2003: Starting with Foreign Trade

Chapter 1065 The Counterattack of the Overthrown
"This is a war without gunfire."

For two months now, the Seagull team project department, from the sales manager of Dynasty Ocean Network to the vehicle project manager, to the product planning and technical leaders, as well as the top decision-making level, Brother Boatman and BYD's CTO, have held countless meetings to conduct emergency response strategy simulations for the impact of the StarWish project.

Less than two months after its launch, the starting price of the Seagull has been significantly reduced to 5.99 yuan. BYD has also been forced to convey to the market through marketing that the Star Wish is a premium car and the Seagull is a commuter car, trying to maintain its core market share with its absolute cost-performance advantage.

However, it still had little effect. Seagull's deliveries have remained around 5000 units for two consecutive months. The failure of this model, which they had high hopes for, is now a foregone conclusion.

"I underestimated Wei Lai's determination. This is no one's fault, and I also underestimated the Star Wish model. We should learn from this experience in the future."

The boatman sighed.

The conference room was filled with smoke, and the executives, including Boatman, were not in a good mood. For a long time, Weilai had held the title of the leading new energy company, but even so, BYD was still very confident in defeating Weilai and winning the championship.

The two companies have different product portfolios. Although BYD has been slow to move upmarket, it still has a strong presence in the A0 to A-class market. The Galaxy P series has performed well, but it has only been lukewarm.

With only an advantage in the pure electric vehicle sector and only one model, the Exeed S01, and limited by its high-end brand positioning, facing the encirclement of the Dynasty and Ocean series' entire product matrix, it's only a matter of time before Weilai relinquishes its sales champion status.

BYD has a plan to surpass Weilai and become the world's leading seller of new energy vehicles by 2025, leveraging its advantage in the sub-20 yuan market.

The launch of the Star Wish model presents BYD with the most severe challenge since the advent of the new energy era, as it is a model that has damaged their core business.

The seagull's defeat is just the first step.

Since August of last year, Buffett has begun to reduce his holdings in BYD. Although the reduction is not large, the stock market guru's continued reduction has put significant psychological pressure on market sentiment, and some investors have begun to doubt whether BYD is overvalued.

The performance of Wish Star in the two months since its listing has brought a drop of nearly 20% to BYD's stock price, which was already under heavy pressure. For a listed company, a sharp drop in stock price in a short period of time is very fatal.

In the short term, BYD's stock price, sales and profits of some models will be under tremendous pressure. In the long term, BYD's leading position in electric drive technology, brand premium and product planning will face unprecedented questions and challenges.

The attitude of the capital market can be seen from the recent research reports and valuation reductions issued by securities firms regarding BYD.

"A0 to A-class sedans are the foundation of BYD's sales. The two Exeed models have already shaken BYD's foundation. With this precise attack from Wei Lai, BYD will naturally not sit idly by. The most likely scenario is that it will launch another brutal price war. The fact that the Seagull model was significantly reduced in price less than two months after its launch is proof of this."

"The Dolphin and Seagull models are the core sales pillars of BYD's Ocean Network. The performance of these two models in May and June, especially the failure of the Seagull model, has caused a sharp fluctuation in the overall sales of Ocean Network. BYD's dealers are once again facing the biggest crisis since 2010, with a surge in inventory risk."

Some domestic securities firms, anticipating another price war, have lowered their net profit forecasts for BYD this year. Compared to the forecasts at the beginning of the year, some securities firms have lowered their net profit forecasts for BYD by 20%.

"The valuation expectation for BYD was based on the fact that their product matrix could surpass Weilai to become the global sales champion in the next few years. However, the emergence of the two Exeed models has greatly reduced this possibility. Weilai has blocked BYD's way out by using their Xingyu architecture and technology transfer."

The decline in net profit is not the key issue; the most crucial point is that some institutions have begun to reassess BYD's valuation multiples, lowering them from the original 25 to 30 times to 15 to 20 times.

