2003: Starting with Foreign Trade

Chapter 816 Investing in Little Friends
Li Xiang is right. During the Guangzhou Auto Show, positive feedback came from word-of-mouth recommendations from attendees and new posts on the Weilai APP community.

This has greatly appealed to some users who were still observing the situation on the Weilai APP.

According to the timeline announced by Wei Lai, the first batch of ES6 models equipped with the latest intelligent driving technology will be officially available for pre-order starting November 24, 2014, and the new driving pleasure can be experienced as early as two weeks later.

OTA updates for existing users will also be gradually rolled out starting January 1, 2015.

Regarding the OTA issue that Aion S users are concerned about, Weilai did not give a specific timeframe. However, Li Xiang, special assistant to the president of Weilai, said that it would be delayed because there are still some compatibility issues and testing problems that are being fixed.

Another issue is the production capacity of parts suppliers, but these are just excuses to mislead consumers; the real reason is something that can't be said.

However, no matter how much it's upgraded, in terms of hardware, older users can't compare to newer users, and there's nothing that can be done about that.

Even if existing users harbor resentment, there's nothing they can do. In reality, no matter how much they try to cover it up, most of the first batch of new energy vehicle users still end up as guinea pigs for car companies, and Weilai is no exception.

All we can do is try our best to appease users with the best service. This time, for the OTA update of the car infotainment system for existing users, we will provide it for free, which can be considered as a way to appease our existing users.

I must say, this trick is actually quite effective.

As I said before, consumers these days are indeed quite tolerant.

Weilai's customer base is relatively high-quality. Just like buying Maodou S, these days, anyone who spends hundreds of thousands to buy an electric car is definitely not lacking in financial strength. Most people just use it as a toy.

Basically, most of the people who bought the Weilai ES6 also own at least one gasoline-powered car, and it's not a low-end vehicle; most of them are probably BMW or Mercedes-Benz customers.

Maintaining brand affinity among these high-end users is still very important.

As November came to a close, there were indeed a lot of pre-orders for the ES6. A total of 1021 ES6s were delivered in November, and the number of undelivered orders has accumulated to nearly 4000.

In addition, orders for the Aion S are increasing, with the number of undelivered orders already exceeding 10,000.

The statement I made to Brother Boatman before that the new energy vehicle market is very small is not entirely true. From January to November, the sales volume of new energy vehicles delivered nationwide has reached more than 70,000 units.

Based on this trend, it shouldn't be a problem for new energy vehicles to sell 80,000 units this year.

This market size is already quite large; it's worth noting that the overall sales volume of pickup trucks a few years ago was roughly the same.

With 11 months gone, Weilai's sales figures for this year are basically set. The total sales target of 40 vehicles for the year has been achieved this month, and the total sales for the year should be around 43 vehicles.

Compared to last year, Weilai's growth this year should be over 15%, which is a very good result.

Of course, the most surprising thing is the growth rate of new energy vehicles. Last year, Weilai sold more than 7000 new energy vehicles, and this year it is expected to sell about 2.8.

And this only includes the deliverables; the total number of orders, including those not yet delivered, should be close to 40,000 vehicles.

Based solely on delivery volume, Weilai is the world's second-largest new energy vehicle manufacturer, with only the North American market separating it from Tesla. In fact, Tan Jincheng has been considering whether to enter the North American market.

This is quite a headache. According to his recollection, some subsequent events did not seem to have a significant impact on the automotive industry, so it seems that it might be worth trying the North American market.

However, for now, let's test the waters in the Southeast Asian market and try to open up the market with gasoline-powered vehicles.

Regarding the acquisition of Proton, Wei Lai and Sequoia have already started assembling teams and making preparations for the initial stages.

Tan Jincheng also needs to report to the relevant departments, as the acquisition of a foreign car company requires their approval, and he can also seek their assistance.

Tesla's sales have plummeted since the purchase tax rebate promotion they implemented before the arrival of the executive. This year's sales target of 3.5 vehicles is unlikely to be achieved, especially in the Chinese region, where they had set an annual sales target of 1 vehicles.

It would be good if we could get 8000 vehicles now.

After failing to meet sales expectations, Tesla's stock price has fallen for three consecutive months since peaking in September. Wall Street's capital instincts have always been so keen.

Barring any unforeseen circumstances, Tesla's stock price will likely continue to decline in December.

