2003: Starting with Foreign Trade

Chapter 1040 The Luxury Car Market Has Changed
As expected, everything went exactly as everyone had predicted.

A few days after the launch event, on July 1st, the WILAI L1 officially announced that its price would be adjusted to 300,800 yuan, in line with the ES6, with a price reduction of more than 12%.

Sources close to Weilai indicate that in the future, Weilai may even maintain consistent pricing for its high-end models and similar models, adopting a pricing model where pure electric and hybrid vehicles are priced the same.

Despite the competition, Wei Lai didn't seem to care.

Normally, pure electric vehicles are more expensive than hybrid vehicles. If we adopt the same pricing strategy for both, then the configuration of the hybrid vehicle must be commensurate with the price.

This means that in terms of intelligence and interior luxury, the price must be commensurate with that of a pure electric vehicle. Therefore, consumers are quite looking forward to Weilai's high-end hybrid models.

"It's only because Wei came that long-time customers would have already put up banners to protest if it were any other car company. Speaking of which, Boss Tan's attitude towards long-time customers is truly impeccable."

Tesla and other companies have repeatedly lowered their prices, sparking huge protests from long-time customers. They've gone so far as to put up banners, and their unconventional approach has indeed attracted a segment of the customer base.

Even in the days following the launch event, despite the anticipated price reduction, sales of the Weilai L1 were not significantly affected. Throughout June, the total delivery volume of the Weilai L1 reached 1.3 units, continuing to break the monthly delivery record.

As netizens jokingly put it, the Weilai L1 has no trouble selling at all, and yet it still lowers the price. Boss Tan is just too flamboyant. This is the spirit of the richest man.

The existing customers who met the conditions for a full refund were happily waiting for Wei to transfer the money to their accounts. The other existing customers had no objections either. They had driven the cars for a year and a half, so normal depreciation was to be expected. Now that they could receive a refund for the price difference, what more could they ask for?

If long-time customers are concerned about vehicle price reductions, then yes, they are. But if they are not concerned, then yes, they are not too concerned. These days, even house prices have fallen sharply, let alone consumables like cars. Look at gasoline cars, their prices have dropped drastically, and we have to accept it.

The dissatisfaction of long-term customers stems from the manufacturer's neglect of them; once they buy the car, the manufacturer ignores them, which is why long-term customers are treated worse than dogs.

Wei Lai's compensation plan certainly won't satisfy all long-time users, but it should be enough to silence the vast majority and satisfy most of them, preventing large-scale protests.

However, Weilai has also made significant sacrifices. Not to mention that the compensation mechanism has consumed a large amount of Weilai's cash flow, in terms of stock price alone, Weilai has seen a pullback for three consecutive trading days after the official announcement of the L1 price reduction.

In three days, the stock price of Weilai fell by 8.42%, which aroused great dissatisfaction among A-share investors towards Tan Jincheng and Weilai.

"There's no need to respond to them. A stock price correction is a normal occurrence. If we have to respond to such a small correction, how can we possibly handle it?"

Zhu Liujun, then CFO of Weilai, approached Tan Jincheng to ask for his opinion on the large number of questions asked in the Weilai Shares Board Secretary Q&A section. Zhu Liujun also served as the Board Secretary of Weilai Shares.

This CFO, who has worked in the automotive industry for nearly 20 years, comes from Ford Asia Pacific and is considered part of the collaboration between Weilai and Ford.

The second quarter has ended, and July is the window for listed companies to submit their interim reports. Their responses may cause some controversy; of course, regulatory agencies won't bother them with such a trivial matter.

Short-term stock price fluctuations may be a critical matter for investors, but for them, it's actually not that important.

July and August are traditionally considered the off-season for car sales, as few people are willing to brave the scorching sun to look at cars. Besides, although travel has become much easier, the situation in some areas remains quite severe.

So even without this price reduction, it's not surprising that the stock price would be under short-term pressure. Last year, the new energy sector was extremely popular, and Weilai's stock price increase ranked first in the domestic new energy industry.

