2003: Starting with Foreign Trade

Chapter 1038 "Price War, Old Zhang is Doomed"

The explosive growth of range-extended electric vehicles, coupled with the increased popularity brought by the entry of the new car brand, has affected more than just the ES series from Weilai.

The market size for vehicles priced between 30 and 50 yuan is limited, and almost all models in this price range have been significantly affected, regardless of whether they are gasoline-powered or pure electric vehicles.

With BBA sales declining, Weilai's own ES series has also seen a decline, and Li Bingjia, another new energy vehicle brand operating in the same price range, has also been greatly affected.

In addition, even the Tesla Model Y high-performance version, which is priced at 36.99 yuan, has been greatly affected. The most direct losers are traditional car companies' converted electric vehicles such as the Mercedes-Benz EQC and Audi e-tron.

These types of cars have short ranges and high prices. In the past, they could still fool some consumers who didn't know much about cars by relying on their brand image, but now they are completely unsellable.

Of course, emerging brands like HiPhi, which make ultra-high-priced pure electric SUVs and lack brand power, were completely crushed. On the other hand, companies that focus on models priced below 30 yuan are doing quite well, such as XPeng, Leapmotor, and Nezha.

Nezha and Leapmotor, two emerging brands that focus on low prices, have seen significant sales growth in the first five months. Their sales in the first five months have already surpassed those of Wenjie.

Last year, Wenjie was riding high, but now its sales have fallen to fourth place among new energy vehicle companies. Its stock price halved from January to May, showing a clear downward trend. The struggles of WM Motor and the fragility of Wenjie, as well as the performance of these leading brands, all reflect the fragility of new energy vehicle companies.

Xiaopeng, another leading new energy vehicle company, also had a tough first half of the year. Although it didn't show the same decline as the other two, it still experienced a high start followed by a low finish.

小朋的主力车型是P7，P7销量占据着其整体销量的60%，25万元至35万元的价位虽然没有直接与尉来L1以及与闻界系列形成直接竞争，但面对的冲击也不小。

Each of the leading emerging electric vehicle manufacturers has its own selling point. Xiaopeng's selling point is autonomous driving. Its models and selling points are roughly comparable to Tesla. When Tesla lowers its prices and directly competes with Xiaopeng, Xiaopeng's sales will be under considerable pressure.

In addition, the downgraded features of the P5 have also greatly damaged the Xiaopeng brand. The vulnerability of emerging brands is also reflected in their supply chain. When faced with an environment like today's sharp rise in raw material prices, the supply chain of emerging brands is very vulnerable.

Even for emerging brands like Xiaopeng, which has formed a purchasing alliance with Weilai, the price increase of raw materials is not only reflected in batteries. Even if they can secure supply orders at a reasonable price, they still cannot afford the costs.

Both companies, including Wenjie and Xiaopeng, accelerated their financing processes in 2022. Xiaopeng had its secondary listing on the Hong Kong Stock Exchange, while Wenjie had its third listing in Singapore. The pressure of funding forced them to do so.

However, what worries emerging players the most is not the waning investment enthusiasm in the capital market for new energy vehicles. In the first half of the year, the stock performance of global new energy vehicle companies such as Wray, BYD, and Tesla was very sluggish.

The better-than-expected first-quarter reports from companies like Tesla and BYD did not elicit much of a market reaction, and the stock performance of emerging companies that rely on capital for survival was even worse.

"Adjusting prices is definitely necessary, but we also need to make some upgrades to the product itself."

In April and May, sales of both of Welai's pure electric SUVs declined to varying degrees. Although Welai's sales do not rely on these two models as the brand's flagship models, their strategic significance remains relatively important.

If one day range-extended electric vehicles don't sell well, then the ES series will have to take over; it's still necessary to maintain its popularity.

Moreover, the competition in the range-extended electric vehicle market will only become more and more intense. It doesn't require much technology; as long as you're willing to learn, you can do it well. If you're willing to lower your standards in marketing, you can sell well. Seres has already confirmed that it will launch the Hongtu X7 this month.

According to Da Zui's (a nickname for a prominent figure in the Hongtu X7 brand) promotion, the official delivery date for the Hongtu X7 is set for August. Although Da Zui is known for making empty promises, it's unlikely that he's just making things up by providing a delivery date.