Tesla had a relatively comfortable year in 12 and 13, but from 14 to 18, the tech visionary Elon Musk had a tough time. Before building a factory in China, especially in 2016, the stock price plummeted.

Overall, before 2019, Tesla's electric vehicles were not well-received in global markets outside of North America, and the majority of users in China who bought their electric vehicles were simply driven by curiosity.

In addition, some car companies and individuals like Xiaopeng who want to build cars have bought them for research.

These people's motives for buying Teslas were never pure.

On December 6, following Boatman Brother's appearance in Ningbo at the Beicang International Circuit at the end of November, He Xiaopeng also made a low-key appearance in Beicang, Ningbo.

The biggest change Tan Jincheng brought to Ningbo was that he made this low-key industrial city no longer so low-key.

Beicang has seen a surge in the presence of various industry leaders, drawing more attention to this seaside town whose name even a famous CCTV host mispronounces. Business receptions have become a significant source of income for Beicang in recent years.

"Mr. He, welcome."

He Xiaopeng has been working in Hangzhou recently, handing over UC business to Ali. He took advantage of his free time on the weekend to make an appointment with Tan Jincheng.

"Thank you for your hospitality, Mr. Tan."

He Xiaopeng looked up and greeted Tan Jincheng with a smile. Speaking of which, He Xiaopeng is not tall either, even shorter than Tan Jincheng. Tan Jincheng, who is 175 cm tall, is not considered tall among entrepreneurs.

There aren't many people shorter than him.

"Don't mention it. How's the handover going with Ahri?"

Although he did not leave Ali, He Xiaopeng has already founded Xiaopeng Motors. Of the three emerging forces that were founded at the same time in the previous life, Tan Jincheng has only seen one in this life.

Li Bing, who has unified the automotive media industry, is doing well at Bitauto and has no plans to start a new business for the time being.

As for Li Xiang, Tan Jincheng could sense the change in his attitude.

Looking at the emerging new energy vehicle companies, those that have performed well were mostly established between 2014 and 2015. Most of the brands that followed have not fared well, which shows that 2014 was truly the first year of the new energy vehicle era.

If they don't act now, they may not have many more opportunities in the future. Tan Jincheng doesn't know whether these two will be able to continue their entrepreneurial ventures in the future, nor can he predict what the consequences will be if they really go out to start a business and miss the golden period of these two years.

However, if these two go out to start their own businesses, we should still invest, since they have a close relationship with Wei Lai.

Including He Xiaopeng, if he is willing to accept investment, he can also invest.

Taking the teacup from Tan Jincheng, He Xiaopeng smiled and said, "The handover is in progress. Ali sent a team over, so I'm not too busy right now."

In fact, there was no need for a handover. Long before Alibaba acquired UC for $43 billion, with their 66% stake, they had already arranged for a large number of Alibaba personnel to be in charge. In the later stages, He Xiaopeng of UC was basically sidelined.

"Ali is really rich, 43 billion US dollars, that's an outrageous amount."

Both parties have made official announcements, and the full acquisition is now complete. In 2014, UC Browser held a 66% share of the domestic browser market and an 11.1% share of the global market, ranking first.

Even so, Tan Jincheng was unwilling to spend nearly 300 billion yuan to acquire such a company.

In the mobile internet era, users' habits have been completely overturned. Take Tan Jincheng from his previous life as an example. He rarely used UC Browser and would search on Baidu instead. Although there were many ads and he couldn't find much information, UC Browser also had a lot of ads.

After being acquired by Ali, UC almost disappeared from users' phones. This was partly due to Ali's influence, but also partly due to changes in user habits.

It can be said that 2014 was the peak of UC's valuation.

"Haha, you certainly have money, but it seems like Mr. Tan has a different opinion on the valuation of UC?"

"Huh? No, no, to be honest, I do not quite understand the valuation system of Internet companies. Take our Orange Technology for example, its current market value of around 80 billion US dollars is already comparable to our valuation before the IPO."

Then there are Kuaidi and Didi, whose valuations are the most outrageous. After multiple rounds of burning money, their valuations have become higher and higher, almost catching up with the well-performing Weilai.

Like crazy.

"Haha, that's not like something someone like you would say. You have a certain standing in the internet industry."

"Haha, I was just venting. I definitely won't admit it once I'm out this door,"

It is an undeniable fact that internet companies are overvalued, but this is related to the nature of the industry and has little to do with him.

Invest if you should, and make money if you should.

"I agree with that point, but if we're going to build cars, we'll still use an internet-based approach."

