gasoline-powered vehicles are very popular.

But if we're talking about what Wei Lai is most concerned about, it's definitely BYD's seals.

What do you think the price of a seal will be?

After dismissing the head of Team L and suppressing the calls for price increases within the group, Tan Jincheng went to the Weilai Research Institute and chatted with Hu Zhengnan. In fact, Tan Jincheng probably knew who was behind the price increase trend within Weilai.

However, these are insignificant products, and the price fluctuations of these products are within the rules. It's perfectly normal for them to raise prices when everyone else is doing so. But in Tan Jincheng's view, they are still too optimistic about market competition.

Wei Lai's sales expectations for new energy vehicles this year are not low, and the KPI is still very high. In the past, Tan Jincheng would have let them try it out and then change course after they learned their lesson, but this year is not an option.

Competition with Tesla is intensifying, and BYD is also making a strong push.

Judging from the configuration parameters of the Seal, it can be seen that this is a model directly targeting the ET5 and the Model 3. Before its official release, the Seal had already been hyped up for a long time, and the market generally expected the price of this model to be between 22 and 28 yuan.

"The starting price shouldn't be too high. I estimate it will be similar to the ET5, or even lower. I just don't know how many intelligent features BYD will offer."

The starting price of the ET5 in China is 21.98 yuan, but it is mainly targeted at overseas buyers. Therefore, apart from the initial launch period, not much resources were invested in its promotion in China. However, this does not mean that the car is not selling well.

In the 20 to 30 yuan market, the ET5 still has a place. It hasn't increased in price over the years, and its features, such as driver assistance, have been upgraded with technological breakthroughs, making it a relatively conscientious model.

For users familiar with the ET5 model, if they are not looking for an SUV, they would still be very willing to choose the ET5. First of all, the appearance is very grand and looks high-end.

The Seal is less aimed at Tesla and more at the ET5. Like the Wynn, in addition to the domestic market, BYD also has its sights set on the European market.

"No need to worry, it will definitely be cheaper than the ET5."

The price war waged by the DZ is really something else. Tan Jincheng is almost certain that the Seal will be cheaper than the ET5. It's fortunate that raw material prices are rising sharply and the entire DZ series has raised prices. Otherwise, Tan Jincheng is sure that the Seal might have been able to get below 20 yuan.

A mid-size sedan priced at 20 yuan—just thinking about it is exciting enough; this is real competition.

(End of this chapter)