After Dazui (CEO of Seres) took full control of the company, Seres significantly accelerated the launch of its models. The X5 range extender and pure electric version were released, and six months later, a new X7 was launched. Although the market questioned whether the X7 was a reverse-engineered version of the Xiaokang Fengguang ix7.

However, this rapid pace of innovation not only proves the excellence of Seres's products but also demonstrates the company's manufacturing capabilities and dispels public doubts about Seres's production capacity.

When an automaker delivers three new models within a year, even if it's suspected of being an "OEM," it's enough to prove its strength. Seres can be said to have undergone a complete transformation.

With chrysanthemums empowering its rapid development, Seres is also entering a critical period in its car manufacturing. At its peak, the construction of its Yizhuang factory had 2800 construction workers at the same time. Construction started in April, and it is expected to be topped out in November this year and completed in June next year.

In addition, Xiaomi has also finalized its technology roadmap and supplier solutions.

Xiaomi's technology roadmap is to develop the entire autonomous driving system in-house, and to integrate the smart cockpit ecosystem through the Pengbai OS system. It plans to realize a large-scale voice interaction model through OTA in 2023.

The key battery and electric drive technologies have also been finalized. The high-end models use Jinshidai's Xuanwu battery with CTP3.0 technology and support the 800V platform, while the low-end models are equipped with BYD's lithium iron phosphate system.

The drive motor was selected as a 220KW permanent magnet synchronous motor from United Automotive Electronics, which is suitable for different range requirements.

With top suppliers such as Jinshidai, BYD, Hesai Technology, United Electronics, and Kong Hui, Xiaomi secured key resources through investments or strategic agreements, completing the most crucial resource integration.

According to internal sources at Xiaomi, its engineering prototype will roll off the production line in September this year, and the first batch of prototype testing will begin at the end of the year.

From announcing its car manufacturing plans to rolling out an engineering prototype, Xiaomi has been quick. The only uncertainty is whether Xiaomi will obtain the necessary manufacturing qualifications, and whether it will achieve mass production through contract manufacturing or by acquiring the qualifications of other companies.

However, industry insiders like Tan Jincheng never thought that Xiaomi's car manufacturing qualifications were a problem. To a certain extent, Xiaomi's car manufacturing represented the capital city and even the northern car manufacturing forces.

With the Yangtze and Yellow Rivers as the dividing line, well-known domestic new energy vehicle companies, including Tesla, have all placed their headquarters in the south, and the same is true for emerging brands.

Great Wall Motors' slow progress in electrification and BAIC's unsuccessful development have both affected the north-south landscape of new energy vehicles. Lei Jun's decision to place Xiaomi in Beijing, rather than Wuhan, is arguably the smartest one, aside from the fact that Xiaomi's headquarters are in Beijing.

If Xiaomi Auto can achieve the same level of success as Chrysanthemum Auto, then the domestic new energy vehicle market will be divided into four major sectors: east, west, south, and north.

With Wynn from the Yangtze River Delta, BYD from the Pearl River Delta, Seres from Chongqing, and Xiaomi from Beijing, along with traditional automakers like Geely, Great Wall, and Dongfeng scattered across various regions, the automotive industry landscape has been completely opened up and balanced.

Therefore, no one is worried about Xiaomi's car manufacturing qualifications. Besides, the Ministry of Industry and Information Technology has a regulation that requires meeting the mandatory qualification approval target of annual sales of more than 30,000 vehicles.

With Xiaomi's massive fan base and Lei Jun's marketing prowess, it's almost a certainty that Xiaomi's first car will sell 30,000 units. Even though Xiaomi doesn't have a prototype yet, the buzz surrounding the Xiaomi car since its official announcement is quite high.

Almost every now and then, Lei Jun (CEO of Xiaomi) would make some kind of move to keep Xiaomi cars in the spotlight. Although the capital market is skeptical of Xiaomi's car manufacturing, it is only about the future prospects. No capital firm believes that Xiaomi cannot sell 30,000 cars.

"We can launch new models in a timely manner, but we must accelerate the updates of existing models to cope with increasingly fierce market competition."

