2003: Starting with Foreign Trade

Chapter 1082 Comprehensive Transformation
"A new competitive model has begun."

To be fair, it's quite something that two mobile phone manufacturers have entered the automotive industry at the same time. The automotive sector has remained incredibly popular for the past six months, and this is undoubtedly related to these two companies.

Looking back, even in 2023, although the automotive industry was quite lively, it was nothing compared to this year.

The hype has increased, but so have the problems.

Over the past six months, Tan Jincheng has gained some insight into the power of these two companies. After all, he had acquired Meizu and had some understanding of their styles.

However, once you get into the automotive industry, you're truly amazed; their multi-billion dollar marketing campaigns are no joke.

"Currently, it is unlikely that any large groups will enter the automotive industry. With market penetration exceeding 50%, the market structure is basically set. In the future, companies will be eliminated one by one. If adjustments are not made, Weilai may also be eliminated."

High market penetration is never a good thing. High penetration means market saturation, and the market has changed from an incremental market to a stock market. In the future, what everyone will be fighting for is not new users, but orders in the hands of competitors.

The market has become extremely competitive.

"Yes, the era of piling on parameters is over. From now on, we can only focus on brand power."

Technological innovation has reached a certain bottleneck. All advanced components can be purchased on the market. Just like mobile phone brands, if you can use the most advanced processor, so can I. The difference is whether we are willing to use it or not.

With the same configuration parameters, which company's product to buy depends on brand strength. And brand strength is not simply about trusting a particular brand, but also includes a series of supporting measures such as after-sales service.

For big-ticket items like cars, no matter how strong your brand is, users will only trust you once, even if you have a large number of loyal fans like those two tech companies.

They are all ordinary people. They might make an impulsive purchase once, but no one would spend hundreds of thousands of dollars a second time to experiment.

Most importantly, consumers are becoming more rational and are no longer easily fooled by various marketing jargon. Frankly speaking, it's not necessarily a good thing for businesses for users to become more rational, just like the saying goes, "Fools are a social resource."

But that's how the market works; businesses need to do more than just adapt; they need to cater to it.

The current internet is actually in an era of information explosion. Countless consumers receive all kinds of information every day. With so much information, netizens are more or less tired. And there are only so many tricks. Once you use them too much, they will become less effective.

Since the recall of the SU7 in August, negative news has naturally increased, but Lei Jun effectively suppressed it by showcasing the SU7 Ultra prototype and delivering a compelling presentation.

"This thing seems really powerful, but we have one too; sigh, we still don't know how to promote it, we can't compete with CEO Lei."

Tan Jincheng has never seen the prototype of the SU7 Ultra. This model, which is said to be going to run the Nürburgring, has three motors and four-wheel drive, 1548 horsepower, and a 0-100 km/h time of 1.98 seconds. However, since he has never seen the prototype, he cannot comment on it.

Since June, when Xiaomi chose to include science popularization features and pushed for legislation on intelligent driving, forcing Xiaomi to change its intelligent driving marketing strategy, the relationship between the two companies has become delicate, and proactive communication has decreased.

They're all seasoned veterans; they can tell who's behind this. However, Lei Jun doesn't think Wei Lai is targeting Xiaomi, but rather making a decision for his own benefit. Nevertheless, it has affected Xiaomi's strategy.

They could have won all the battles; they could have attracted users not only with their good looks and performance, but also by proclaiming themselves as the leading intelligent driving technology, thus attracting users who value intelligent driving capabilities.

After intelligent driving became a hot topic, it became one of the biggest selling points in the current market. Xiaomi could have easily attracted users to buy it by leveraging its market appeal, but that approach is no longer viable.

To be honest, their intelligent driving capabilities are really lacking. From the start of deliveries in April to the end of August, they underwent three major OTA updates, including two major OTA updates in May alone.

Before these two major OTA updates, their intelligent driving system was not even assisted driving, let alone intelligent driving. After the second major OTA update, it could barely be considered assisted driving, which is Level 2+, but it was only available in ten cities.

The sales figures are disproportionate to the product itself. This thing is not even a semi-finished product, yet it was put directly into the market. It's only sold to fans who don't understand it. If it were a car owner who had been educated about it, they would be furious.

