2003: Starting with Foreign Trade

Chapter 1063 The Overwhelming Pressure of Star Wish
Lei Jun was also very conflicted about the pricing of the SU7.

Based on the SU7's positioning, it belongs to the C-class sedan category. Currently, the competition in the C-class sedan market is relatively relaxed, not as crowded as the A-class sedan and SUV segments. Xiaomi can be considered to be taking a differentiated competitive approach.

Even in less crowded areas, there are still giants like Tesla, BYD, and Geely, which has seen explosive growth, as well as emerging forces like Leapmotor and established joint venture manufacturers, so there is no complete lack of competition.

For Xiaomi to carve out a path in this market, it won't be as easy as it seems. Besides differentiating itself from major giants in terms of product strength, the most important factor is price.

Fortunately, the major players have left a little room for new brands to survive, namely the market segment between 20 and 25 yuan. For example, the starting price of the Han series ET5 has dropped below 20 yuan.

The ET7 and Jike 001 are priced above 25 yuan, leaving only the Maodou 3 as a competitive option in this price range. The strategic intentions of Weilai, BYD, and even Geely are quite clear: to let the new forces compete with Tesla.

If you succeed, you'll gain market recognition and live a comfortable life like Seres, and achieve brand recognition like Xiaopeng or Wenjie. If you fail, you'll either struggle financially or go bankrupt and exit the market.

“Competing with Tesla is definitely easier than competing with the three major domestic brands. Tesla only has two models that sell in large quantities, while the three major domestic brands have a complete matrix of models at various price points.”

Moreover, each model in the product matrix of the three giants is very competitive. Competing with only one model will likely result in becoming cannon fodder. Look at Nezha; since they entered the market segment of BYD and Wynn, Nezha's performance has been declining day by day.

Coupled with their misjudgment of the market, they hastily raised prices on three of their models during the New Year's holiday. Instead of other automakers following suit, they were met with a widespread price war.

At this auto show, Nezha also launched a new car, a two-door, four-seater pure electric sports car.

"Monthly sales target of 5000 vehicles?"

Although the Shanghai Auto Show was bustling with people, Nezha's booth did not attract as many visitors, mainly because of its less-than-ideal location. It was situated near the auto parts supplier area, adjacent to the booths of Jinshidai and CATL.

Zhang Yong looked somewhat embarrassed. Faced with his former boss's question, he really didn't know how to answer. The starting price of the affordable sports car Nezha GT was only 17.88 yuan, and the most expensive one was only 22.68 yuan.

At this price, monthly sales of 5000 units are indeed not many, but who would spend 20 yuan to buy a sports car for no reason? Moreover, this thing is just an electric version of the Meirenbao. The Meirenbao was also launched with the name of an affordable sports car, but it ended up being discontinued.

If everyone's driving sports cars, who needs affordable ones? The concept of affordable sports cars has been proven by the market to be an unsustainable business model; it's something that both the wealthy and the poor don't care about.

Furthermore, considering it's a sports car, the Nezha GT's performance is incredibly weak. A sports car that needs 3.7 seconds to accelerate from 0 to 100 km/h? That's it? And they're saying they'll only sell 5000 units a month?

Zhang Yong looked much more haggard than last year.

The price increase during the New Year's Day holiday put Nezha at a significant strategic disadvantage, hindering its move towards the high-end market. Its main selling model, Nezha V, faced strong competition from Wuling Bingo and BYD Seagull at the beginning of the year, and now it has another competitor, Exeed Wish.

After StarWish announced its price, the entire market was in an uproar. It boasts next-generation technology and an extremely attractive price, with a limited-time pre-order price of 6.58 yuan, which stunned the market.

Using the features of an A-class sedan to undercut the A0-class market, Weilai is really going all out for sales. However, the unlucky ones are new energy companies like Nezha and Leapmotor. After Weilai announced the specific price of Xingtu Xingyuan, Leapmotor's stock price plummeted by nearly 8% in a single day.

Leapmotor is doing relatively well. They transformed into a range-extended electric vehicle manufacturer, copying the model of Weilai, and gained a certain level of brand recognition with their affordable L-series. Their first range-extended electric vehicle, the Leapmotor C11, along with the 2023 C01, C11EV, and T03, released in March, have received considerable recognition, especially in the capital market.

Throughout March, Leapmotor bucked the market trend and rebounded by more than 30%, with its stock price hitting a new high since its listing.

"Leapmotor's performance has once again proven your vision in the investment field, boss."