The valuation downgrade is based on the collapse of BYD's growth narrative and a return to the valuation of traditional automakers. According to this valuation rating, BYD's most optimistic valuation is only 5000 billion.

Compared to the initial valuation of 7800 billion yuan, the valuation has been reduced by a full 2800 billion yuan, meaning there is still at least 20% downside potential.

Under the precise attack of StarWish, BYD's short-term valuation suffered a double blow from its valuation and earnings, and the market shrank significantly. By the end of June, BYD's annual decline was 40%, and its overall valuation had fallen back to the range of 4000 billion to 5000 billion yuan.

Most of these sales were by institutional investors, who viewed BYD as a value stock rather than a growth stock.

In June, the Weilai factory operated at full capacity, prioritizing the processing of backlogged orders, and production capacity rapidly increased, with monthly deliveries exceeding 2.5 vehicles. Although Seagull quickly lowered its prices to widen the gap with Xingyuan and did attract a certain number of users, it was to no avail.

In addition to significant price reductions, BYD also launched enhanced financial policies and benefits in mid-June, including highly attractive financial and after-sales policies such as zero down payment, 24-month interest-free installments, and free charging stations.

The aim is to further lower the barrier to car purchase and attract extremely price-sensitive consumers, covering all models on the Ocean Network. In essence, the second phase of the price war has quietly begun.

Although the losses are severe, this is the fastest and most direct response. BYD aims to stabilize order volume and avoid a complete collapse. However, price wars can only provide temporary relief; product strength is fundamental. What BYD needs to do now is to accelerate product updates at all costs.

The Seagull and OceanNet teams held numerous meetings to prepare for the second phase of the attack on Wei Lai. In the current car market, price sensitivity is no longer absolute; everyone knows that product strength is fundamental.

However, this move to drastically reduce prices less than two months after its launch has sparked dissatisfaction among dealers and customers. Even lower-end models are painful to see their prices drop in less than two months.

"We need to continue optimizing production capacity. In a few months, other car companies will be retaliating. We need to take advantage of these few months to sell more and try to expand our advantage."

While BYD was scrambling to respond, Wei Lai's side didn't stop either.

In June, Star Wish's popularity surged again after it was promoted by Gu, the richest woman in the internet industry and the owner of Orange Games, along with celebrities like Liu Yifei. This was compounded by rumors that Star Wish would hire a spokesperson targeting the new generation of female stars.

Celebrity fans mobilized to recommend their idols and jointly boost the popularity of Star Wish. This "fan-baiting" tactic was a dirty trick devised by Zhou Ao, but it's not a new one in the entertainment industry.

This is basically an open conspiracy. Even if fans of each idol know it, they will still flock to it, because their idols' ability to cooperate with large companies is a source of pride for them to show off.

The biggest challenge for Xingyuan right now is delivery. Faced with overwhelming orders and the ever-increasing enthusiasm for order urging in the comments section of his Douyin account, Tan Jincheng has appeared at Xingyuan Factory countless times in the past two months.

In terms of marketing, Boss Tan also learned from Musk. Back then, Musk slept in the Texas factory due to production capacity issues, making a big show of it. Many years later, Boss Tan also brought this trick to the Chinese Internet.

On Douyin, a photo of Tan Jincheng sleeping in the Xingtu factory while wearing a Weilai work uniform added fuel to the fire of the sweltering heat in early July.

Tightening screws has become a famous internet meme.

"We are already operating at full capacity, and this month's production capacity should be able to increase to 30,000 vehicles. We will continue to optimize the production line internally."

"Well, let's sell as much as possible first, because there probably won't be many good days coming up."

The product became an instant hit upon its launch. However, the sales figures for Star Wish during this period do not reflect the true market demand. Under the influence of hype, there are many impulsive buyers, and the factory's production capacity ramp-up is the result of this period.

In a situation where supply cannot meet demand, dealers do not need any discounts, and there may even be instances of paying extra to get a car.