The car market in June was even more competitive than in March, with both BYD and Chrysanthemum making moves. BYD accelerated its promotion of Seal, with a massive offline advertising campaign and the launch of the Hongtu X7.

In addition, there were other noteworthy models on display, such as the Xiaopeng G9, the Wenjie concept car, and the BMW concept car, as well as the Nezha S, a new model launched by Nezha, a dark horse in this year's car market, which is a model that Nezha is targeting in the high-end market.

From a second-tier emerging brand to the sales champion in the first half of this year, Nezha has made a great leap in the past six months. However, its brand image is too low-end, and its user base highly overlaps with that of Wuling Hongguang MINI EV, which is one of the reasons why Nezha has been unable to launch for so long.

The Nezha S, which started pre-sales on June 6, is an adjustment made to move the brand towards a higher-end image. It is a B-class sedan, including range-extended and pure electric models, with starting prices ranging from 202,800 yuan to 338,800 yuan.

As a sporty sedan, the Nezha S is indeed flawless in terms of appearance. It is stunning at first glance, and it has all the mainstream features currently available on the market, whether it is a range-extended or pure electric model.

"In terms of design, this model is flawless; it's just a pity it was born at the wrong time."

The Nezha S, which has started pre-sales, has received some attention. However, mainstream media are not optimistic about Nezha's move towards the high-end market, even though its pre-sales performance is quite good.

"Let's first take a look at what the competitors of Nezha S are."

In the pure electric vehicle sector, there are the BYD Seal, which will be delivered at the end of August; the Han EV series currently on sale; the ET5, which just broke the monthly sales mark of 10,000 units; as well as the Xiaopeng P7 and Maodou 3.

In terms of range extension, it will face competition from the Han DM-i and Deep Blue SL03.

Looking around, which one can compete with the Nezha S? Without any overwhelming performance, these few popular models alone can completely suppress the sales of the Nezha S.

In addition, the price range of Nezha S, from 20.28 yuan to 33.88 yuan, is indeed absurd.

"To this day, the fact that a car model has such a huge starting price range can only mean that Nezha itself lacks confidence in its ability to go high-end."

When a company lacks confidence in its own products, then everything else is just an illusion.

Starting at 20.28 yuan, the range-extended electric vehicle seems to be designed to boost sales, but this price is not competitive with either the Han DM series or the Deep Blue SL03. With overlapping prices, consumers would not only choose the Han DM series, but even the Deep Blue brand, backed by Changan, seems much more reliable than the Nezha.

As for the pure electric version with a starting price of 24.58 yuan and a four-wheel drive high-performance version with a price of 33.88 yuan, that's even more absurd. Not to mention that the price itself is already higher than that of the Seal and Weilai ET5, which are also B-class sedans, this pricing undoubtedly determines the failure of the pure electric version in the current market environment.

While the market has shown some appreciation for Nezha's premiumization strategy as the top-selling new energy vehicle brand in the first half of the year, the announcement of the pure electric version's pricing has been met with widespread pessimism. "As a consumer, I wouldn't buy the pure electric version, even if I really liked it."

The same car model can be bought for 20 yuan by others, so why should I spend more than 30 yuan to buy it? And we still get the same treatment on the road.

After learning about the pricing of Nezha S, Tan Jincheng had already decided that Nezha's attempt to go high-end was doomed. He wondered what they were thinking internally, since Zhang Yong should have known all this.

As a new car, if you can't outperform your competitors in terms of performance and technology, you can only compete on price, making it at least 20,000 to 30,000 yuan cheaper than your strong competitors.

Secondly, this model shouldn't have been offered as a range-extended version. Although range-extended models have indeed sold very well this year, and the 20 RMB price range with refrigerators, TVs, and comfortable sofas is certainly attractive enough.

However, if the goal is to break into the high-end market, it's impossible to have both. If you want sales volume, you shouldn't launch pure electric models. If you want to be high-end, you should only make pure electric models and establish your brand first.

"It's a pity. This model is quite good. Apart from the unbalanced pricing, it's also a bit late. If it had been a year earlier, the situation would have been completely different."

Tan Jincheng felt somewhat sorry for Zhang Yong and Nezha. In terms of team strength, Nezha was not bad, and in terms of capital strength, it was also sufficient. The strategy of moving from low-end to high-end was not wrong either, just like Xiaopeng did.