After leaving the exhibition area, Zhang Yong invited Tan Jincheng for afternoon tea. The two hadn't been seen together in a long time, and today he had to swallow his pride and invite his former boss to appear at the Nezha exhibition area to generate some buzz for them.

The empty exhibition area contrasted sharply with the other bustling booths, making them extremely embarrassed. Even offering free ice cream right after Hongguang failed to attract any visitors.

Consumers aren't so easily fooled.

"Your shareholders are too complicated, and besides, I really don't like Lao Zhou."

The “Wei Lai Group” is a hot topic in the new energy vehicle industry right now. Although Xiaopeng Motors has encountered a lot of trouble, He Xiaopeng has indeed gained full control of the company through this crisis, which is obvious to anyone with eyes to see.

Coupled with He Xiaopeng's decisive actions—removing what needed to be removed, replacing what needed to be replaced, lowering prices where necessary, and cutting products where necessary—which is very much in line with Tan Jincheng's personal style, the capital market is still quite optimistic about Xiaopeng's transformation.

Although Leapmotor's sales declined in the first quarter, that was due to product upgrades. Its new models, priced between 15 and 20 yuan, which include refrigerators, TVs, and sofas, are still quite popular in the market.

With its full-stack self-developed technology, strong major shareholder background, and low-profile founder, Leapmotor is still more promising than Nezha, even though it is not in a good situation in the short term. Nezha's investment in technology is really negligible.

The initial losses to boost sales have left Nezha with insufficient cash reserves to support high-end R&D. Currently, Nezha has fewer than 2000 R&D personnel, far fewer than other emerging brands. Its level of intelligence lags behind its competitors, with gaps in computing power, algorithms, and high-speed navigation.

With most competitors using 800V supercharging, Nezha's 400V architecture offers no advantage whatsoever.

"Understand, understand."

Zhang Yong sighed inwardly. His boss had rejected him again. The biggest problem Nezha was currently lacking was funding. With insufficient cash on hand and no way to go public in the short term, they were simply unable to upgrade the product.

To put it somewhat inappropriately, their products lag behind competitors, especially emerging brands, by one or two years in technology, let alone leading companies like Weilai.

The StarWish is at least three years ahead of the Nezha V, while the price difference is less than 5000 yuan.

"Why don't you learn from Leapmotor and focus on making good products? There's no need to chase traffic."

Leapmotor is quite an anomaly among new energy vehicle startups. It focuses on product development and invests very little in social media, keeping a low profile even more than joint venture brands. Despite its limited brand exposure, its market share has not decreased at all.

It is clear that making a good product will still win you a market share; you don't necessarily have to do marketing.

"It's tough. We have a huge funding gap right now. If we don't increase our traffic and exposure, we won't be able to raise funds, and things will only get more and more complicated."

Live streaming has become an essential part of modern marketing for car company executives and top management. Most executives hold a live stream every now and then to introduce their products and factories.

On March 16, Nezha also held a live broadcast with shareholder Zhou Hongyi, and the two of them appeared on camera.

Unfortunately, that live stream was a disaster for Nezha. Zhou Hongyi berated them mercilessly and denigrated the brand, creating several memorable moments.

Zhou Hongyi's popularity has increased, but Nezha's brand has suffered considerable damage, including Zhang Yong himself.

During his tenure at Wei Lai, he had never been scolded like this by investors before. Within the Wei Lai system, investors were not allowed to interfere with the company's operations. Tan Jincheng himself would not interfere with the company's specific operations unless the founder or the company's management asked him to make suggestions.

"Old Zhou is getting worse as he gets older. His investment in you is not genuine at all. Getting involved with him is the biggest mistake you've ever made."

With his outrageous criticisms, high-profile, disruptive marketing tactics, and deeply integrated personal brand, Zhou Hongyi's actions are nothing more than using his most familiar topical marketing methods to generate buzz for himself and his company's products.

The investment in Nezha is not actually that important to Zhou Hongyi. If he does it well, he can make a fortune through Nezha. If he does it poorly, it will keep Nezha Auto in the center of public opinion, bringing him and 360 a lot of attention.

“Your current funding gap is at least 50 billion yuan, and having funds alone is not enough. You should get out of here as soon as possible if necessary.”

After finishing the last sip of coffee, Tan Jincheng stood up and said in a deep voice to his old subordinates who had also stood up, "Although ByteDance has reduced its investment share in recent years and he himself rarely participates in the specific operation of ByteDance, it does not mean that he does not pay attention to the capital market."

ByteDance's advertising platform submits a market report to him every month, analyzing the current operating conditions of automotive and technology companies in the market and seeking investment opportunities.

