2003: Starting with Foreign Trade

Chapter 1045 A Million-Dollar Milestone: Being Prepared for Unforeseen Circumstances
September and October are traditionally peak sales months. Although production in Weilai was affected to some extent in September, production capacity was shifted to higher-selling models, and existing inventory was also prepared, so sales were not significantly impacted.

Driven by the countdown to the subsidy deadline, the market for vehicles priced between 10 and 20 yuan has seen a full-blown surge, with strong demand for key models such as Exeed S01, Dolphin, Yuan PLUS, and Galaxy P1.

"BYD shutting down its gasoline-powered vehicle business is actually quite reasonable."

Tan Jincheng held up Weilai's monthly sales figures in his hand. On his desk were several A4 sheets of paper showing the sales figures for several other companies this year, namely Tesla, BYD, and Geely.

Except for the first two months this year, WILAY's total monthly sales have never fallen below 100,000 vehicles. From March to May, with BYD's production capacity limited and Tesla's production capacity affected by the Shanghai market, both companies experienced temporary production problems. WILAY seized this opportunity immediately.

Since March of this year, when Weilai achieved a total sales volume of 100,000 vehicles in a single month, its sales have maintained a steady increase every month since then. By the end of August, Weilai's total sales of new energy vehicles for the year had reached one million vehicles.

With four months remaining, Weilai has already achieved over 70% of its annual new energy vehicle sales target. In early September, Weilai announced a readjustment of its 2022 new energy vehicle sales forecast, raising its previous target to 160 million vehicles for the year.

Following Wei's lead, BYD also adjusted its annual sales forecast, raising its previous sales target of 120 million vehicles to 150 million vehicles.

Both companies that significantly increased their sales forecasts share a common characteristic: firstly, the production capacity ramp-up for each model of these two automakers has been completed. BYD Changan's Luzhou plant went into operation, and Weilai's Luzhou and Changzhou industrial bases also successfully started production during this period.

Secondly, during the policy window of the reduction of new energy vehicle subsidies, the two companies secured a large number of orders in advance. With their main competitor, Tesla, having a limited number of models, they leveraged its policy and production capacity advantages to exert their strength.

Besides these two external factors, the most crucial factor is that the two automakers have formed their own moats in terms of technology, vertical integration capabilities from top to bottom, and independent control of the supply chain.

In terms of battery supply, Weilai is able to achieve 100% self-sufficiency and control. Apart from some affiliated brands like Zhidou that introduce second-tier suppliers like Guoxuan due to cost considerations, all batteries in Weilai's main product system are supplied by Jinxin Times.

In the semiconductor and electronic control sectors, starting in the fourth quarter of this year, we will also be able to achieve self-sufficiency in the industrial chain and get rid of our dependence on overseas suppliers. The integrated electric drive system from Weilai adopts a highly integrated motor and electronic control system, and its efficiency can reach the level of Tesla.

In addition, the continuous investment in thermal management and range optimization, as well as the world's first integrated die-casting technology, have reduced the manufacturing cost of a single base plate by 40% and reduced the number of parts from 70 to one. This is a major innovation in automotive technology.

With its charging stations covering China and Europe, comprehensive service system, transparent pricing, and 12 OTA upgrades throughout the year, including several major updates that allow users to improve performance without having to send their devices back to the factory, Weilai has attracted a large number of loyal users, with repeat purchases from existing users exceeding 60%.

By leveraging the speed of technological iteration and the effects of large-scale production, Wynn has built its own moat in the pure electric and range-extended electric vehicle fields. BYD is the same, except that BYD's advantage lies in hybrid power.

One is a pure electric behemoth, and the other is a hybrid behemoth. Both are penetrating into various advantageous areas, but they are also tacitly guarding their own tracks. However, neither Wynn nor BYD is without its shortcomings.

