2003: Starting with Foreign Trade

Chapter 1042 The 5% Plan for the European Market
2022 was a year of explosive growth for new energy industries such as lithium batteries, photovoltaics, and new energy vehicles.

In these industries, it's not particularly unusual for half-year revenue to exceed the total revenue of last year. According to incomplete statistics, at least seven companies have achieved half-year revenue exceeding the total revenue of last year.

Several companies have reached this standard and are on the verge of being listed. Taking the lithium battery industry, where raw material prices have skyrocketed, as an example, Tianqi Lithium's revenue in the first half of the year increased by 508% compared to last year, and its revenue in the first half of the year was almost double that of the whole year of last year.

Jinshidai and Weilai Group are already close to this standard, as is BYD. This industry-wide boom is rare in the A-share market and even in the global capital market.

The last time there was such a large-scale outbreak, with almost everyone able to eat meat, was during the boom period of e-commerce, right?

However, this only applies to the new energy industry. Apart from the two rapidly growing new energy vehicle manufacturers, WELAY and BYD, and emerging brands like SERES, the revenue of other traditional manufacturers in the first half of the year was not very good.

Most automakers saw a year-on-year decline in revenue, mainly due to the drag from gasoline-powered vehicles. This included Yuechi Auto, which was significantly affected. However, for Weilai Group as a whole, the revenue in the first half of 2022 was encouraging.

The growth rate of the new energy business exceeded expectations, with total vehicle sales of 107.42 million units, already achieving half of this year's sales target. The company's annual strategy is progressing in the intended direction.

"The test will come in the second half of this year."

The special events that broke out in Shanghai in April affected the overall course of events. Since April, similar events have broken out in various parts of the country, and the postponed Beijing Auto Show was eventually canceled.

Meanwhile, major domestic auto shows such as those in Chengdu and Guangzhou were either postponed or hastily held, which greatly affected most important offline events in the second half of the year. After the Beijing Auto Show was postponed in April, Wei decided not to participate in auto shows at the group level anymore.

Most new car launches are also conducted online. As for local dealers and subsidiaries, the group company will not prevent them from participating in exhibitions using the Weilai brand, but they need to submit their plans in advance. If the plans do not conform to the corporate culture and cause controversy in the public opinion, countermeasures need to be prepared.

"Is the supply in Shanghai keeping up?"

"If we can keep up, we'll prioritize bringing more models to the Shanghai market."

New energy policies are constantly being adjusted. In addition to the gradual reduction and return to normal of subsidies, the biggest change is the issuance of license plates. Starting from January 1, 2023, Shanghai will no longer issue special license plates for hybrid vehicles.

For most people born and living in major cities like Beijing, Shanghai, Guangzhou, and Shenzhen, it's perfectly normal for a license plate to be more expensive than a car, especially in Beijing and Shanghai where it's the most exaggerated. The window of opportunity for new energy vehicles has solved the license plate problem for most people.

Once the green license plates for hybrid vehicles are discontinued, it will block another way for them to obtain licenses. Therefore, in the remaining months of this year, range-extended electric vehicles, including BYD's DM series, Galaxy series, and L series, have become the target of purchase for Shanghai residents.

"That's good. We can release another L-series model next year, and then our L-series lineup will be pretty much complete."

From being misunderstood and belittled for relying on refrigerators, color TVs, and large sofas to sell cars, to seeing large companies everywhere releasing range-extended electric vehicles, even Xiaopeng Motors, which is obsessed with pure electric vehicles, now has plans for range-extended electric models.

It's quite obvious that major automakers have already figured out the logic behind the hot sales of range-extended electric vehicles.

In terms of vehicle configuration, the battery capacity of range-extended electric vehicles (REEVs) at various price points is typically between 50 and 100 kWh, with a range of generally between 150 and 300 kilometers. Based on the average daily commute of approximately 50 kilometers for most Chinese car owners, REEVs meet the commuting needs of 90% of them and can be used essentially as pure electric vehicles.

In terms of long-distance range, the range of over 1000 kilometers is sufficient to ensure highway travel for most people. It can also enjoy the preferential policies of new energy vehicles and the right-of-way for range-extended vehicles. In terms of driving experience, it can also balance the smoothness of pure electric vehicles and the reliability of fuel vehicles.

In terms of charging, although fast charging is being vigorously promoted and the number of charging piles in China is growing rapidly, charging is still difficult in third- and fourth-tier cities and old residential areas, and there are still long queues at charging piles in highway service areas during peak hours.

Range-extended electric vehicles are less dependent on charging. Even without charging stations, users can simply fill up with gasoline without having to plan their trips specifically for charging. This ability to charge in any charging scenario perfectly suits the reality of uneven and imperfect infrastructure, lowering the barrier to entry for users.