With a market capitalization exceeding one trillion yuan, Weilai has always been one of the focal points of the A-share market, and there has been much debate about whether it is overvalued. Given the size of the A-share market, Weilai's market capitalization of one trillion yuan is still on the ChiNext board, which is indeed a huge challenge in an era of cooling investment.

Regardless of whether it's overvalued or undervalued, once A-shares start to fall, it's completely irrational. In the past six months, listed companies, including auto parts and vehicle manufacturers, have all experienced significant declines, so Weilai's adjustment is relatively small.

Tan Jincheng has long since stopped caring much about the stock price, so it was expected that the price adjustment of his four high-end models would cause stock price fluctuations.

In terms of gross profit margin, including the L9 which has not yet been delivered, these four models have the highest gross profit margin among all models, with the L1 being the most profitable. Price reductions will put pressure on the profit margin of the L1.

The market is realistic. After these four models are reduced in price, they will definitely attract more customers. For example, the pre-sale that was reopened after the press conference saw the L9 receive 20,000 orders within the 72-hour pre-sale period.

But that's after the official delivery in September. Investors are more concerned about the performance of the financial reports in July and August. The price war in June meant that the third-quarter financial report was destined to be less impressive than expected.

However, the pre-sale of the L9 was indeed far beyond market expectations. Before the launch, no blind order data was released, and most media and consumers expected the L9 to be priced at around 50 yuan.

For a high-priced model of 500,000 yuan, especially a domestic brand, selling five or six thousand units a month would be considered a huge success. However, according to Li Xiang's statement on Weibo, even without a price reduction, the L9's delivery volume in September, the month in which it is officially delivered, will reach more than 10,000 units.

When did consumers become so wealthy? When did consumers become so enthusiastic about high-end domestic brands?
"The success of the L9 is a great step forward for our domestic brands. We are also grateful to consumers for their recognition of Weilai. We will do our best to serve our car owners and live up to their trust."

"As for why popular models are being discounted, that's a good question, but it's something I don't quite understand. If popular models aren't being discounted, then what other models are worth discounting?"

"Those models that don't sell? In that case, lowering prices wouldn't make any sense. Our price adjustments have never been aimed at clearing inventory. We will adjust our product pricing strategy based on our costs."

"When the costs of our products are sufficient to cover our own and our suppliers' profits, we can proactively lower prices while ensuring a certain level of profit. This is the benefit brought by technological research and development."

"As for the impact on brand premiumization, I don't think so. Consumers don't think that just because they bought a low-end model from Huawei, it's a low-end brand. Similarly, they don't think that a no-name brand phone they bought for several thousand yuan is a high-end brand."

“Brand recognition is influenced by price, but it’s not the whole story. The luxury of BBA (BMW, Mercedes-Benz, Audi) is not reflected in its price.”

With the overwhelming demand for the L9, it is confirmed that over 10,000 units will be officially delivered in September. As the first domestic model to achieve over 10,000 units delivered in a single month and priced above 400,000 yuan, the L9 represents a significant milestone.

CCTV Finance interviewed Tan Jincheng about the achievements of L9.

Of course, what has attracted the most attention is the collective price adjustment of high-end models by Weilai. Many car companies are even worried that this price adjustment by Weilai may affect mid-to-low-end models.

This is also one of the themes of this interview; Tan Jincheng needs to use this interview to reveal Wei Lai's attitude to the outside world.

Will the ET5, Exeed, and Galaxy series see price reductions? These models haven't experienced any price cuts since their launch. While the Exeed and Galaxy series can be excused by their shorter time on the market, the ET5 certainly has ample reason to do so.

With production capacity at full capacity, a focus on the domestic market, the off-season in July and August, and an increase in competitors, the ET5 has ample reason to lower its price.

Frankly speaking, there are still quite a few companies in the market that are afraid of Wei Lai extending price reductions to the entire product line. The Nezha S, which was released in June, and the Hongtu X7, which just held its launch event in early July, are both victims.