To put it simply, Xiaomi's so-called intelligent driving, in its initial stage of implementation, is only at the level of the Yuechi A1 with cruise control enabled. That's right, it's at the level of a gasoline car. In reality, it may not even be as good as that of joint venture brands.

In a traditional sense, a major OTA update for a vehicle would be considered a type of recall. However, for smart cars, just like updating the operating system on a mobile phone, the software system doesn't need to be taken to a shop.

Such large-scale updates only occur once every few years. Each update is handled with great care, and users are notified in every possible way to prevent updates from happening while driving, which could affect safety.

Three major OTA updates in five months is rare even in the 140-year history of automobiles.

"In the future, we need to provide users with more services. Don't make empty promises at the press conference. Whatever promises you make, you must deliver them to users as quickly as possible. Don't underestimate these things; they will bring us a great reputation."

In a saturated market, the competition is all about service. Whoever provides better service will thrive. The old tricks of making empty promises are no longer effective.

Judging from the promotional materials, the SU7 Ultra boasts impressive performance, but its actual performance remains to be seen. In his speech, Lei Jun continued to raise expectations to the max. However, it turns out that this performance car really does exist.

That's Lotus. Lotus has completely stopped producing gasoline-powered cars and only has three models, all of which are pure electric vehicles: a mid-to-large-sized pure electric SUV, a large pure electric coupe, and a pure electric supercar flagship.

In terms of performance, all three models are quite good. Taking the Lotus Emeya, a pure electric coupe that is compared with the SU7 Ultra, as an example, the planned 2025 model is not inferior to the Ultra in terms of overall performance.

While the combined horsepower is slightly lower, the combination of Woolai and Lotus has a greater advantage than Xiaomi in terms of electric drive system, advanced intelligent driving, aerodynamics, chassis tuning, and so on.

Otherwise, it wouldn't be called the "King of Performance." With a starting price of 52.8 yuan, it's not considered too expensive for users who pursue performance.

"Should we also do some promotion for Lotus?"

Although he left Lotus, Li Xiang still has a deep understanding of the company. Lotus has never invested much in marketing in China and has always been a relatively low-key company. However, under Robin's leadership, Lotus has developed quite well.

Robin's style is rather aggressive. Apart from some turbulence during the transition period and a short-term decline in sales, it has developed relatively smoothly with the cooperation of its shareholders.

Currently, the Lotus Heisel plant has been transferred to Weilai, which means that Lotus only has the Jiangcheng plant, and only one car factory. In the automotive industry, this can be considered a light-asset operation.

Lotus's sales have also increased after completing its electrification transformation. In 2023, Lotus sold more than 20,000 cars, a 74% increase for the year. Europe was Lotus's biggest highlight, accounting for 40% of total sales, a 179% year-on-year increase.

More than 5000 units were sold in China, accounting for 25% of total sales. The remaining share was distributed in North America and other regions. Europe contributed nearly 40% of global sales. The outstanding performance of the pure electric supercar, as well as the brand's historical accumulation and recognition in Europe, are the main reasons for the increase in sales.

Lotus's original sales forecast for 2023 was 1.2 vehicles, but 2 vehicles far exceeded expectations. The revenue of US$19.5 billion also greatly improved Lotus's financial situation, and the corresponding stock price also increased significantly.

Lotus's revival is progressing step by step toward its established goals. Tan Jincheng originally expected that increasing total sales to 20,000 units by 2025 would be sufficient.

"We won't worry about that; let Robin decide for herself."

Robin comes from Tesla, so she probably wouldn't be willing to do something like this, which is riding on their coattails. Besides, Lotus's biggest market is in Europe, and it will take a long time for the SU7 Ultra to be sold in Europe.

"Actually, it's not low. Think about it, cars with an average price of over 500,000 yuan can sell 20,000 a year. That's an amazing achievement."

Li Xiang chuckled: "But the Hongtu X9 can sell more than 10,000 units a month."

To be honest, Apple is really something. Their flagship model, the X9, starts at 46.98 yuan for the range-extended version and 50.98 yuan for the pure electric version. Despite such a high price, the X9 has set record after record.

The SU7 is very popular, but to be honest, it's nothing compared to the X9.