BYD's weakness lies in its advanced autonomous driving technology. Currently, BYD can only achieve Level 2 assisted driving, and it is relatively basic. Their solutions still mainly rely on Mobileye, and their progress in high-end development is slow.

BYD's current high-end models mainly rely on the Han EV series, which has an average price of around 25 yuan. It is far less high-end in terms of quality, and the Han series accounts for too high a proportion of ride-hailing sales, which has affected its image to some extent.

The Han series accounts for 15% to 20% of the sales in the B-end ride-hailing market. Although there are many people using high-end models like the Weilai series and Tesla models for ride-hailing, those are all individual behaviors of car owners. Such a high percentage as the Han series is still quite rare.

The Han DM series is more commonly used for family purposes, while the Han EV series accounts for over 25% of ride-hailing services in first- and second-tier cities, even approaching 30% at one point. For a high-end brand, such a high percentage is indeed detrimental.

As is their long-standing habit, when sales are hampered, Dizi will target the B2B market to increase market share. While this approach does have many advantages, it also has more disadvantages.

The average price of the Han EV exceeds 27 yuan, which is almost the ceiling for ordinary families. No consumer wants to exhaust their savings to buy a high-end car, only to have it parked on the roadside and randomly pulled over to ask for its license plate number.

This is also one of the reasons why the Dizi's progress in becoming a high-end brand has been slow. Back then, the Qin series was also one of the most impressive models, but it was subsequently deployed in large numbers for ride-hailing services, which "backstabbed" its consumer base.

Looking up to the million-level positioning largely reflects Dizi's realization that it is already quite difficult for them to make a breakthrough in the million-level price range. They have blocked the path of breakthrough from the top up, so they might as well learn from Wei's top-down strategy.

Luxury brands in the million-level segment are not pursuing sales volume, which allows them to remain steadfast in their determination. Once they succeed, they can launch models with prices lower than their competitors.

BYD has its own shortcomings, and so does Weilai. Compared to BYD, Weilai is not as diverse in terms of models. The Dynasty and Ocean series, which are sold through dual networks, offer both pure electric and hybrid vehicles. As of 2022, BYD had a total of 21 new energy vehicle models on sale.

With prices ranging from 6 to 30 yuan, plus the newly launched Yangwang and Denza brands, BYD has further enriched its new energy vehicle lineup.

As for Weilai, although Weilai currently sells one more range-extended electric vehicle model than BYD, it only has 11 models. Although new models will be launched in the future, Tan Jincheng's strategy of having only three models in each major series limits the number of models that can be launched.

The ES series models are already fixed, the L series will only have one model to be launched in the future, the ET series will have two more models in the future, plus Exeed and Galaxy, Zhidou will each have two more models, so in the two major segments of sedans and SUVs, there will only be 21 fixed models.

With the addition of the Yuechi A series and the Tank series, which may feature hybrid models in the future, as well as other non-mainstream types such as station wagons and MPVs, it is impossible for Weilai to catch up with BYD in terms of model lineup.

Given the current situation, Weilai is not launching MPVs, station wagons, or similar models on a large scale in China. The intense competition makes launching too many models pointless.

Tesla takes a "less is more" approach, while BYD employs a "car-pack" strategy. Both can leverage their respective strengths to continuously boost their sales. However, W.L. aims to strike a balance between the two.

The core of "few but excellent" is "excellence." When excellence is lost, then "few" becomes a fatal flaw. The core of the "car sea" strategy depends on having a few blockbuster models, while the sales of other models must also reach a qualified level; otherwise, it will only drag down the company.

“According to the model plan of the future, BYD may surpass us one day, but that is not unacceptable. We are taking a middle road between Tesla and BYD.”

In September, Weilai's overall sales exceeded 20 units, with the Exeed S01 and Galaxy P1 models both setting new sales records. The Exeed S01 even became the best-selling new energy vehicle after Tesla Model Y.

