2003: Starting with Foreign Trade

Chapter 1075 Goal: Top Five Globally!
Price wars, the changing of the guard between old and new forces, competition and debates arising from the divergence of technological routes—it's been an aggressive year, and there's just too much for Wei Lai to do.

From entering the workforce in 2003 to 2023, a full 20 years have passed. In the business world, I have faced all kinds of competition, deceit, and intrigue. But if I had to say which year was the most stressful, it would definitely be 2023.

After his business grew, the bugs he had in his previous life, apart from the general direction, such as the fact that new energy vehicles would sell very well during the three-year special period, were actually not very useful anymore. Moreover, once things got busy, he could hardly remember many things anymore, after all, it had been too long.

What has kept us going is nothing more than the result of years of hard work and accumulated business acumen; no one is born knowing everything.

"Actually, the early stages of new energy vehicles are relatively easy to do, but last year was indeed quite difficult."

After announcing its cumulative sales figures for 2023, Tan Jincheng returned home to receive congratulations from his family. As a leader in the global new energy vehicle market, Weilai's achievements in 2023 are truly outstanding.

In particular, of the 367.9 million units sold, 33.07 were exported overseas, accounting for about 9% of the total sales. The pure electric pickup trucks bearing the NIO brand are quite popular in the Australian market.

Speaking of the brand NIO, it is quite prestigious in the minds of overseas users. NIO represents innovation and change, and its pronunciation is similar to the future, making it a clear representative of high technology. In addition, the fact that it can export complete vehicles and that its quality and design meet EU standards shows that NIO is a good brand.

With its auspicious brand name, reliable quality, and distinctive car design, Weilai has not only established a high-end image in China but also represents high-end status overseas.

Besides the Wynn, BYD, which began its aggressive overseas expansion in 2023, also has a high-end image overseas. For overseas users who did not experience the era of BYD's gasoline cars, the experience of getting into BYD's most mature electric vehicles is completely different.

"Is it easy to do? What do you mean? If it were easy, there wouldn't be so many bankruptcies, right?"

Just after New Year's Day, another emerging electric vehicle company collapsed: HiPhi. While Nezha Auto is currently facing numerous problems, it's not really fair to call it bankrupt. HiPhi, on the other hand, has completely ceased operations.

If it weren't for the overly complex equity structure behind Nezha, there would actually be someone willing to save it. Just its advanced car factories and land in various places are enough to make people's hearts flutter. Among the new energy vehicle companies, Nezha has the most factories.

However, its equity structure is too complex, making it extremely difficult to fully understand and take over as a whole. In the end, it will most likely be sold off in separate parts.

If possible, Wei Lai could take over its automobile factory in Tongxiang, thus achieving a complete layout across Zhejiang Province.

"Bankruptcy does not mean that the boss did not make money. Many bankruptcies are not due to market factors. Some may be intentional on the part of the boss."

When a market is in its development stage and receives strong policy support, it is actually the best time for many companies with strength and background to accumulate initial capital. Weilai entered the new energy vehicle industry very early, and not to mention anything else, it received a lot of government subsidies.

Selling cars is not the source of profit. If they were really after money, many business owners could easily walk away unscathed. Those with a conscience could make a perfect exit, while those without would just leave the mess to the local government and walk away.

Assuming Tan Jincheng was only after money, he could have done what those bankrupt companies do: use all sorts of fancy advertising, minimize costs on the cars themselves, and then figure out a way to exit the business.

"That's true, but now that the subsidies are gone and the market is back on track, things won't be so easy."

Only his family knows how busy and stressed Tan Jincheng has been this past year, despite his seemingly glamorous life. For one thing, the once youthful-looking Mr. Tan has changed a lot in appearance this year, which is due to the pressure.

Without subsidies, in addition to increasing sales, we must also focus on profits. We can earn less money, but we cannot not earn any, otherwise the cars will not sell.

"Yes, last year was just the beginning. This year will be more difficult, so we need to be more cautious."

The price war has lasted for a year and has not only failed to subside but has shown signs of intensifying. On the first day of the new year, BYD lowered the starting price of its Qin series to 7.98 yuan. Today, there are also rumors of price cuts for Tesla, with the rear-wheel-drive version of the refreshed Model 3 already rumored to be getting a price reduction.