This strategy applies to domestic brands such as BYD, Geely, Chery, and Woolai, which were all established during the era of gasoline-powered vehicles. It is a strategy that aligns with our national conditions.

This year's performance is quite good. Leapmotor, which is about to be launched, is also a low-end brand. Compared with Leapmotor, Nezha seems to be a little unlucky. It failed to go public twice. Just when sales were picking up and it was seeking to move upmarket, the environment changed again.

What was the market like in June 2022? Let's not even mention the approximately 300 new cars launched this year, including 80 to 100 brand-new models and 150 facelifted or redesigned models, nor the strong rise of the Chrysanthemum brand.

Given the market environment in June alone, the Nezha S would have been different even if it had been launched three months earlier.

In June, the domestic new energy vehicle market saw its first fierce price war. Stimulated by the ET5, the yet-to-be-launched Seal adjusted its previously announced starting price of 212,800 yuan to 209,800 yuan, a full 10,000 yuan cheaper than the ET5.

Faced with competition from models like the Tesla Model Y, ES3, P7, L1, and X5, Tesla has adjusted the price of its high-end version again, using price reductions to boost sales.

As the pioneering models of the Weilai brand, the ES6 and ES8 will also have major developments at the end of June.

Hu Zhengnan, Dean of the Weilai Research Institute, personally explained the ES6 and ES8 facelift launch event.

"The 2023 ES6 has a maximum range of 615 kilometers, accelerates from 0 to 100 km/h in 3.8 seconds, offers optional lidar, and comes standard with the NAD intelligent driver assistance system, supporting functions such as automatic parking."

"In terms of core luxury features, the ES6 boasts a queen-like passenger seat, Dolby sound system, an 11.3-inch central control screen, and a 10.2-inch instrument panel."

"Like the upgraded ES8, the ES6 can also be equipped with air suspension and CDC dynamic damping control."

Unlike Tan Jincheng and Li Xiang, Hu Zhengnan took a more technical approach to his presentation, making this facelifted model launch event quite reminiscent of the BYD Seal launch event in March.

The presentation focused on technology without much exaggerated rhetoric. Apart from the L9 during the pre-launch period, the company has consistently maintained the tradition of announcing the price at the launch event. Even with the L9, although a blind pre-order strategy was adopted during the pre-launch period, the price was still announced at the launch event.

Speaking of which, besides BYD, Tesla, and several emerging companies, WIL also made significant moves in June.

在原本预计6月21日尉来L9发布会的基础上，增加了一场ES6以及ES8这两大车型2023款的发布会，日期定在6月20日，两场发布会，尉来两位大佬主持。

Modern automakers are often able to release the first generation while the second generation is already under development and the third generation is being developed simultaneously. Otherwise, they would not be able to keep up with the pace of the market. Although the launch events for the ES6 and ES8 were arranged at the last minute, they did not seem rushed.

According to the original plan, these two models were to be launched at the end of the year, leaving some market space for the delivery of the L9 in September. However, the sales figures in April and May forced Weilai to change its strategy.

As for the early delivery, which creates some competition with the L9 and L1, it's beyond our control internally. The L series is the focus this year, with new models being released, but the ES series is equally important. It's only natural to respond to market changes with appropriate policies.

Even without internal competition, they would face external competition.

"In terms of configuration, Weilai has shown great sincerity, and we are equally sincere in terms of price, which is what everyone cares about most."

"Whether it's the ET5, Exeed S01, or the L series and Galaxy series, Weilai has always pursued the greatest sincerity towards users in the same price range. We don't do anything fancy, so I'll just announce the prices directly below."

With no controversial remarks or exaggerated descriptions, the press conference hosted by Hu Zhengnan seemed somewhat "boring." However, this was intentional on Tan Jincheng's part; the real focus was tomorrow's L9 launch event.

As Hu Zhengnan finished speaking, the pricing of the 2023 ES6 and ES8, which appeared on the big screen at the press conference, surprised both the audience and those watching the live stream.

"The Weilai ES6 starts at 30.08 yuan!"

"The Weilai ES8 starts at 42.28 yuan!"

