2003: Starting with Foreign Trade

Chapter 1041 "The Unexpected King Wei Lai"

"A luxury car worth millions? I don't have that plan for the time being."

The interview continued, and Weilai has achieved an absolute dominant position in the 30 to 50 yuan new energy vehicle market. The topic then naturally turned to whether Weilai would launch a million-yuan luxury model.

According to information obtained, BYD has begun to lay out its strategy in the million-yuan luxury car market. Its Yangwang brand will be launched later this year, aiming at the luxury car market. In addition, the Denza brand, which has returned to BYD, also launched a high-end MPV this year with a price range of 30 to 50 yuan.

The Denza D9, priced between 329,800 and 459,800 yuan, will officially begin deliveries on August 23 next month. Weilai also has its own MPV plan, but there has been no news about it in the million-yuan luxury car market.

Zhang Xinyue's question here refers to the Weilai Group, not the entire car manufacturing system under Tan Jincheng. The entire car manufacturing system already has luxury car models worth millions.

That comes from Lotus, but since Lotus is not affiliated with the Weilai Group, it is generally not included in the statistics.

"Is it because of the existence of Lotus?"

Zhang Xinyue clearly understands the new energy vehicle industry and Weilai. Lotus holds a special place in Weilai's heart. This long-established supercar brand, with its exaggerated power performance, excellent aerodynamics, and outstanding chassis tuning capabilities, has greatly promoted Weilai's technological advancement.

Take the Lotus engineering team as an example. This team, which provides technical guidance on dynamics, vehicle platforms and other aspects for automobiles worldwide, is famous for its chassis tuning. Since being acquired by Tan Jincheng, the chassis tuning of all major brands under Weilai has been completed under the guidance of Lotus engineering.

As a result, the chassis tuning level of various models has also made significant progress.

"Yes, because of Lotus's existence, there is no need for Weilai to participate too much in the million-yuan luxury car market. As I said before, Weilai does not aim to pursue high prices. From my personal point of view, I hope our cars will become more and more affordable."

Tan Jincheng did not shy away from this issue. Among domestic brands, the most expensive is the Hongqi L5. As a living fossil of the domestic automobile industry, the customized version of the L5 is priced as high as 500 million yuan and is only available to specific customers.

As a cultural icon in the history of China's automotive industry, the L5 has actually transcended the category of consumer goods, and its pricing is not controversial.

In addition to the upcoming Yangwang series, other luxury cars in the million-yuan and near-million-yuan price range include BAIC's BJ90, Dongfeng Mengshi civilian version, Jike 001FR version, and Shenlan SL03 hydrogen-electric version.

Besides these models, there is also the new energy brand HiPhi, which uses high prices as a gimmick. However, these models have almost no popularity and sales, and most of them are just gimmicks.

The claim of truly million-dollar luxury cars is still unconvincing.

I was originally going to add that it included Lotus, but I decided against it. Lotus is not affiliated with Wei Lai, and if he publicly stated his strategy, it would cause some trouble for Robin's operations.

Under the leadership of Robin Danholm, Lotus has undergone tremendous changes in the past two years as it accelerates its electrification transformation. It is no exaggeration to say that it has been completely transformed. Electrification, brand premium, and resource integration have become the focus of Robin's work in the past two years.

In the past two years, Lotus has launched two models: a gasoline-powered car and a pure electric luxury SUV. The gasoline-powered car has been confirmed, and this is the last generation of Lotus gasoline-powered cars to be released.

The Emira gasoline version, with a starting price of 85.8 yuan, became Lotus's swan song in the gasoline car field. Lotus will no longer release gasoline cars in the future, and this Emira will be launched in a limited number of units.

In addition to the gasoline-powered Emira, Lotus also released a luxury electric SUV ahead of schedule, namely the Eletre series, which is named "Fan Hua" in China.

The Lotus Jiangcheng plant is a pioneer in the Weilai Gigafactory plan. Having achieved electrification, it is now fully capable of mass production. In the fourth quarter, the monthly production capacity of the Lotus Jiangcheng plant will reach 3000 vehicles.

Lotus's total deliveries for the year are expected to reach 1.2 to 1.5 vehicles. Most importantly, Lotus will transition from focusing on gasoline-powered sports cars to electric SUVs in 2023.

The delivery time for the Blooming Flower is October of the fourth quarter. The competition in the luxury SUV market this year is extremely fierce, and the pressure from its sister company, Weilai Auto alone is enough to suffocate Lotus.

However, in the domestic market, if a breakthrough is desired, it must start with SUV models. SUVs are the most suitable models for the Chinese market. Lotus's breakthrough point is a high-end pure electric SUV, a model with a range of 600 kilometers, support for 800V fast charging, and performance parameters comparable to the Porsche Cayenne Turbo S.