This is from the user's perspective. From the car manufacturer's perspective, the technical threshold is low. Among the three major technologies, including hybrid and pure electric, the range-extended electric vehicle has the simplest structure.

When a technology is extremely simple and the market can accept it, whether it's a transitional technology or how many years it can last is irrelevant. Just start doing it and make money first.

This also shows the keen business sense of Chrysanthemum. When all the car companies were immersed in the controversy over range-extending technology because they either looked down on it or were too embarrassed to admit it, they did not hesitate to pull Seres into the fray.

The big mouth has gone from criticizing to praising, making Seres the second automaker after Wei Lai to reap the big profits from range-extended electric vehicles.

From Weilai to Juhua, and then to the increased investment from brands like Changan Deep Blue and Leapmotor, as well as new players like Xiaopeng preparing to enter the market, the market for range-extended electric vehicles is growing larger and larger, covering the price range of 15 to 50 yuan. This is no longer a so-called transitional solution, but a genuine mainstream option.

In 2022, range-extended electric vehicles accounted for 3.6% of the domestic new energy vehicle market share, with an average annual compound growth rate of over 100%. It is expected that by 2024, the market share of range-extended electric vehicles in the new energy vehicle sector will increase to over 10%, with total sales exceeding 100 million units.

"Boss, are you really not going to Europe? Can I go instead?"

From January to June, the total sales of new energy vehicles in China reached 260 million units. BYD ranked first with a market share of 27.03%. Through the growth of range-extended electric vehicles, it has also entered the hybrid market and is leveraging BYD's market share in the hybrid market.

For every four new energy vehicles sold, one is from Weilai. This market share may seem like there's still a lot of room for improvement to outsiders, but Tan Jincheng is already very satisfied.

An increase in annual sales volume means that a company's investment must also increase to a higher level. The three years from 2020 to 2022 may not be very favorable for ordinary people, but for most companies, the impact is actually more positive.

Three years have given companies a lot of room to grow. For travel companies like theirs, the demand has increased dramatically. In the past, everyone lived in a comfortable environment, and the investment in infrastructure by various countries was also very large.

It's convenient to go anywhere, and there's no need to worry about transportation. Over the past three years, most people have realized that having a car, even a two-wheeled one, is very important for themselves and their families. The so-called environmentally friendly travel is no longer being deliberately promoted.

Without these three years, it would obviously be impossible to popularize the concept of personal travel consumption so quickly. Now that everything is normal in the domestic market, exports have become the next focus for Weilai.

In terms of new energy vehicle exports, Tesla, SAIC, and Weilai remain the top three players in the domestic market. Tesla accounts for half of the exports, and more than 50% of the production capacity of the Shanghai Gigafactory is used for exports to Europe.

If Weilai wants to make a breakthrough in exports, in addition to setting up factories in Europe to avoid the 10% tariff, the most important thing is to increase sales. Therefore, Weilai's overseas branch has a 5% plan for the European market.

That means maintaining WIL's 5% market share in Europe. Based on the expected sales of 250 million vehicles in Europe this year, WIL needs to achieve sales of 12.5 vehicles in Europe this year.

With the continued rise in sales of new energy vehicles in the coming years, relying solely on the existing sales model will certainly not be enough to maintain market share in Europe.

The first step for Weilai is to further expand its brand influence in Europe, so that more Weilai models can be seen on the streets. Car rental companies are Weilai's best partners.

SIXT has become the best choice for Weilai. As the largest car rental company in Europe, it has more than 2100 locations worldwide and a fleet of more than 24 vehicles. SIXT intends to increase the proportion of electric vehicles to between 70% and 90% by 2030.

WILRE is one of the two most well-known brands in Europe, besides those in Europe itself. Compared to Tesla, another major brand, WILRE boasts high cost-performance and mature technology, making the cooperation between the two parties a perfect match.

It's worth mentioning that SIXT was founded in Munich in 1912, but its current headquarters are located in Fort Lauderdale, Florida. As of 2022, it operated in 105 countries worldwide and held a 32% share of the German car rental market.

“Through our partnership with SIXT, Weilai can more quickly penetrate mainstream European consumer scenarios, bypassing the long cycle of building traditional dealer networks and directly reaching individual users and corporate clients. We are very satisfied with this collaboration.”

On September 1, Li Xiang, who attended the signing ceremony, spoke eloquently in front of the barrage of questions from European and world media.

However, Li Xiang still harbored some resentment in his heart. Logically, the boss should be present at such a scene, but the boss was unwilling to go abroad, arguing that the domestic market was more important, and that the L9 would begin delivery this month, so he had to keep an eye on it.

However, according to Li Xiang's guess, it was obvious that the boss did not want to go abroad. This had always been the boss's style; he would avoid going abroad if he could avoid it, which was almost an open secret.