The Hongtu X9, with an average price of 500,000 yuan, has seen its production capacity ramp up rapidly after deliveries began. Seres' current production capacity is indeed impressive. Since April, monthly deliveries have exceeded 10,000 units, and have remained at a high level for the past few months. The expected annual delivery volume is around 150,000 to 160,000 units.

"They're different. The X9 is an SUV, a family car. Although it's luxurious and has a high starting price, it's fundamentally different from Lotus."

Aside from one SUV that can barely be considered a family car, Lotus's other two models are performance cars, which are more like luxury toys. These cars have a limited audience to begin with, so selling 20,000 units a year is already quite good.

"That's true, let them be, take it slow." The production capacity of performance cars needs to be controlled. At the same time, Tan Jincheng also believes that this kind of thing is not easy to promote on a large scale, especially not on a large scale among fans who do not know about it.

Not everyone can handle a performance car. The most crucial point is that, given the current financial policies and the consumption concepts of young people, a car costing over 50 yuan is both expensive and cheap.

按照20%至30%的首付比例，50万元的车子首付通常在10万元至15万元区间，最低可以做到10万元的首付，某些年轻用户是真的会脑子一热去借网贷买的。

They didn't even consider whether they could afford the monthly payments later; they just wanted to enjoy themselves first. However, performance cars are prone to accidents if not properly controlled.

For routine accidents, insurance companies can cover the costs, which is fine. But for unconventional accidents, it can be a real problem. Young people who don't have the money to pay compensation face a disaster for both the accident victim and the perpetrator.

Lotus's decision not to conduct large-scale advertising in the country is partly due to this consideration.

"Lotus is not positioned as a high-selling model, so maintaining the current scale is better. Slow growth is also more suitable for Lotus's development."

The Lotus Jiangcheng plant is designed with a theoretical annual production capacity of 15 vehicles. However, the actual production plan will be dynamically arranged according to market conditions. This year, Lotus's annual production capacity plan is only between 3 and 3.5 vehicles. If it becomes a blockbuster, it will actually be a troublesome thing.

A blockbuster product isn't necessarily a good thing if production capacity can't keep up. Back in the day, Tesla was almost driven to the brink of bankruptcy by hundreds of thousands of orders for the Model 3. Xiaomi is currently facing a similar problem.

A monthly delivery capacity of over 10,000 vehicles is indeed excellent for a startup, but it is still somewhat insufficient compared to their order volume. Their current situation is actually similar to that of Tesla in its early days.

"Sometimes you really can't be too greedy."

Tan Jincheng sighed, "With a large number of orders in hand but production capacity unable to keep up, in a market with limited supply, it's no wonder other manufacturers are struggling."

"In the end, it's still a lack of experience. They set the bar too high. Chrysanthemums also started from scratch."

From the failure of the first smart-select model to the steady monthly deliveries after the transition to range-extended models, and the emergence of blockbuster models only after the market adapted, the trend was one of gradual upward movement. In contrast, Xiaomi immediately placed itself on the throne and achieved a large number of orders of 100,000 vehicles.

The traffic surged, but it can also easily backfire.

It's only been a few months, and there's already a lot of negative news. The order data of our competitors is really a mystery. A few years ago, they were getting orders for 10,000 vehicles, but last year they started to aim for 30,000 to 50,000.

This year it's gotten even more outrageous, with orders easily reaching 100,000. If we really followed the established order numbers, how many cars would we have to sell in a year?

"From now on, let's stop releasing large order data, unless it's for strategic models. Also, let's stop releasing weekly rankings. If necessary, releasing them once a month will be enough. As for the specific models, you can decide for yourselves. Some models, we shouldn't release them."

Too much data annoys users.

"Is the boss really going to make a complete transformation?"

He created the weekly rankings, and since then, many weekly rankings have become the target of competition among various companies. How many cars a company sells in a week has become a point of pride for its competitors. Companies with sales of two or three thousand cars can claim the top spot.

This has inadvertently intensified competition within the industry.

"Not really. We'll just keep a low profile and sell cars quietly from now on. Of course, we'll still invest when necessary, and we can learn from Tesla."

Tesla also engages in marketing, and its marketing expenses are considerable. However, with the rise of domestic car manufacturers in recent years, Tesla's brand image has become much more "low-key," much like Apple did back then.