The initial design for StarWish's maximum monthly production capacity was 30,000 vehicles, which could be quickly ramped up. Boss Tan didn't have much to ask of the team. However, it was still worth trying to optimize the existing capacity and produce more to consume the previous orders.

The initial orders of over 100,000 vehicles will take about three to four months to fulfill, according to the current production capacity plan, by which time the market will have returned to rationality.

Sales after September will reflect the true market demand, and the major players obviously cannot sit idly by. Four or five months is enough time for them to launch countermeasures.

"We must respond to the impact of Exeed's two models with the attitude of all-out war."

Exeed offers two models, covering A0 to A class, with an expected annual sales volume of 60 units. This is complemented by the Galaxy P series and some hybrid models recently launched by Weilai.

In this single market alone, Wynn has achieved sales of nearly one million vehicles, and at least half of those sales would originally belong to BYD.

Seagull has already been greatly impacted, and the entry-level version of Dolphin is following closely behind. Since the entry-level version and the high-end version of Star Wish have overlapping prices, it is more popular among some consumers to consider the high-end version of Star Wish instead of buying the entry-level version of Dolphin for the same price.

The rear-wheel drive version with intelligent features, while sacrificing some space, offers a completely different driving experience.

Besides dealing a fatal blow to OceanNet, BYD's biggest concern is the potential impact on Meta Plus, and they need to come up with an assessment strategy for this as soon as possible.

As BYD's global strategic model, the Yuan PLUS is positioned slightly higher than the Dolphin. However, the emergence of the Star Wish model may make some consumers feel that the Dolphin is not high-end enough, while the Yuan PLUS is over budget.

The Star Wish is a perfect alternative. The Yuan PLUS team has already optimized the space and SUV attributes, and is trying to maintain its appeal through minor adjustments to the configuration.

In June, the Exeed team announced that it would follow the group's globalization strategy and that the Exeed S01 and Exeed Wish models would be launched in overseas markets as soon as possible.

BYD's fundamental logic is the technological leadership of its E platform 3.0, its market dominance in the 10 to 20 yuan price range, and the continuous profit growth brought by economies of scale and brand premium. Exeed has shaken BYD's logic with two models.

In mid-July, BYD announced the launch of a sports version. This sports version isn't simply an upgrade; it features targeted enhancements. In terms of performance, BYD has equipped the sports version with a more powerful motor to compensate for the significant power gap. Additionally, the sports version upgrades the size of the central control screen and the vehicle's infotainment chip, and improves interior materials, enhancing its technological feel and overall quality. While retaining the lower-priced version, BYD is also launching a higher-spec model priced similarly to the entry-level Star Wish version, offering a differentiated option and attempting to win back some users who value cost-effectiveness but are unwilling to settle for basic features.

While the Seagull Sport Edition was officially announced, more self-media outlets on the internet highlighted BYD's core advantages. In addition, there were more attacks on the Star Wish. As a new car, the Star Wish has certain potential risks, and its reliability has not been verified by the market over a long period of time. These are unavoidable.

This attack on StarWish was an attempt to evoke caution in consumers.

"It's getting more and more interesting, it feels like the Warring States period."

Starting from the Shanghai Auto Show in April, Zhou Ao entered a high-intensity work mode. The intensive marketing and public relations kept him in a state of excitement. When there were many attacks on the Internet about Xingyuan's new car, Weilai's public relations team had already prepared a countermeasure.

With the increase in "negative information," Wei Lai has shifted the core promotion of Star Wish from Star Wish itself to the Star Control framework.

“The Wish Star is not a new car that was created out of thin air. It is based on the 180 billion yuan R&D investment of Wynn and has the world’s top pure electric architecture that has been verified by ES8 and Lotus. Its safety standards and reliability verification system are consistent with these high-end models.”

"In fact, the concerns that everyone has been worried about were already resolved three years ago by the StarDrive architecture. StarWish inherits top-level security genes that have been proven by the market."