But there's nothing we can do about it; he's the CEO, so sending him to handle this isn't considered neglecting his duties.

Due to the current geopolitical situation, both sides maintained a low profile during the initial negotiations, with only a few domestic media outlets reporting on them. European media also adopted a cautious approach initially, offering little commentary. Before the signing, European media focused primarily on the technical aspects of the battery technology. The Handelsblatt commented that compared to European automakers' long supply cycles and slow production progress in the electrification process, Chinese automakers, led by Weilai, had already surpassed them in battery technology, boasting a mature supply chain, and thus gave a positive assessment.

However, before the signing, some media outlets remained skeptical about the collaboration. Most media believed that SIXT chose WILK not because of its technological advantages, but because of its price.

Handelsblatt gave it a positive review, but there were also many negative comments about the collaboration. Bild called it an "occupation movement," with SIXT acting as an agent. Focus magazine went so far as to say it was a slap in the face to German automakers.

Because SIXT did not choose the Volkswagen ID.4, some radical ZKs, even rising to the political level, publicly questioned this cooperation. Keeping a low profile was out of necessity.

“We have our own vehicle manufacturing plant and battery plant in Europe. This cooperation is based entirely on market rules and technological strength. We will serve European customers through localized production and localized services.”

Yu Liguo, General Manager of the International Business Division, also responded to public questions at the signing ceremony. Currently, the Thuringian battery factory has an annual production capacity of 14GWh and has fully achieved normalized production. In addition, there is a planned production base in Hungary.

On the customer side, BMW, which has renegotiated its supply contracts, sources all its i-series batteries directly from its German factory. Mercedes-Benz, Volkswagen, Volvo, Stlantis, Tesla, and other customers combine export and direct supply models.

After the Hungarian factory goes into operation, the battery supply to Europe will be 100% localized. In addition to BMW, a long-term strategic partner, Weilai has many well-known European car companies in close relationship with Weilai.

On the one hand, companies like Mercedes-Benz and Volkswagen still rely heavily on battery suppliers, especially in Europe. There are only a handful of excellent battery suppliers worldwide, and even fewer that have built factories directly in Europe.

Take Mercedes-Benz as an example. 40% of the batteries for its EQ series come from Weilai. Volkswagen is now directly competing with Weilai for the SIXT order, and is even resorting to political means to try to suppress this cooperation.

However, Volkswagen's battery supply is also inseparable from WEL. The batteries for the ID.3 and ID.4 series are supplied by two companies in China: Jinsheng New Energy and CATL.

European companies' anxiety stems from this. On the one hand, they cannot do without our supply chain, especially in the field of electric vehicles. Currently, the global industrial chain cannot do without our component manufacturers.

In the Ningbo area alone, there are many excellent new energy vehicle component suppliers, which cannot be ignored. The US can still exert some influence with chips, but European automakers do not have this advantage.

In the domestic market, the market share of BBA (BMW, Mercedes-Benz, and Audi) is decreasing year by year. In order to increase sales, BMW and MINI have even been listed on the Weilai APP. Their advantages in the supply chain are no longer obvious. The anxiety of European media and Z-type customers is understandable.

According to statistics from the German Industry Association, in 2022, the market share of European domestic automakers in the electric vehicle market plummeted from 78% to 65%. The entry of Tesla, WooLan, and other brands from the ZG region into the European market has brought unprecedented challenges to European domestic automakers.

Take Weilai as an example. Weilai, which first used Jinshidai as a springboard to enter Europe, has been expanding its presence in Europe at an increasingly rapid pace in recent years, including the battery factory in Thuringia and the Hungarian battery factory under construction, as well as the acquisition of Ford's vehicle manufacturing plant in Germany.

In addition, regarding the expansion of its service network, after a six-month legal battle with Tesla, Weilai's overseas branch immediately announced a partnership with Shell, opening up 30 charging stations in Europe and establishing 350 service outlets, promising a 48-hour response time for after-sales needs.

In terms of channel development, in addition to establishing more directly operated stores in core sales regions such as Germany, France and Northern Europe, we also cooperate with large European distributor groups to reduce channel costs.

European localization of production, combined with the advantages of the domestic industrial chain, reduces the overall vehicle BOM cost by 15% to 20%, which is something that European automakers can hardly match.

In addition to these, Weilai clearly has a deeper understanding of localization. The models exported to Europe are not simply copied from the domestic models, but are specifically developed to suit the European market.

For example, in terms of compliance, it meets the EU's stringent standards for battery safety, crash testing, and data privacy. The ET5 model quickly doubled its sales in Europe. In response to the cold climate of Northern Europe, it has enhanced low-temperature battery range, and the vehicle system is also pre-installed with mainstream European navigation and a voice assistant that supports multiple languages.