This news is highly likely to be true, and even more likely it was released by Tesla itself to test the market's reaction.

Last year, Wynn launched the price war, and BYD and Tesla immediately followed suit. This year, it's BYD's turn, and there are already rumors that Tesla will follow suit. Whether Wynn directly lowers prices or uses discounts to indirectly reduce prices, it's a must.

However, price wars also bring many problems, namely cost issues. Everyone understands the principle of "you get what you pay for," and price wars lead to problems with car quality. When prices are lowered, some companies get used to cutting corners in places that are not visible in order to ensure profits.

All three giants are pursuing vertical integration. With the mass production of Weilai Semiconductor chips, Weilai's vertical integration level has reached 75%, giving it a clear cost advantage. However, if they continue to compete in this way, they will face heavy pressure.

After all, subsidiaries also have their own KPIs and survival needs, and cannot unconditionally support complete vehicles.

Cost optimization is also necessary, and some components will be replaced. However, under Tan Jincheng's requirements, core components such as the three-electric system must be worth the price and safety must not be compromised.

"We are going to take the path of popularizing technology, and a decline in profits is inevitable, but we must also do a good job of balancing it."

He didn't go as far as Lei Jun claimed, only needing a 5% gross profit margin—that's pure nonsense. However, for high-volume models, lowering the gross profit margin is possible. According to Weilai's internal plan, for high-volume models like the Exeed series, the final gross profit margin could be reduced to around 10%.

If the market becomes even more competitive, it's not impossible to reduce the profit margin to below 10% in order to maintain market share. Taking a car model priced at 100,000 yuan as an example, the gross profit margin per car is 7,000 to 8,000 yuan, or even 10,000 yuan. Combined with sales volume, the profit is still quite considerable.

Currently, popular models including Exeed S01, Galaxy P1, and Star Wish all have room for price reductions, especially the Galaxy P1 hybrid model, which has a relatively large room for price reduction.

As is well known, hybrid vehicles are cheaper than pure electric vehicles. The Qin series' starting price of 79,800 yuan is aimed at hybrid vehicles. BYD's only pure electric vehicle under 100,000 yuan is the Seagull.

In the pure electric mass consumer market, Weilai still has a clear advantage.

"What are your sales expectations for this year?"

The one who asked this question was the father-in-law. Now the father-in-law's family has also moved to Ningbo to live, and they live in the same community as Tan Jincheng's family. Gu Yanning's family also came with them, so they are not lonely.

The family members usually get along quite well. They dance in the square together after dinner, and occasionally go on trips together after the full reopening. They usually stay at home taking care of the children, and their lives are quite comfortable.

This son-in-law's achievements have far exceeded his expectations. His car company sells more than 300 million cars a year, and green-plated cars with the Weilai logo can be seen everywhere on the streets. He has been the richest man in China for several years now.

Back then, when I chose Tan Jincheng, besides his good looks, his ability was definitely the most important factor. A young man in his early twenties was able to build a successful business with no background and make his foreign trade business thrive. But I never expected him to be so capable.

"This year, we will be more conservative with our target, aiming for 420 million vehicles. We can't be this aggressive every year."

420 million vehicles represent a growth rate of approximately 15% based on the 2023 forecast. The new energy vehicle market is not yet saturated, so this growth rate is achievable. Combined with the sales of gasoline vehicles, this target can be roughly reached.

However, the sales target for new energy vehicles is close to 20%, which is still a considerable pressure. But we can't give up if we can break into the top five globally.

"This pressure is really immense."

Gu Hongshun was stunned for a while before sighing. He had done business before and knew how difficult it was to sell more than 400 million cars a year. The key was that Wei Lai's cars were really quite expensive.

Take the L series as an example. In 2023, the total sales volume was 37.6 units, with an average selling price of 32 yuan. This is a pure high-end market. The sales figures were simply dazzling in the market.

"There is pressure, but also motivation. This year, I plan to stabilize the situation and make the financial report look better."

To be among the top five globally, it's not enough to just look at sales volume; revenue also matters. Due to their low-end image, domestic automakers, even if they sell a lot of cars, generally cannot enter the global mainstream in terms of revenue.

Simply put, the increase in volume did not translate into an increase in revenue. All the money went to multinational car companies. For a long time, revenue could only be maintained at a scale of hundreds of billions, and net profit was even less comparable.