From Tan Jincheng down, all senior executives of Weilai maintained a unified stance, consistently displaying technical confidence and composure in the face of external attacks. Furthermore, by leveraging crash tests conducted by authoritative third parties, including C-NCAP and China Insurance Research Institute, they launched a large-scale publicity campaign immediately to refute the doubts raised online.

Of course, besides the backlash from the public, what makes users reluctant to give up the car is the unexpected guarantee that Weilai provides: lifetime warranty on the three main electric components for the first owner, and an extended warranty of 6 years/15 kilometers for the whole vehicle.

Unconditional return or exchange for vehicles with specific quality issues within 365 days.

"We dare to make this promise because we are confident that we can eliminate all your concerns with the most thorough guarantee."

The Star Wish advertisements included a slogan that appeared in various contexts, suggesting that more than one car company was involved in this back-and-forth of public opinion.

"Don't name names, don't get into a war of words. This is not just about BYD's models. What we need to do is expand our base and use actual data to refute all kinds of doubts."

BYD has developed a "total war" plan to solidify its core business, and other car companies are also launching counterattacks.

Following Seagull's official price reduction, Wuling Bingo also followed suit with an official price reduction and announced the launch of models with lower configurations, such as the Youth Edition, to further lower prices and firmly maintain its image as a cost-effective car and a car for women, thus avoiding direct competition with Xingyuan.

Changan, a dark horse in this year's extended-range electric vehicle market, announced a strategic adjustment, emphasizing the differentiated advantages of the Deep Blue S03 and the upcoming S7, in an attempt to avoid direct competition in the pure electric vehicle market.

However, Changan's statement was not accepted by many people. To put it bluntly, the range-extended electric vehicle is still just a replacement product. Although it is recognized by the market, its core positioning has not changed.

The reason consumers choose range-extended electric vehicles, besides the appeal of refrigerators, TVs, and comfortable sofas, is simply to experience the joy of pure electric driving without range anxiety. With continuous breakthroughs in battery technology and declining electric vehicle prices, the market for range-extended electric vehicles will inevitably return to its original positioning.

Compared to the rapid response of domestic brands, Volkswagen was the fastest among joint venture brands to react. The price of the ID.3 was lowered again and again. The rise of Weilai and BYD made Volkswagen realize that the speed of technological competition in the domestic market was far beyond their expectations.

In addition to direct price reductions on its models, Volkswagen has also accelerated the development of its pure electric platform for the Chinese market and is trying to collaborate with more domestic technology companies to address its shortcomings in smart cockpits and intelligent driving.

"Hehe, President Tan has actually given us an advantage this time."

The intensified competition in the technology sector and the fierce battle in the A0-class market have had little impact on emerging brands. Wenjie, Seres, and Xiaopeng are fortunate to have avoided this bloody battle thanks to their market positioning.

For He Xiaopeng, this battle brought them an unexpected gain: Volkswagen suddenly accelerated its negotiation process with them. Previously, Xiaopeng Auto had tried to reach a cooperation agreement with Volkswagen, but the other party seemed to look down on them.

However, this wave of technological competition has made Volkswagen realize its weakness in intelligent driving systems, and the rapid cooperation with Xiaopeng may bring them unexpected surprises.

The negotiation was brought to a level playing field, which greatly reduced the pressure on He Xiaopeng.

Compared to Volkswagen, the three major Japanese automakers seem lost. In the process of electrification, Japanese automakers mainly rely on hybrid electric vehicles (HEVs) and experimental models such as the BZ4X. Their technological approach is completely different from that of domestic automakers, and they were never popular in the first place.

The emergence of StarWish plunged them into deeper strategic confusion. In addition to feeling unwilling to concentrate their resources on ZG Enterprise's advantageous projects, they also had the same feeling as Ford: what were their chances of winning?

"Either accelerate your evolution or be completely eliminated."

In an interview, Geely's CEO revealed the harsh reality of the industry by commenting on the sudden emergence of the Star Wish model. Geely's Galaxy brand also launched a similar model, but unfortunately, their technology was a step behind.