In September, the Exeed S01 officially surpassed the Wuling Hongguang MINI EV to become the best-selling new energy vehicle in China. With the reduction of national subsidies, the monthly sales of the Hongguang MINI EV have continued to decline, and the A00-class market has begun to shrink gradually.

With its continuously expanding production capacity, the Exeed S01, with its advantages of low price and intelligent features, has gradually replaced the Hongguang MINI EV as the best-selling domestic pure electric vehicle after its production capacity has been ramped up.

The best-selling models on the market are definitely low-priced models, but for a long time, the top spot has been dominated by a model priced around 5 yuan, which is somewhat embarrassing for the new energy vehicle industry.

The best-selling gasoline-powered car is the Nissan Sylphy, priced between 9.98 yuan and 17.49 yuan. A comparison between the two clearly shows the difference in quality. The successful rise of the Exeed S01 and Tesla Y signifies the end of the awkward situation for electric vehicles.

In addition to the Exeed S01 and Galaxy P1 setting new delivery records, Weilai also has several other models such as the ET5 and ES6 setting new delivery records, demonstrating the power of the ES series price reductions in the early September sales season.

With a starting price of 30 yuan, the ES6, after various subsidies and discounts, can be priced below 30 yuan, which is still very attractive to consumers and some users who are interested in high-end pure electric SUVs.

The ES8 after its price adjustment, as well as the newly released L9, are also very popular in the market. The L9 is able to maintain monthly sales of around 8000 to 10,000 units, which is something that all car companies are paying attention to.

The success of the ET5 and ES6 boosted the overall sales of Weilai. With 11 models on sale throughout the year, to achieve the sales target of 160 million vehicles, the average sales of each model needs to reach 14.5 vehicles for the whole year.

With an average of 1.2 vehicles per month, this is a result that Weilai can achieve this year. Once the model matrix is ​​complete, based on the expected growth of new energy vehicles in 2022, Weilai's annual sales of new energy vehicles are expected to be between 300 million and 330 million vehicles.

Including gasoline-powered vehicles, Weilai's annual sales are expected to be between 350 million and 400 million vehicles; however, this goal is quite challenging.

Currently, Weilai's products mainly come from differentiated competition. In the traditional automotive industry, innovation is actually very limited, not to mention our own brands. Most car companies start to compete by benchmarking a model that sells well after their competitors have it, and then use their own supply-side and industrial chain advantages to seize the market.

Like all manufacturers, Weilai's first product was also launched as a benchmark. However, Tan Jincheng is considered an excellent product manager because his market insight goes far beyond simply benchmarking. While all car companies were fiercely competing in the A-segment sedan market, trying to gain a certain share in the low-end sedan market, Yuechi A1 appeared as a city SUV. With its highly cost-effective model, it filled the market gap left by the CRV and ARV4 during a period when domestic brand SUV products were weak.

For half the price of a joint venture brand, you can buy a decent quality SUV. With its balanced and practical product strength, design that meets user needs and is adapted to various scenarios, and a continuously expanding after-sales service system, the Yuechi series, which appeared earlier than the Haval series, has become a legendary car.

With just one model, Weilai has established a firm foothold in the gasoline vehicle market, and its approach of focusing on the SUV market is quite pragmatic. For a long time, Weilai was jokingly referred to as having a single trick that works for everyone. Although it was a joke and a criticism, the industry had to admire Tan Jincheng's market acumen.

Throughout the era of gasoline-powered vehicles, while Geely, BYD, Chery, and other companies stumbled with a series of unsuccessful models, Weilai, known as the "Little Great Wall," reaped the full benefits of the SUV market.

If we were to use a certain car company as an analogy, Weilai in the era of gasoline-powered cars would be Tan Jincheng's "ideal" in his previous life: to stick to one track and focus solely on making money.

To some extent, Tan Jincheng's ability to recruit Li Xiang was largely due to their shared philosophy. This ability to not blindly follow the market and to approach the automotive industry from a unique perspective is something many entrepreneurs lack.