Wei Lai is also going down this path; it's not good for leading enterprises to be too arrogant.

"Okay, I'll go arrange it. Zhou Ao will have to cooperate on this."

"Go and talk to him yourself."

On the first Saturday of September, Li Xiang officially announced on Weibo that starting this month, Weilai would no longer publish weekly sales rankings, and sales figures for some models would no longer be released to the public, sparking a heated discussion.

"We need to cooperate in the fight against involution."

There is currently a strong call to combat involution, and the automotive industry should also respond. As one of the "one superpower and many strong players" in the automotive industry, Weilai's cumulative sales of new energy vehicles exceeded 230 million units from January to August, while its cumulative sales of gasoline vehicles reached 56 units.

Total sales reached 286 million vehicles, achieving over 70% of the sales target set at the beginning of the year. Clearly, the sales target of 400 million vehicles can no longer be met.

After June ended, Weilai readjusted its sales forecast for 2024, raising it to 450 million vehicles, and internally set a goal of 500 million vehicles.

Besides the rapid growth of new energy vehicles, the biggest change is in gasoline vehicles. With the overall price war intensifying, gasoline vehicles have reached a very cost-effective price range, making them very attractive.

With the expansion of exports, Yuechi Auto's fuel vehicle growth this year is still very good, especially the Tank series and Yangzi series. The Tank series, like the SU7, has become a popular product and has established a solid market position in the off-road vehicle field.

The Yangtze series, which had reached a growth bottleneck in the domestic market, found its own path after opening up overseas exports, performing very well in the Middle East and Australian markets.

In addition, through Proton's channels, the lower-end models of the Yangtze series are also quite popular in Southeast Asia.

Southeast Asian countries are quite cunning. If you want to enter their market, they welcome you, but only if you build a factory there or cooperate with their factories to disassemble and reassemble the parts.

Nezha was dragged down by this model in a sense. It wasn't just in the Southeast Asian market; in China, they partnered with three cities, and whether it was local or Southeast Asian, the prerequisite for cooperation was to build a factory.

The continuous construction of factories consumed a lot of funds, and Nezha did not have the financial strength to do so.

This rule isn't exactly wrong, but it requires a lot of investment from car companies. So far, Tan Jincheng is only willing to invest heavily in regions with large single market sizes, such as the European Union and Brazil.

Southeast Asia is a complex region with many countries of varying sizes, and unlike the European Union, it is not a highly integrated system. Given this environment, he did not intend to make large-scale investments, so Proton became a very good channel.

Proton has distribution channels throughout Southeast Asia and has recovered in its home market, which can effectively support the export of low-end models in Southeast Asia.

As a large group company, controlling investment is essential as the market enters a period of stagnant growth. Starting this year, Weilai has essentially entered a "contraction" mode in both its power battery and automobile manufacturing businesses.

Since last year, the three core entities of Jinshidai, Weilai Auto and Yuechi Auto have not made any large-scale investments in China, and have instead focused on optimizing existing production capacity.

Zhidou Auto, located on the outskirts of the city, and Ninghai's industrial park have also adjusted their strategies. Lotus now only has one factory left. Apart from its headquarters remaining in Europe for the convenience of selling cars, it is essentially a local car company.

Proton followed a similar approach, focusing its efforts on the Southeast Asian market and adopting a contraction strategy in other regions.

The group's annual production capacity of 500 million to 600 million vehicles is Tan Jincheng's plan for Weilai within the next five years. According to this plan, industrial adjustments will be made. If sales decline, those that need to be sold will be sold, and those that need to be dismantled will be dismantled.

Throughout business history, there are countless examples of companies collapsing due to unchecked expansion, and Tan Jincheng does not want his company to become one of them.

Of course, the contraction is only relative. When it is necessary to invest, he will not hesitate to do so. If Weilai's sales can break through 6 million vehicles one day, he will not mind striving for annual sales of 10 million vehicles.

After all, it's something to be proud of to have a domestic car brand reach the top three globally.

"Ten years, is that even possible?"

Five years is definitely not enough time. Ten years is a good time to try. Ten years later, or before he retires, is also a good time to take a gamble.

(End of this chapter)