This A0-class model, which is still under internal codename, seems to have no choice but to upgrade its features to avoid being stillborn. The emergence of Star Wish has redefined the benchmark for product value in the 8 to 12 yuan price range.

Going forward, all new cars must be benchmarked against the Star Wish model, offering equal or even better features; otherwise, pricing will be impossible.

Compared to BYD, Geely suffered less damage. Currently, they have essentially abandoned their Geometry models in the A0-class market, and the newly launched Panda MINI, which is positioned to compete with the Hongguang MINI, is also less affected.

The only thing affected was that the models under development needed to increase investment. The devastating defeat of Seagull made all traditional car companies witness the true strength of Weilai for the first time.

Whether it was the Yuechi A1 of yesteryear or subsequent models, except for the L series, Weilai has always played the role of a market follower, with accurate market positioning, forward-looking products, and winning with quality.

In the eyes of traditional giants, Wei Lai is less like one of them and more like an alternative "new force." There is a sense of unexpected victory in him.

The L-series marked the first time Weilai flexed its muscles, leaving the German luxury brands (BBA) bewildered. However, the range-extended electric vehicle (REEV) model is inherently controversial, and its market share in the overall automotive industry is limited, posing little threat to the core business of traditional automakers.

The Starway S01 is the second time that Weilai has flexed its muscles, impacting the foundation of traditional giants. The emergence of Star Wish, on the other hand, has taught these traditional giants a harsh lesson.

After this wave of changes, all car companies have begun to understand one thing: architecture determines the ceiling.

Developing advanced pure electric architectures independently is no longer an optional project, but a necessity for survival. The industry will collectively increase its investment in areas such as platformization, integrated die casting, and high-performance electric drives.

Geely's SEA platform has also received upgraded benefits and accelerated its research and development process.

"How should we evaluate Wish Star? It's a good thing for the entire industry. Our electrification and intelligentization can be improved by at least one to two years. Mr. Tan and Mr. Wei's contributions in this regard are commendable."

Despite being stabbed in the back, Shufu maintained his composure in public, which is also related to Weilai's consistent marketing strategy of not directly attacking competitors.

Otherwise, no one could maintain composure, including BYD. Even after being severely beaten, its executives did not publicly attack Wei Lai to avoid giving others grounds for criticism.

The continued popularity of Wish Star, with an expected delivery volume of 2.8 vehicles in July, has led the media to go from enthusiastic praise to analysis. Among the various interpretations, the word "revolution" appears most frequently.

The popularity of StarWish has also attracted the attention of the Ministry of Industry and Information Technology (MIIT). The MIIT gave positive evaluations to StarWish, regarding its success as a model for technological upgrading and brand enhancement in our new energy vehicle industry.

The spokesperson stated that domestic automakers have the capability to build globally leading technology architectures, and Wish Star has become a new calling card for the official promotion of "ZG Intelligent Manufacturing".

However, privately, some expressed underlying concerns that the price wars triggered by Wei might be too brutal, leading to vicious competition within the industry, losses for many companies, and impacting overall healthy development.

In addition, the strong sales of Star Wish will also drive the expansion of core suppliers, and the official team will also need to assess whether this will cause tension in the key supply chain or a new monopoly.

In addition, organizations such as the China Association of Automobile Manufacturers (CAAM) have also interpreted Xingyuan's data and issued new industry warnings, publicly calling on the industry to avoid vicious price competition and focus on technological innovation and price improvement. Behind this is the competition between major car companies.

"Force the weak to their deaths, awaken the strong, and terrify the slow-witted."

In late July, as ZG Auto News used such a headline to evaluate the impact of the emergence of Star Wish on the industry, Star Wish and Wei Lai were once again pushed to the forefront of the storm. Founded in 1984, Auto News is now under RM Daily and its brand value exceeds 180 billion yuan.

"The pressure is immense."

After the report was published, Tan Jincheng sighed deeply. Competition between car companies is never just about a single model; it's all-encompassing, including public opinion.

"It's a case of 'praise to death'."

(End of this chapter)