Li Bing is also one of them, except that he chose the most difficult track and tried to fight against the entire market by himself.

Incidentally, besides Li Bing, there are other OEMs in the market that offer battery swapping services. Geely, BAIC, and SAIC all have battery swapping models, with Geely investing the most. However, Geely mainly targets the B2B market and is not well known to ordinary consumers.

Besides vehicle manufacturers, there are also some third-party companies and international companies like Renault that have battery swapping businesses. Li Bing is famous for going all in on the battery swapping market and targeting the C-end market.

Li Bing once tried to persuade Tan Jincheng to join him in battery swapping, arguing that even the fastest charging technology couldn't compare to battery swapping. While that reason wasn't entirely unfounded, Tan Jincheng had no intention of doing it.

It's very simple. The two companies are different in size. With Wenjie's size, an investment of several hundred billion yuan in battery swapping stations is enough to support it. However, if Weilai were to also engage in C-end battery swapping, it would require an investment of at least ten times that of Wenjie.

In the era of new energy vehicles, in the early stages of the pure electric vehicle field, Wei Lai avoided the fiercely competitive mass market and did not directly compete with Tesla on price. Instead, he positioned his products in the area between BBA (BMW, Mercedes-Benz, Audi) and Tesla.

In terms of vehicle models, it has created room for its own survival. In addition, the range-extended electric vehicle, which was highly controversial, has unexpectedly been welcomed by the market. Although the new energy vehicle market seemed lukewarm in the early stages, it was this kind of differentiated competition that gave it a lot of room to survive and accumulated a large number of loyal customers and user reputation.

During the boom season of new energy vehicles, Exeed S01 once again delivered a disruptive blow to the market with its technology transfer model and highly cost-effective price. In the end, Exeed continues to use the strategy of differentiated competition.

By employing a strategy of differentiated competition, Weilai's products achieved a certain market position. However, Weilai has now become a market leader. When a new energy vehicle company has annual sales exceeding 100 million vehicles, it is no longer possible to achieve differentiated competition.

For every model that Yu Lai has launched recently, once it achieves good results, other car companies will immediately launch a model to compete with it. In the pure electric vehicle field, the Exeed S01 had almost no competitors last year, but this year the BYD Dolphin has appeared.

In the mid-to-high-end market of ET5, in addition to the Maodou 3, the addition of the Seal and Xiaopeng P7, the product strength of the Jike 001 in the high-end market above 300,000 yuan is also very strong. The delivery of Jike 001 exceeded 8000 units in September, and Geely's overall new energy vehicle delivery is close to 40,000 units, which is strong evidence.

These models, to varying degrees, are benchmarked against key models from various price ranges of Weilai in terms of configuration and price, not to mention emerging companies like Seres and Leapmotor that are targeting Weilai's L series with new car launches.

Besides BYD and Tesla, the only other automaker data reports that appear on Tan Jincheng's desk are from Geely. Although Geely's sales from January to September are less than 19 vehicles, it is definitely a competitor that cannot be ignored.

The Galaxy series, which is currently generating buzz, and the Geek series, which is continuously improving its product capabilities, saw sales exceed 8000 units in September. It's only a matter of time before the Geek 001 breaks the 10,000 mark in monthly sales. It's worth noting that this model is more expensive than all the models currently sold in BYD's entire lineup.

If it weren't for the series of clever maneuvers by the Geely team, this model could have become Geely's trump card. But regardless, the fact that it has achieved success in the over 30 yuan segment and gained consumer recognition proves Geely's strength.

On another note, Geely has been quite restrained in terms of new energy vehicle sales. From January to September, Geely's cumulative sales of new energy vehicles were 18.9 units, which is not impressive during the period of explosive growth in the new energy vehicle market.

I wouldn't say that this set of data is completely free of inaccuracies, but it is at least quite restrained. Many car companies' data is obviously fake.