For Weilai to gain true recognition, in addition to sales volume, it also needs to be among the top ten industries globally in terms of revenue.

"Wei Lai's 2023 financial report should be very good, right?" Gu Qingqing also asked. In recent years, apart from Orange Products Club and TiMi Studio, which have been able to maintain stable revenue, Orange Group's financial report has not been very good due to the large amount of investment in artificial intelligence and the acquisition of Seven Star Data Center from the controlling shareholder.

In addition, with the recent ebb of the internet boom, although major internet companies are actively transforming and embracing AI, their market value performance is not very good. This can be described as the wheel of fortune turning.

Orange Group is also under considerable pressure in the capital market, mainly because its financial reports show that it is not as profitable as it used to be due to increased investment. Currently, the capital market's expectations are far lower than its profits.

"Overall, it should exceed one trillion, so we can be considered a company with one trillion in revenue."

After announcing its sales volume and sales forecast, Weilai's 2023 financial report has clearly become the focus of the capital market. According to the estimates given by institutions, Weilai Group's total revenue in 2023 will exceed one trillion yuan.

Currently, among the top 500 private enterprises, only Jingdong has reached a scale of one trillion yuan. The peak revenue of SAIC Motor, the leader in the automotive industry, was only 9021.94 billion yuan in 2018.

Weilai is very likely to become the first automobile manufacturer in the country to achieve a revenue scale of one trillion yuan.

This achievement has attracted attention not only from the capital market but also from higher levels of government. The new energy industry chain has been plagued by controversies and increasing chaos in recent years. With the intervention of capital, industry competition has become increasingly fierce, leading to a faster pace of industry reshuffling.

This has inadvertently caused some harm to local governments and consumers, and has made the question of whether new energy vehicles can truly replace gasoline vehicles a hot topic of discussion. However, the industry has developed to this point, and it is impossible and necessary to stop.

A new energy vehicle manufacturer with revenue exceeding one trillion yuan can, in a sense, reassure all sectors of society.

"Then your financial report for this year will have to be released ahead of schedule."

Tan Jincheng is no longer a greenhorn, and Gu Qingqing has also grown rapidly. She has been in charge of Orange Group for some time now, and her political sensitivity is also quite good. Every March is the financial report season, and also the meeting season.

Releasing a financial report with trillions in revenue ahead of schedule is of great significance.

"According to the rules, we should have disclosed it in advance, and we have complied with the procedures."

According to the rules for listed companies, if the positive or negative value exceeds 50%, it needs to be disclosed a few days in advance. Although this requirement is not very strict, most companies will voluntarily comply as long as the growth rate exceeds this figure, since it is a good thing.

On January 12, the second Friday of the new year, Tesla Model 3, as rumored, saw a price reduction. Following BYD, the second giant has once again launched a price war, and all market attention is focused on the new energy vehicle leader, Weilai.

"Let's follow suit."

Since New Year's Day, the stock market has been speculating on Weilai's financial report. Weilai shares have seen a noticeable increase in daily trading volume and a gradual rise in stock price, indicating that funds are positioning themselves in the market.

Weilai's full-year sales growth rate is comparable to that of the other two leading companies, with the growth rate of new energy vehicles expected to be around 20%, which is not particularly noteworthy.

Most importantly, Wei Lai, who always likes to stir things up at the beginning of the year, has not made any moves for almost half a month now, which has really surprised everyone.

"Alright, I'll have someone release them right away."

Boatman is ambitious this year, and he announced the price reduction of the Qin series during the New Year's Day period. So I have to support him. Wei Laiyi doesn't have many models to adjust, only the Exeed S01 and Galaxy P1.

Due to the upcoming model change, the starting price of the Exeed S01 has been adjusted to 10.08 yuan, and the starting price of the Galaxy P1 has been adjusted to 8.98 yuan. Apart from these two main models which are directly reduced in price, other models have not taken the direct price reduction route, but instead have reduced prices indirectly through financial subsidies, free insurance, and other means.

Another model that has been adjusted is the ET5. In order to compete with the Model 3, the ET5 has also been reduced by 3000 yuan. With the addition of indirect discounts, the actual discount can be more than 5000 yuan, maintaining a certain level of competitiveness.