The price of the ES6 is several tens of thousands of yuan cheaper than before, even cheaper than the Weilai L1. The starting price of 30.08 yuan still holds the threshold of high-end models above 30 yuan, but everyone knows that this is just a prestige project.

With various subsidies and launch benefits, the price of the ES6 has directly entered the 30 yuan range.

The ES8 didn't even bother with the additional features; it was directly reduced by more than 60,000 yuan. As two high-end models that have been on the market for many years, this is the biggest price adjustment the ES6 and ES8 have made since their launch.

Compared to the previous model, the 2023 ES8, a mid-to-large SUV, has completely eliminated the seven-seat option, making significant adjustments in product positioning, pricing strategy, and technological differentiation.

As the top-of-the-line pure electric SUV in the world, in order to avoid too much competition in the market with the L9, which will be officially launched tomorrow, the ES8's product positioning has shifted from the previous luxury SUV to a business flagship.

The all-new ES8 is positioned to compete with the Mercedes-Benz V-Class. It adds an in-car conference system to enhance high-end business reception and downplay its family image, transforming its image into that of a presidential vehicle. Its dual motors accelerate from 0 to 100 km/h in 4.5 seconds, which also enhances the efficiency of business travel.

The interior has also undergone significant changes, leaning more towards a business style. In addition, the ES8 has launched an executive version, priced at 48.28 yuan, which is 6 yuan more expensive than the base model, but still cheaper than the old model.

The executive-level models target corporate procurement and high-end business users, and even some high-end ride-hailing companies. Ride-hailing services are not limited to Aion and BYD Qin series; even Maybach offers ride-hailing services.

While high-end ride-hailing services have limited application scenarios, they are still more profitable than regular ride-hailing services. However, the cost barrier prevents most ride-hailing drivers from accessing them.

The ES8 also only has two configurations, in line with the L9. This way, Weilai will maintain three configurations in the high-end segment: pure electric and hybrid, which can minimize model confusion.

This is the biggest price reduction since the company went public, which will definitely hurt existing car owners, especially those who took delivery this year. In response, WILAY has made appropriate compensation to its existing customers, as is its consistent practice.

Considering that both models are high-end vehicles with a relatively high-value customer base, in order to retain these customers, Weilai pushed out a compensation mechanism to existing users after today's press conference.

今年1月1日以后提车的用户，无论是ES6还是ES8，均按2023款起售价退差价，而提车一年之内的老用户，按2023款起售价退50%至80%不等的差价。

Cash! No fluff!
There is also a compensation mechanism for existing customers who have owned their vehicles for more than a year. Depending on the year of ownership, they will receive corresponding cash, preferential services, points, and other compensation packages.

The resale value of a used car is generally a reference for the success of a model. Compared with gasoline cars, the resale value of new energy vehicles is relatively lower. If users choose a high-end model on this basis, they are already taking on a lot of risk.

Weilai's compensation policy for long-term customers covers the vast majority of models. This is not because Mr. Tan is rich and powerful; to a certain extent, Weilai is using this method to maintain the value of used cars.

This time, the subsidies for high-end models are so substantial that they essentially cover the losses from the depreciation of used cars, allowing users to hold onto their vehicles with peace of mind and alleviating the dissatisfaction of existing customers with the significant price adjustments.

"Why is it 42.28 yuan? Haha, everyone can look forward to the launch of the Weilai L9 tomorrow."

The CEO, who is a regular on Weibo, immediately followed up with a comment on Weibo after the ES6 and ES8 generation launch events, both riding the wave of popularity and generating buzz for the L9 launch event.

Currently, there are over 30,000 blind pre-order users for the Weilai L9. If you were to ask who cares most about the price of the L9, these 30,000 people would be the first to answer that question.

The price war between BYD and Tesla, two leading automakers, has reached its climax with a significant price adjustment for the high-end ES series models.

Looking back at the entire month of June, if we were to name the most anticipated model, it would undoubtedly be the pure electric version of the Nezha S, which was delivered around the same time as the Seal. The Seal was priced at 20.98 yuan, the ET5 at 21.98 yuan, and the Maodou 3 base model at 27.99 yuan.

What should Nezha S use to fight?

(End of this chapter)