Neta Auto is a well-known company, and given Zhang Yong's connections, it has always been within the scope of ByteDance's monitoring. Tan Jincheng is well aware of its complex shareholding structure and chaotic operations.

It wasn't that people from Tongxiang hadn't tried to contact him. After all, when it came to reviving bankrupt companies, Boss Tan was a well-known figure in the industry, and many people had asked him to intercede on their behalf. He knew Nezha's business situation all too well.

In Tan Jincheng's eyes, Nezha has already been sentenced to death. Their sales champion title last year was actually largely inflated.

"Um, okay, I'll think about it."

Zhang Yong was somewhat taken aback. This was the second time his boss had said this to him, which showed how little the boss believed in the company. As the CEO, this was somewhat embarrassing.

“If you leave now, you can still return to our system. If you leave any later, I won’t dare to take you back.” Seeing Zhang Yong’s embarrassed expression, Tan Jincheng smiled and reminded him. As a meritorious official who helped Wei Lai conquer the country, he could understand Zhang Yong’s desire to go out and prove himself. At that time, the United States was indeed the best choice for him.

Given Zhang Yong's less-than-successful career at Hozon New Energy, returning directly to Weilai Auto would definitely not be feasible. However, with Zhang Yong's abilities, he would be more than capable of expanding the market for Lotus, Proton, or Weilai's overseas branches.

This was his last reminder to Zhang Yong. He had done more than enough. Once Nezha went bankrupt, given the mess and chaos left by the collapse of New Force, he really wouldn't dare to use Zhang Yong again.

A lot of new companies have gone bankrupt. Before they went bankrupt, they could still find a decent job by running away with their money. But after they went bankrupt, it became difficult, and they would no longer have the opportunity to show their faces in public, since their reputation was too bad.

Staring at Tan Jincheng's retreating figure, Zhang Yong fell into deep thought.

To be fair, his former boss treated him really well. In addition to providing him with a high salary and benefits while he was employed, he also gave him a lot of advice when he left. Although the two did not keep in touch much in the following years, whenever he made a request, his boss would provide assistance.

Of course, matters of principle are unacceptable. For example, when he tried to bring up financing, he was rejected before he even had a chance to do so.

Returning to the Wei Lai system? That's probably unlikely.

Saturday, October 4.

The Star Wish pre-sale has begun and the scene is incredibly popular. On the Weilai APP, the Star Wish has generated more buzz than any other car model. The topic is all over the community forums and is also very popular on various social media platforms.

"Boss, the user profiles are ready."

On the first day of pre-orders, StarWish performed very well, and according to the backend data, StarWish's user profile has also become more comprehensive.

"The proportion of male users is actually as high as 38%, haha, this is different from what you imagined, we will immediately increase production capacity."

A0-class sedans are often primarily used by female users, since they are a bit too small for male users. Given the choice between spending 70,000 yuan on a Star Wish sedan and adding 30,000 yuan to buy an S01, most male users would likely choose the latter.

The proportion of family-based car purchases was 57%, with an average age of 34.5 years, and the proportion of first-time car buyers was not high.

"A beautiful grocery shopping cart is probably the positioning of Wish Star."

The cost-effectiveness, configuration, and advantages of new energy vehicles offer many advantages over joint venture brands for customers who are replacing or adding vehicles to their purchase. However, what Tan Jincheng values ​​most is the average age of car buyers.

The age of 35 is a hot topic and a sensitive topic in society. However, in the consumer market, the age of 35 occupies an extremely important position. The age structure of Chinese residents' consumption roughly presents an inverted U-shape.

The peak consumption period in a person's life is between 30 and 40 years old. StarWish has been most successful in capturing this consumer group, regardless of whether they are male or female.

However, the actual users of Wish Star are probably mainly female. Even if male users buy it, it's usually for their wives or girlfriends, or for middle-class or higher families to buy for their nannies.

After three days of pre-sales, Weilai officially announced the pre-sale results of Star Wish, accumulating over 50,000 orders in three days.

"Deliveries in the first month will exceed 20,000 units. It's still unknown how long the Exeed S01 can remain the top seller."

The Exeed S01's average monthly sales are approaching 40,000 units, making it the third blockbuster model after the Qin PLUS and Maodou Y. Even so, the Exeed S01's pre-sale performance was not as good as that of the Star Wish when it was first launched.

"I wonder if Tesla's models priced below 20 yuan can put some pressure on Wei Lai."

The explosive popularity of Star Wish has put tremendous pressure on other car companies. With two consecutive blockbuster models, Weilai has completely dominated the 10 yuan market segment. Weilai's entry into the mass market with a high-end image has truly opened everyone's eyes.