Before the launch event, the starting price of the Hongtu X7 had already been announced: 31.98 yuan, which is 1.9 yuan cheaper than the Weilai L1, giving it a price advantage.

However, with the proactive price reduction of the Weilai L1, the X7's price advantage disappeared. In order to sell the car more smoothly, the X7 was also forced to adjust its initial price, embarking on the path of price reduction before it was even launched and delivered.

There's nothing we can do about it. Who told the arrogant and boastful Da Zui to project a total sales target of 30 units for the Hongtu series this year? Obviously, that number is impossible to achieve, but getting as close as possible is always better.

The original starting price of 31.98 yuan was intended to keep the price above 30 yuan. According to market logic, the status of a price above 30 yuan is completely different from that of a price below 30 yuan.

Seres' pricing strategy for the X7 clearly aims to directly target the high-end market. The success of the X5 certainly gives them the confidence to do so, with X5 sales exceeding 7000 units in June. Breaking the 10,000 mark in monthly sales is only a matter of time.

It's 1.9 yuan cheaper than the L1, which can attract a group of range-extended electric vehicle enthusiasts, but they are not fans of the Chrysanthemum brand, or rather, they are users of the Weilai brand. This is the plan that Seres and Dazui are playing.

However, this price advantage is now gone, and the starting price of 30.08 yuan is making Seres extremely uncomfortable. Being stuck above 30 yuan, even if the price were the same as the L1, it wouldn't make any sense. In that case, it would be better not to lower the price.

So Seres gritted its teeth and directly lowered the price of the Hongtu X7 to 299,800 yuan, saving 20,000 yuan. This allowed them to capitalize on the popularity of Wei Lai in their advertising and also break through users' psychological price point.

Tan Jincheng's answer left the on-camera host Zhang Xinyue stunned for a moment. Luckily, it was a pre-recorded broadcast; if it had been a live broadcast, this would have been considered a mistake.

This senior reporter from CCTV's financial channel has long focused on the dynamics of the automotive and new energy industries, and has participated in the reporting of major economic events on numerous occasions. She has also come into contact with Tan Jincheng more than once. In the past, Tan Jincheng gave her the impression of being humble, gentle, and energetic, but his aura was somewhat lacking compared to the older generation of entrepreneurs. However, this time, her question about the price reduction of Weilai's high-end models made her feel that Tan Jincheng was somewhat different.

The aura and powerful confidence she exudes are so pervasive that they exert a sense of pressure on the entire industry.

After a moment of hesitation, Zhang Xinyue continued to ask: "Orders for the L series and ES series continue to surge. Can the current production capacity meet market demand? How can the delivery cycle be optimized? The price reduction by Weilai has had a certain impact on the launch of existing and new cars by other domestic companies, such as Seres and BYD. I wonder what Mr. Tan thinks about this issue."

"These are two separate issues," Tan Jincheng said with a smile.

Zhang Xinyue smiled too. Reporters who had interviewed Tan Jincheng knew that he was very cautious when answering questions, to the point of being extremely sparing with words. If you only asked one question, you might not get a positive response to the next one.

Therefore, reporters who are familiar with Tan Jincheng's style have learned to ask multiple questions at once, and if they are lucky, they can get responses to all of them.

"Okay, let's answer the first question first. First of all, it should be noted that the price reduction of new energy vehicles is just like the current trend of new energy vehicles. This is irreversible. Even if Wei Lai hadn't taken the lead, other companies would have. We are just following the market."

Zhang Xinyue nodded. Logically speaking, it's not really fair to say that Wei came out on top. It was BYD and Tesla that started the price war first, so it wouldn't be an exaggeration to say that Wei was just passively following along.

She had been following the new energy industry for a long time and knew that what Tan Jincheng said was true. However, what was unexpected was that Wei Lai did not choose to follow up in the low-end and mid-range markets, but instead focused on the high-end market, which surprised the industry to some extent.