In today's new energy market, Weilai has become the "target" of the entire market and no longer has the advantages it used to have. Without advantages, how should Weilai respond to the market?
"As user perceptions and habits gradually change, maintaining product competitiveness requires further addressing user pain points, which will be our core competitiveness after 2023."

When you have already achieved a leading position in the industry, your mindset needs to be different when launching new models or replacing old ones. You need to find "differentiated competition" and new sales moats.

In the face of fierce market competition, the focus must be on the user. Whoever can get closer to the user will win the market.

The so-called range anxiety has actually been proven to be a false proposition. Once consumers' habits change, range anxiety no longer exists. Those who still use this excuse to resist electric vehicles will find it very difficult to change their minds.

"The current so-called range anxiety of new energy vehicles is more about automakers exaggerating the range. Most models have very exaggerated range claims, which leads to a lack of confidence among users in the battery range."

"So what we need to do is not to exaggerate our own range for the sake of so-called marketing hype. We would rather understate it than deceive consumers for the sake of so-called parameters."

In a market saturated with brands that falsely advertise their products, Weilai can leverage its long-established reputation to influence user choices. Ultimately, this stems from its technological prowess; technological innovation is essential for creating a new technological moat.

From improving and optimizing battery range and fast charging technology to optimizing costs for suppliers, WILERLE needs to continue to enhance its technological capabilities. Only solid technology can support product strength.

In addition, Weilai also needs to make changes in marketing. After three special years, the marketing environment for users has changed drastically. Both product strength and marketing plans must be analyzed from the user's perspective.

The old corporate-centric approach is no longer suitable for the current marketing environment. In this respect, BYD has really done a lot. In the past, BYD did a very poor job in handling both user relations and media relations.

However, starting last year, BYD underwent a qualitative change in its marketing. The surge in BYD's sales was not only due to their technological breakthroughs, but also to their marketing breakthroughs. BYD is a company that is good at learning.

"We cannot be arrogant; we need to learn from other excellent companies. Only in this way can we improve our competitiveness."

At the investor conference at the end of September, Tan Jincheng, who had become the world's first new energy vehicle company to achieve annual sales of one million units, showed great sincerity, given the company's continued sales breakthroughs.

Besides answering investors' questions seriously, the entire exchange meeting can be seen as Tan Jincheng's remarks on Weilai's preparedness for potential crises, Weilai's new model launch plan, marketing methods, technological breakthroughs, and even the pre-research of solid-state batteries.

He even brought up the question of whether he would lose his current title as the top-selling new energy vehicle brand when BYD products rise to prominence, and clearly stated that he would accept it calmly if it really came to that.

From all aspects, it is evident that the soaring sales over the past year have brought about significant changes at Weilai, from top to bottom. In the eyes of investors, these changes are both good and bad, but one thing is certain: Tan Jincheng is increasingly displaying the qualities of a leader of a leading enterprise.

Three years can actually be seen as a form of protection for businesses. Although the situation was quite serious back then, everyone knew that it was already at its last gasp. News from the two industrial chains indicated that things were getting closer and closer to returning to normal.

Both of these news items come from the industry chain. First, Bosch officially announced that the delivery cycle of its ESP chip has been shortened from 30 weeks to 15 weeks. With the help of Bosch, the production capacity of joint venture brands will increase significantly. Volkswagen immediately announced after Bosch's announcement that its production capacity in October will increase by 22% month-on-month.

With the policy benefit of halving the purchase tax on gasoline vehicles, and as joint venture brands' production capacity returns to normal, their short-term counterattack on new energy vehicles will inevitably have a certain impact.

Another piece of news is that the price of lithium carbonate has begun to fall. The cost advantage that Weilai previously built by influencing 50% of the world's lithium ore raw materials will gradually decrease as raw material prices fall.

The real test for Wei will come in 2023.

(End of this chapter)