The Exeed S01, Galaxy P1, Star Wish, and ET5 form a strong market presence in the 7 to 25 yuan price range. Compared to the Dynasty series, the Exeed may have fewer models, but the Exeed S01 and Star Wish are particularly competitive, so it seems they can maintain their position for now.

"It looks like the Exeed series will also have to consider hybrid technology."

The development of hybrid vehicles in the past two years has been too rapid. BYD has seized a large market share by relying on hybrid technology. However, we are lacking in this area. In order to maintain this huge market share, we must add some hybrid models at this price point.

However, we don't plan to develop range-extended electric vehicles anymore. The market is still too small. We can maintain the profits of the high-end L series. There's no need to compete with companies like Leapmotor and DeepBlue in the low-price segment.

Wei Lai's decisive follow-up, coupled with the 15 billion yuan reward plan that started deliveries in January, has once again stirred up the market. Although the China Passenger Car Association has made repeated appeals, major car companies simply do not take it seriously and continue to lower prices as usual.

"President Tan hasn't made any big moves this year. It seems that Wei Lai's actions this year will be mainly conservative, which gives us a certain opportunity."

The BYD sales team, which still hasn't given up on becoming a leader in the new energy vehicle sector, breathed a sigh of relief after seeing that Wei Lai only followed up briefly. Wei Lai, who always makes a big splash at the beginning of each year, didn't do anything significant this year, which reassured them quite a bit.

However, Weilai has not been idle. Weilai's actions are mainly reflected in technology and services. Starting this year, Weilai will open up more charging networks and build more supercharging stations.

Meanwhile, the original Lifan Motors team, led by Weilai Technology, a subsidiary of Weilai, has also begun to cooperate with Li Bing's Wenjie on battery swapping, striving to achieve a more comprehensive approach to energy replenishment.

In addition to providing excellent service, Weilai has begun to introduce AI big data models into its intelligent driving team. Integrating AI big data models into vehicles has become a major task for Weilai's intelligent driving team this year, aiming to improve the intelligent cockpit and human-computer interaction experience.

However, these are still being kept secret for now and have not been announced to the public. Compared with traditional price wars, Weilai now places more emphasis on technology wars. In the future, with homogenization and limited price space, the competition will be about who has the better technology.

"January is a whole month of sales, so everyone needs to stay focused and try to close the gap with Weilai."

The BYD sales team, especially the Dynasty series team, is highly motivated. Last year, Ocean.net was almost crushed, and this year they are fighting with their backs against the wall. If Dynasty.net cannot gain an absolute advantage today, then being the perennial runner-up may become their mission.

We need to make a final push before the Chinese New Year, otherwise it won't just be a matter of the stock price not stabilizing.

With its vast sales network and exceeding expectations, BYD could repeat the mistakes of 2010 if it fails to meet them. The current environment no longer allows them the long ten-year grace period they once had.

The sales team here in Weilai did not slack off either. Although the official discounts were not much, the Xingtu and Xinghe series, after the addition of the dealer system, had a lot of room for maneuver with the dealers.

They can't differentiate themselves from directly operated stores in terms of price, but they can attract customers with other discounts. Anyway, the profit margin offered by Weilai is quite good. Being a Weilai distributor is quite comfortable.

As long as the official pricing system set by Weilai is not violated, Weilai turns a blind eye to its own offline discounts. In addition, since it has its own insurance company, Weilai also cooperates with distributors in the insurance business and gives them a certain commission.

Most importantly, because of its big data business and well-developed APP, Weilai has done an excellent job in production capacity planning and does not engage in large-scale expansion or fabricate sales data. Therefore, they do not need to accumulate a lot of inventory like other brands.

Having too many cars in stock is a recipe for disaster.

On January 31, Weilai released its unaudited preliminary financial report for 2023. Although it was not a formal financial report and only a rough estimate, it still caused a huge sensation.

2023年度，尉来集团整体营收约1.05万亿至1.1万亿区间，净利润约800亿至850亿元！

On that day, Weilai shares surged 7.7% due to the news.

"The first vehicle manufacturer in China to achieve a trillion-yuan revenue, and with its revenue ranking among the top ten globally, Weilai is qualified to become a global automaker."

"Now it all comes down to whether Weilai or Jingdong has higher revenue, whether the internet or new energy wins."

(End of this chapter)