"As for saying it has affected the pricing of competitors, that's a bit of an exaggeration. Competitors' price adjustments are definitely due to their strategies, and the user group of the Seres Hongtu X7 you just mentioned is completely different from that of Weilai."

"Although the Hongtu X7 and Weilai L1 are both range-extended electric vehicles, they are not very competitive. This is a growing market where everyone can thrive."

Zhang Xinyue muttered to herself, these big bosses really just spout nonsense.

In terms of power, drive system, battery range, body size, and intelligent features, the X7 is almost identical to the Weilai L1. Even in terms of intelligent assisted driving, which is something that Chrysanthemum is proud of, Weilai is just as good.

At the press conference, although the L1 brand was not mentioned, the comparison of competing parameters made it clear to everyone that the model being used for comparison was the Weilai L1.

Since the X7 launch, in addition to the "far ahead" meme becoming popular again, there have been numerous comparisons between these two models on the market. Major automotive media outlets and even independent media unrelated to automobiles are happy to use these comparisons to gain traffic.

Comparing the two, most people naturally praise the X7, but some users have also improved their impression of the Weilai through this comparison; the reason is that the Weilai uses all-wheel drive, and there is no distinction between high and low configurations.

If you want a four-wheel drive version of the Hongtu X7, you have to buy the high-end version, which is priced at 339,800 yuan, which is 1,000 yuan more expensive than the Weilai L1 before its price reduction. The four-wheel drive premium version is even more expensive at 379,800 yuan.

In addition, the X7 is being compared to the 2022 L1 model currently on sale, while the 2023 L1 will be launched in November this year, with further upgrades to the model. This means that the claims some X7 manufacturers make about being superior to the L1 in terms of configuration will not last long.

Fortunately, the 2023 L1 model, which officially began deliveries in November, gave Hongtu X7 a few months to adjust and respond.

The upgraded L1 boasts superior specifications on paper compared to the X7. In terms of actual cost-effectiveness, the 2023 L1, priced at 30.08 yuan, is definitely more worthwhile than the X7's 29.98 yuan.

However, Tan Jincheng was not wrong. Juhua's users and Weilai's users are completely different groups of people. It is not an exaggeration to say that Juhua sells cars to fans.

"In terms of production capacity, we have already achieved vertical integration of the supply chain. Our component suppliers are also very capable, and we can guarantee production capacity in both battery and chip supply, so there is no need to worry about production capacity."

"As for the delivery time, due to the upgrade of L1, the delivery of L9 can be fully guaranteed."

The L series is no longer operating alone. With the launch of the L9, the L1 no longer needs to support production capacity on its own. The production capacity of the older L1 has been gradually reduced. In addition to these two models, there is another model in the L series that is yet to be released.

Based on the popularity of range-extended electric vehicles, Weilai plans a total production capacity of 50 units for the L series, including a model that has not yet been released. This capacity is sufficient to ensure that the delivery of the L series will not be affected until 2025.

Range-extended electric vehicles are mainly sold domestically, with no export plans. They're not very popular overseas, and besides, they don't really have any hype. Europeans aren't particularly interested in large SUVs, so there's no need to waste resources on them.

The production capacity of the L series seems to have returned to its original trajectory. At the Beicang plant, only 10 units of the L series are planned for production capacity, while the remaining 40 units are planned for production capacity at the Changzhou industrial base.

With the rise of the new energy passenger vehicle market, the reduction of new energy subsidies, and the increasing saturation of new energy buses in major cities, Huanghai Automobile, which mainly produces commercial vehicles, has seen its sales decline year after year. As a result, Weilai has made use of this production capacity and transformed the original production line.

This production capacity has already been utilized this year, and from next year onwards, most of the production capacity of the L series will be located at the Changzhou production base, while the production capacity of the E series will be located at the Luzhou industrial base.

The Beicang area primarily produces Exeed and Aion series vehicles, and most of the production capacity for gasoline vehicles will also be concentrated here. In terms of production capacity, Weilai is not too worried. Since 2020, although there have been several periods of tight production capacity, it has rarely happened like BYD, where orders could not be delivered.