The high-end electric SUV market continues to grow, with Wynn and Tesla accounting for 70% of the market share. As a supplementary model to Wynn, the Fan Hua has received a lot of attention since its launch.

However, what attracts the most attention is the starting price of the Blooming Flowers.

With a starting price of 52.8 yuan, Lotus, no longer confined to the pure sports car manufacturer, has given the high-end niche market a slight shock with a starting price that is 40% lower than the average price of its own brand's gasoline cars.

Lotus has enabled Wola to achieve its aerodynamic, lightweight, and chassis tuning technologies, while the acquired Lotus has also benefited from Wola's support in electrification, with its access to Wola's global supply chain being one of its core advantages.

This significantly reduces the marginal cost of Lotus's electric vehicles.

The price of 52.8 yuan significantly lowers the entry barrier for Lotus, but thanks to the supply chain, the Flower series can still achieve extremely high gross profit.

Depending on sales volume, the gross profit of a single vehicle in the Blooming Flower series can range from 5.3 yuan to 10.6 yuan, which is a gross profit margin of 10% to 20%. Of course, it is currently operating at a loss, and a huge loss at that.

Accelerating electrification is not just a slogan, but requires huge investments. This is one of the reasons why Lotus is eager to go public. After the investment in new energy vehicles has subsided, Lotus's market value has remained between $80 billion and $100 billion this year, comparable to Li Bing's Wenjie.

However, the car model "Fan Hua" also has a rather funny name, which is jokingly referred to by netizens as "Wei Lai Wang".

The three-electric system and production platform are all from Weilai. The intelligent cockpit and electronic system are also purchased from Weilai. The whole car has a strong Weilai gene. The three models, priced from 52.8 yuan to 102.8 yuan (track version), are also regarded as the most expensive models of "Weilai".

The "Blooming Flowers" series thus earned it the nickname "King of the Weilai".

At 52.8 yuan, it strikes a good balance between high-end genes and market expansion, maintaining brand premium while avoiding fierce market competition in the 30 to 50 yuan range, and targeting the blue ocean market in the 45 to 60 yuan range.

Positioned in this middle ground, the Blooming Flower series targets consumers who simultaneously seek brand uniqueness and driving pleasure, reducing direct competition while also increasing the profit margin per item.

However, the Flower series has not been heavily promoted. Lotus's core competitiveness lies in the scarcity of its brand and the uniqueness of its technology, its deep cultivation of racing culture and the ultimate user experience. Even in the process of electrification, it must maintain its own style.

Furthermore, although the track version has a starting price of 102.8 million yuan, its 0-100 km/h acceleration time of 2.95 seconds and maximum power of 918 horsepower make it superior in terms of performance. If it is marketed using conventional promotional methods, it is easy to cause misunderstandings among users who do not understand track culture.

If a high-performance SUV is impulsively purchased by a user who is unaware of its capabilities and misled by marketing claims, it can be a disaster for the owner, as well as for other vehicles and pedestrians on the road.

This is why the high-performance track version is priced much higher than the regular sports version; by raising the purchase threshold, it deters some impulsive buyers.

"So, Wei Lai is going to abandon this market?"

Having received a positive response from Tan Jincheng, Zhang Xinyue followed up by asking, "Weilai is truly an atypical car manufacturer. While all capable car companies are pursuing high-priced models, Weilai has no such plan."

While most automakers are raising prices to offset so-called cost increases and pursue higher profits, Weilai adheres to the principle of not raising prices and cuts prices on its high-end models. Although there are strategic reasons to consolidate the market, it is still a non-mainstream behavior.

"That's not quite right. Lotus is also part of the Weilai system. Weilai doesn't need to launch a similar model to compete with the Fan Hua series. That would be a waste of resources."

Although they operate independently, from the perspective of the actual controller, from Zhidou to Yuechi, from Wei to Lotus, including Proton, they all belong to the same system. Within the same system, it is sufficient to meet the price requirements at each stage.

What brand it is isn't that important.

"Okay, I understand; I have another question. I wonder what plans Wei Lai has for the pricing of other models?"

This is the final question in today's interview, and it's also the most pressing issue in the current automotive market. With BYD raising prices across its entire lineup, no one can guarantee that Weilai won't lower prices across its entire lineup.

The Exeed S01's disruptive performance directly robbed the Qin EV series of 20% to 30% of its market share, delayed the launch of the Yuan PLUS, and also forced the Ocean series to accelerate its rejuvenation.