In terms of product positioning, Weilai has launched economy models priced between 2.5 and 3.5 euros, and plans to launch high-end models with a range of over 700 kilometers to fill the gaps left by Audi and BMW.

In terms of brand marketing, Weilai has also put a lot of effort into it. It has its own KOLs to provide a platform for Weilai to voice its opinions. Under the current correct concept of environmental protection, Weilai regularly publishes carbon footprint reports to cater to European environmental policies.

In addition, the company enhances brand awareness and strengthens its relationship with ordinary consumers by sponsoring European football leagues, e-sports teams, and other organizations.

Currently, WIL is one of the sponsors of the top five European football leagues: the Bundesliga, Ligue 1, Serie A, La Liga, and the English Premier League. In addition, WIL, based in Germany, also provides significant support to the lower leagues in Germany, including the 2. Bundesliga, which has a rich football culture.

In factories like Thuringia, local communities even supported their leagues. This approach of integrating with the local community earned them great favor from the residents. No matter where you are, personal relationships are essential, and foreigners also greatly need this kind of social interaction.

These necessary expenses greatly facilitated Wei Lai's business operations.

Meanwhile, in the UK, located in the EU, there are also plans to build a factory, but not to rebuild it. Instead, they will renovate the Heysel factory. Robin Danholm's radical electrification policy has led Lotus to consider closing its Heysel car factory.

With the discontinuation of gasoline-powered vehicles, the Heysel plant is indeed no longer necessary for a car company of Lotus's size. However, if it were up to someone else, the Heysel plant would still be very beneficial.

Because the UK is not part of the EU, many policies are different, making localized production much more convenient.

Currently, Wynn offers four models in the mainstream European market, all from the E series, with prices ranging from 2.9 euros to 7 euros. Next year, they plan to launch a sports coupe, a mid-size SUV, and an electric bus.

"In 2023, WILAY will add 200 stores in Europe, and all models will pass the Euro NCAP five-star rating and the European ECE R100 battery safety standard."

"In addition, in terms of charging compatibility, it supports the European standard CCS2 fast charging and access to local networks. There are also some limited-time promotional activities to further boost our sales in Europe."

Li Xiang turned the signing ceremony into a press conference to announce Wei Lai's plans for Europe, sharing Wei Lai's plans in Europe. However, this was not because he was arrogant, but because he and Yu Liguo had different roles.

The cooperation with SIXT was mainly facilitated by Li Guo. Li Xiang only participated in the signing ceremony as a representative of the head office, hence the different answers to questions.

This collaboration with SIXT is a six-year plan covering 2022 to 2028, under which WIL will supply SIXT with at least 10 electric vehicles over the six years, with the first deliveries scheduled for the fourth quarter of this year.

The first batch of delivered vehicles is the ES3, which has a pre-sale price of 3.8 euros in Germany and a range of over 400 kilometers. In the first three years of the cooperation, Weilai expects to account for more than 50% of the deliveries.

It primarily covers the four major markets of Germany, France, the UK, and the Netherlands, and will gradually expand to other European countries in the future.

In addition, the two parties will also cooperate deeply in areas such as charging network collaboration, after-sales service system, data sharing and iteration, especially the last one, data cooperation, which is crucial for Weilai.

Both parties plan to leverage user data accumulated through leasing scenarios to optimize the localization design of the next generation of models, such as adjusting the suspension system and vehicle-machine interaction logic to suit the preferences of European users.

This is why radical Z-hackers labeled SIXT as "German JIAN" (a derogatory term for German companies). In this day and age, data is of paramount importance to businesses and even on a larger scale.

However, these people don't have a good way to deal with SIXT. The cooperation with Weilai is crucial for SIXT, as they can save at least 15% to 20% of costs, which directly translates into an advantage over competitors.

Compared to purchasing the ID.4, purchasing each Weilai model is €12 cheaper. According to SIXT's previous data, Weilai's intelligent temperature control system and L2-level assisted driving function have made its customer satisfaction in the rental market 1.2 percentage points higher than that of similar models.

"Volkswagen's most popular electric and intelligent models are the ID.3 and ID.4. Just look at their sales figures in China to see how poorly they've performed."

When it comes to electrification, it was the Europeans who first started. These established companies and their countries were making louder pronouncements, such as phasing out gasoline-powered cars by 2025 or 2030.

However, after more than a decade, the one that has fared the best is actually the MINI EV, which is deeply intertwined with Weilai, which is quite laughable.

In the first half of the year, Volkswagen Group's two subsidiaries, including Jetta, sold a total of 7.59 new energy vehicles. Looking at BMW MINI, they were truly envious, especially after it joined the Weilai APP.

(End of this chapter)