"Weilai has a very clear production capacity plan for each model. We will not blindly increase production capacity based on orders. The production capacity for each model is determined based on sales expectations for the next few years."

Wei Lai pursues sales volume, but not blindly. In addition, Tan Jincheng knows some of the future trends in the electric vehicle market. When Geely makes rapid progress and Chery and Great Wall also begin to pay attention to the new energy market, the competition will be much more intense than it is now.

By then, it will be almost impossible for B-segment sedans like the ET5 and Sedan to still sell for 20 yuan, and it will also be impossible for the Exeed S01 to maintain its invincible position in the compact sedan market.

Blindly pursuing sales volume and expanding production capacity will only make the company increasingly passive. BYD's practice of building factories all over the country and frantically expanding production capacity will definitely cause problems as market saturation increases and competition intensifies.

Weilai aims to be like Tesla, concentrating production capacity in a few regions to achieve a balance between sales and production capacity in a highly competitive environment.

Of course, BYD's model is not without its merits, but only if the new energy vehicle market can almost completely squeeze out the space of the gasoline vehicle market. However, this is obviously very difficult. To put it bluntly, the production capacity of new energy vehicles is actually just taking away the gasoline vehicle market.

Could you please disclose the specific monthly production capacity plan for the L9?

From the end of the press conference to Tan Jincheng's interview, about ten days have passed. The sensation and high level of discussion caused by the Weilai L9, and the price adjustment of the four models has had a much greater impact on the market than expected.

By driving the price down to the edge of 30 yuan, the company is directly targeting the entry-level SUVs of BBA (BMW, Mercedes-Benz, Audi) such as the BMW X3, Mercedes-Benz GLC, and Audi Q5L, rather than just their high-end SUVs.

Many media outlets even ran headlines proclaiming a major shift in the luxury car market.

Of course, this title is not an exaggeration at all. The L9's orders have exceeded 50,000 units, making the market realize that consumers' consumption logic has completely changed. They are shifting from looking at the brand to looking at the configuration. The three-pointed star of BBA and the halo of blue and white are losing their effectiveness.

The price adjustment of these four models is of great significance to Weilai. By combining intelligent technology with cost-effectiveness, Weilai has established its own high-end benchmark and built its own voice in the high-end image by adjusting its pricing strategy.

In the future, whether it's BBA or other manufacturers, if they want to create a high-end SUV, they can't bypass these four models from Weilai. Weilai has truly mastered the pricing power in the 30 to 50 yuan range.

The overwhelming orders for the L9 have made BBA realize that if they want to maintain their market share, they will have no choice but to follow suit with drastically reduced prices. In any case, the high-end gasoline vehicle system led by BBA has collapsed under the impact of the four new models.

Laymen see the spectacle, but experts see the strategy. After two press conferences and price adjustments for four models, competitors who have reflected on the situation can't help but admire Tan Jincheng's ability to control the high-end market.

“In the high-end SUV market priced between 30 and 50 yuan, Weilai has already established its own moat. In the future, as long as they themselves do not have any problems, it will be difficult for Tesla or BBA to break through this moat.”

With its combination of performance and luxury, BYD has truly built its core competitiveness. Currently, only BYD in China has this capability.

In the high-end SUV market of 30 to 50 yuan, BYD also dares not go head-to-head with Weilai. Since the beginning of this year, BYD has put a lot of effort into improving its brand image. The Han EV and Tang EV series have achieved great success. At the beginning of the year, it even shouted the slogan of defeating Weilai.

However, these two successful models only dared to compete in the 20 to 30 yuan price range. In the 30 to 50 yuan price range, BYD did not have the courage to launch a full-scale challenge against the US.

Looking back, everyone realized that Wei Lai had taken the biggest piece of the pie that previously belonged to BBA (BMW, Mercedes-Benz, Audi).

"What Wei Lai left us is probably just a market worth millions, right?"

(End of this chapter)