Besides BYD's swift response, other domestic automakers also felt the pressure from Exeed S01, which even had a significant impact on the pricing system of the Exeed S01. With orders booming after more than a year on the market, if Exeed S3 were to lower its price, it would reshuffle the market in the 10 to 15 yuan range.

Tan Jincheng smiled and said, "That's hard to say. Our pricing mechanism changes according to market fluctuations."

Weilai has no plans to lower prices this year, given the significant increase in raw material costs. Weilai can use price reductions to solidify its position in the high-end SUV market because its profit margins are sufficient. However, while there is room for price cuts in the mid-to-low-end segment, there is no need to do so.

The ET5, which is considered to have the most potential for price reduction, has a starting price that is much lower than the 24.61 yuan price of B-class pure electric sedans. In terms of cost performance, the ET5 is already enough to maintain its market competitiveness.

The same goes for the Exeed S01. It sells so well, and although it is more expensive than the Qin EV series, the advantage of its technology being transferred to lower price ranges is enough to make up for the price difference.

In the first half of the year, Exeed S01 accumulated sales of 117,000 yuan, with monthly sales approaching 20,000 units. Sales in the second half of the year will only be better. Based on the current accumulated sales and past data, the sales range of S01 in the second half of this year is 135,000 to 170,000 units.

The annual sales volume was between 260,000 and 280,000 units. It is the first new energy vehicle model in Wuling to achieve annual sales of over 200,000 units, and the second model after the Wuling Hongguang MINI EV to achieve the same milestone.

Strictly speaking, the launch of BYD Seagull is less about targeting the microcar market and more about competing with Exeed S01 in a differentiated way.

The Seagull, which was launched in April, has also been very popular. With a market guide price of 7.38 to 8.98 yuan, Seagull achieved a sales volume of 1.65 units in June. This price is simply too good to pass up for a commuter car.

Zhang Xinyue was stunned for a moment. Boss Tan responded to her question, but it was as if he didn't respond at all. However, there was nothing she could do. She had no reason to ask the head of a car company to clarify whether the price would be adjusted in the second half of the year.

"Never mind, I've asked enough, so I've accomplished my mission."

After silently comforting herself, Zhang Xinyue smiled and said, "Thank you, President Tan. That concludes today's interview."

The last question felt a bit anticlimactic at the end, but Zhang Xinyue was still quite satisfied with the overall interview. In addition to clarifying Weilai's high-end pricing strategy, Tan Jincheng also discussed battery technology, vehicle body integration, driver assistance, and other new technologies.

Tan Jincheng also criticized the current chaotic marketing of intelligent assisted driving technology without reservation. In addition, he revealed that the Weilai brand has no intention of entering the luxury car market above 50 yuan.

Whether Weilai can maintain its strong position in the market above 50 yuan is unknown, but given its performance in the 30 to 50 yuan market, if Weilai really makes a full-scale entry into the market above 50 yuan, even luxury brands will have to take it seriously.

In this interview, Tan Jincheng revealed a lot of information to both industry insiders and consumers. In fact, there were still many questions Zhang Xinyue wanted to ask, but since it was currently the interim report reporting window, most of the plans had been rejected by Tan Jincheng's team.

In mid-July, the revenue figures for the first half of the year for several subsidiaries of Weilai were released one after another. Jinshidai, Yuechi Auto, Weilai Auto, and Zhidou Auto, which was included in the sales and financial statements this year, all provided their half-year data.

It's even better than everyone imagined.

Jinshidai achieved revenue of 1129.71 billion yuan in the first half of the year, a surge of 156.32% in the first half of the year. In terms of the automotive business, including Zhidou Auto, Weilai Auto's total sales reached 107.42 million vehicles in the first half of the year.

Separating Yuechi Auto and Zhidou Auto, Weilai Auto's half-year sales of 65.22 vehicles also firmly ranked first in total sales and first in global new energy vehicle sales.

As the two most outstanding automakers in the first half of the year, both WYD and WYD had new energy vehicle sales accounting for 100% of their total sales. The rapid increase in sales of the two new energy companies has completely broken the monopoly of joint venture brands.

The former kings, Volkswagen and SAIC-GM, saw their sales decline by 27.3% and 15.9% respectively in the first half of the year, while SAIC-GM's sales plummeted by 33.1%. The former king of the bathhouse suddenly stopped selling.

This isn't even the worst part. Korean brands Kia and Hyundai saw sales declines of 52.5% and 48.1% respectively, leaving the brands marginalized.

Meanwhile, other traditional domestic brands like Great Wall and Geely, which have been slow to embrace electrification, have also experienced a severe decline in sales.

"Suddenly, gasoline-powered cars have stopped selling well, which is the biggest feeling among all car dealers."