There has been much speculation in the market about Tesla's models priced below 20 yuan, but Tesla has not responded directly. This top-down approach has indeed provided some reference examples for other companies.

"The only thing that can restrain Weilai right now is their production capacity."

When a new car is launched, ramping up production capacity is inevitable. The current production capacity of Weilai is indeed a major problem. The delivery time of Xingyuan will be at least one month for a long time, which is currently unchangeable.

However, delivering more than 20,000 vehicles in the first month is not a problem. Weilai has the capability to do so. What does delivering 20,000 vehicles in a single month mean? It means directly entering the top ten in new energy vehicle sales.

"Their progress is too fast."

At Toyota's headquarters workshop in Aichi Prefecture, Toyota executives who visited during the auto show brought home a Toyota Exeed Wish, which had already been dismantled into pieces.

By breaking it down, Toyota roughly analyzed the BOOM cost of the Star Wish. According to their analysis, the cost per vehicle for the Star Wish models is roughly between 6 and 7.5 yuan.

In other words, Wish Star's gross profit margin per bike can be maintained in the range of 9% to 11%.

If we want to cover the company's fixed costs in R&D, production, marketing, etc., and calculate based on a base of 10 billion yuan, then Weilai only needs to achieve a sales volume of 12.5 vehicles to make a profit.

Even with increased costs, sales of around 20 units would definitely allow Weilai to achieve profitability on the Xingyuan model.

"So, it would only take them about six months to turn a profit on this model?"

May was the first month of delivery for StarWish, and the company announced that it delivered 20,000 vehicles in the first month. Based on the production ramp-up rate, the company could achieve profitability as early as October or as late as January next year.

"This is insane, how did they do it?"

This is a model with annual sales of over 300,000 units. Even for an A0-class model with a shorter lifespan, a market expectation of around 30,000 units per month could bring Wei a gross profit of 180 million yuan.

This is just a single market; if exports are included, the scale will be even larger.

In markets such as Brazil and Turkey, Weilai's low-end models are still very popular, and its Zhidou brand currently has a strong appeal in these two markets. Weilai also has a strong appeal in the European market.

"We must take this seriously and adjust our global and China-specific strategic layout."

Even if the ES and L series from Weilai sell very well, these multinational corporations do not see them as a threat. In terms of brand appeal, multinational automakers are not comparable to Chinese brands.

However, the continuous launch of blockbuster models targeting the mass market by Weilai has put considerable pressure on them.

On May 1st, pre-sales for Star Wish were still ongoing. After releasing specific data three days into the pre-sale period, Wei Lai has not released any further pre-sale results. Those who want to find out more information can only analyze it from Wei Lai's recruitment and production line adjustments at its industrial bases in various locations.

International automakers have also accelerated their actions in response to changes in the domestic new energy vehicle market. BMW, which made a big joke in April, announced in early May that it would fully integrate into the development of China's new energy vehicle industry and would start production of the new generation of pure electric BMW models in Shenyang in 2026.

Meanwhile, the supporting BMW sixth-generation power battery project has commenced full-scale construction, and BMW's new R&D center in Shanghai will also be officially put into use in July.

Although BMW's public relations efforts were poor and the brand suffered greatly this time, they have not given up on the domestic new energy vehicle market. In the past three years, the number of BMW's R&D team in China has tripled.

BMW is currently in a brand recovery period and is also communicating with Weilai to relist the MINI EV on the Weilai APP. Strictly speaking, Weilai's unilateral removal of the MINI EV is a breach of contract.

However, BMW is not prepared to take Wei Lai to court, since they underestimated the public relations incident this time, and Wei Lai had given them a warning in advance, so they bear no responsibility.

Of course, the most important reason is that BMW relies heavily on the supply chains of Weilai and ZG to advance their electrification projects and does not want these "minor issues" to affect the cooperation between the two parties.

BMW headquarters actually regrets it now. If they had listened to Wei's advice, this public relations incident could have been an opportunity for brand promotion. Unfortunately, time cannot be turned back.

Ford CEO Jim Farley also stated in early May that Ford could not guarantee it could beat the increasingly fierce competition from local Chinese electric vehicle manufacturers, and that Ford would focus on commercial vehicles to reduce capital risk.

Ford announced it will lay off more than 1300 employees in China. This, along with the internationally renowned auto parts supplier that planned layoffs earlier this year, makes it the second multinational company to explicitly state that it will lay off employees due to the rapid development of domestic automobiles.

As for some traditional gasoline-powered car dealers, they have already been quietly laying off employees and switching industries.

(End of this chapter)