Although the market share of gasoline-powered vehicles has only decreased by 10% compared to last year, the impact is enormous. Popular models that used to command premiums and have long queues, and the once-powerful 4S store sales, are now like the real estate market, a thing of the past.

On the contrary, salespeople of new energy vehicles have no shortage of orders. Take popular models from brands like Wynn and BYD as examples; salespeople can sit in the store and have orders waiting for them, making selling cars much easier.

"Thank goodness we listened to President Tan and made the transformation in time, otherwise this year would have been too difficult."

Within the Weilai dealer network, the hardest hit are naturally the original dealers and 4S stores of the Yuechi series. Most of these dealers have grown up with the Yuechi A1 and experienced the glory of the A1 era, making money hand over fist.

Now, they are facing the prospect of not being able to close a deal for a long time, and the psychological gap is quite obvious. However, what they care about most is their future.

Some 4S stores and dealers that cooperated with the transformation have obtained some sales rights for the Galaxy series, which has given them some buffer space. However, some dealers who are unwilling to cooperate with the transformation are now facing the risk of being eliminated.

Fortunately, it is still a special period, and Weilai's performance assessment for dealers and 4S stores remains very relaxed. In addition, front-line sales staff are also given the opportunity to transfer to other Weilai stores or other positions.

With the transformation and changes in the industry, some employee optimization was inevitable at Weilai. However, given the background at the time, Tan Jincheng still required the administrative department to make arrangements for front-line employees as much as possible.

Going to other stores or other jobs is much better than losing your job.

On July 15, Weilai Group announced its 2022 semi-annual performance forecast and equity distribution implementation announcement. In the first half of the year, Weilai Group achieved a total revenue of 3175.08 billion yuan.

In the first half of the year, only a handful of companies achieved total revenue exceeding 3000 billion yuan.

Weilai Group's overall revenue has surpassed that of GAC and SAIC, and while winning the sales crown for half a year, it has also won the top spot in revenue in the automotive industry.

Of course, if we only consider the automotive business, Weilai is still not as good as SAIC and GAC. Although the sales of these two companies have declined significantly, they are still very difficult to compete with.

The half-year revenue of Welai, amounting to 3175 billion yuan, was repeatedly compared to Tencent's 2695 billion yuan. The better-than-expected revenue somewhat alleviated the downward trend in Welai's stock price.

In terms of shareholder equity, Weilai is quite generous. Based on 2021, Weilai plans to distribute a cash dividend of RMB 6.528 per 10 shares to all shareholders. Based on the current total share capital of 24.4 billion shares, Weilai will distribute a total of approximately RMB 15.93 billion in cash dividends this time.

Of course, Tan Jincheng and his family received the majority of the 15.93 billion yuan cash dividend. Although his shareholding ratio has been declining, Tan Jincheng still holds a considerable number of shares in Weilai.

Due to factors such as share reduction and dilution, Tan Jincheng's shareholding in Weilai Group has decreased from over 51% initially to the current 40.34%. This is an inevitable part of capital operations, but he is not at a loss. The current 40% is much more valuable than the original 100%.

This time, Tan Jincheng and his family will receive a total of approximately 6.43 million yuan in cash dividends, which is more than the revenue of most A-share companies.

On the day of the announcement, Weilai's market value remained above 1.3 trillion yuan. At a time when the new energy industry is declining and A-shares have once again entered a downward trend, it is not easy for Weilai to maintain its current market value.

Since the end of last year, the ChiNext market has fallen by more than 20%, and the Shanghai Composite Index has also fallen significantly. The bull market in the new energy industry has basically ended. Whether the market value is undervalued in a bear market is not important to investors.

Even if you are the leader.

However, not all of Weilai's financial report is positive. For example, the average selling price of Weilai vehicles decreased significantly in the first half of the year.

Excluding Jinshidai's revenue, based on automotive business revenue and sales volume, the average selling price of Weilai vehicles, including both gasoline and new energy vehicles, has declined to 19.04 yuan, while the average selling price of new energy vehicles has also rapidly declined to 20.24 yuan.

Although it is still not low, partly due to the surge in sales of mid-to-low-end models, it is still worth paying attention to.

"This is exactly what I wanted; this is what I expected to exceed my expectations."

During the earnings conference, facing questions from shareholders of all sizes, Tan Jincheng remained calm and composed, stating that lowering prices was also one of Weilai's strategies this year. Only by reducing the average selling price could they face the increasingly fierce market competition ahead.

To be honest, both Didi and Tesla are price killers, and Weilai must not leave consumers with the impression of being "expensive".

These two companies are putting a lot of pressure on Wei.

(End of this chapter)