He Xiaopeng nodded. He came to Weilai to learn from others, not to discuss internet valuations. He believed that using internet thinking to run a car company could help the company grow rapidly and overcome the most difficult initial stage.

"Similarly, I agree with this. Our Weilai also operates with an internet mindset, but ultimately, physical enterprises must speak for themselves in terms of quality."

Cars are very complex things. No matter how much hype they receive, in the end, quality and safety are the most basic requirements.

He Xiaopeng listened attentively.

Although Tan Jincheng is not a professional in the field, he still has a certain voice in the new energy vehicle industry given his current status. At least in He Xiaopeng's opinion, Tan Jincheng understands intelligent vehicles.

Weilai emphasizes intelligence, and in their prospectus regarding the future development direction of their automotive brand, they clearly stated that, while ensuring quality and safety, their core competitiveness lies in intelligence. This means that all software and core hardware will be independently developed.

We will participate in the design of large screens, electronic and electrical architecture, embedded systems, and other aspects, either independently or in cooperation with suppliers, striving to achieve over-the-air (OTA) updates for the entire vehicle.

Currently, 17% of the R&D personnel at NIO are focused on the research and development of intelligent driving and autonomous driving. NIO Pilot is also the first self-designed and developed full-stack intelligent driving operating system.

Although it is not perfect yet, we will definitely continue to develop in this direction and strive to always be at the forefront of intelligent driving.

The competitors, led by Dizi, panicked, and that was precisely the reason.

The prospectus clearly states the company's direction: to build a new energy vehicle brand with power batteries and intelligent driving as its core competitiveness. While everyone thought they were just talking big, they have already developed a world-leading intelligent driving system.

You think someone's just joking, but they're actually serious and exaggerate it. It's hard not to panic.

That said, Tan Jincheng and Boatman have reached an agreement that the intelligent driving system on the Aion S will be more open and updated after June 2015, giving competitors half a year to prepare.

At the same time, BYD is not restricted from discussing contract requirements with Yu Kai of Horizon Robotics, whether it is through joint development or investment.

This also applies to other leading automakers; as long as there is demand, we can cooperate.

Tan Jincheng wants to use Horizon Robotics to bind all the top domestic automakers to the same front and form a technological alliance.

Regarding the patent exchange with BYD, Tan Jincheng did not make things too difficult for Boatman. Ultimately, the matter of applying for patents for technology research and development still depends on one's own strength. The more patents you have, the more say you have.

I'm never comfortable using other people's products all the time.

In fact, patent swaps between car companies are nothing new, and the same is true in the mobile phone industry. If everyone had to pay money to buy each other's patents, the production costs would be too high.

"By the way, Mr. He, I'm a little curious why you set up your company in Guangzhou?"

He Xiaopeng, who lives in Hangzhou, has his car company headquartered in Guangzhou, which is almost entirely dominated by GAC Group. This puzzles Tan Jincheng.

"My two partners have some connections with GAC Group, and they are also graduates of Tsinghua University's Automotive Engineering Department, so they are real professionals. In the years we have been working together to found UC, we have somewhat neglected our original professional backgrounds."

He Xiaopeng was referring to Xia Heng and He Tao, two of whom he had a very close relationship with. They had been starting a business together for a long time and were very important partners. Another important partner was Yu Yongfu.

This person also has some connections in Guangzhou. After considering all factors, the four of them jointly decided to locate the company in Guangzhou so that they could have a powerful backer.

He Xiaopeng's decision to build cars was not a spur-of-the-moment decision, but rather a well-considered and feasible plan by his founding team.

He Xiaopeng stayed in Ningbo for the weekend. Tan Jincheng took him to visit the factory, research institute, and even Flash Technology. He was treated very well.

It was partly out of respect for Lei Jun, since Lei Jun had specifically given instructions beforehand.

As for whether He Xiaopeng will take away Wei Lai's engineer?
Tan Jincheng wasn't worried about this; those who are meant to leave can't be kept in the end.

Two days passed quickly, and Wei Lai's various achievements greatly impressed He Xiaopeng, especially in the field of new energy vehicles, which he wanted to develop. To be honest, he recognized Tan Jincheng's intelligent core solution.

Traditional gasoline-powered cars have run out of new tricks; all that's left is to build up their heritage and expertise.

How can new energy vehicles compete with powerful traditional automakers?

In Mr. Tan's words, all you can do is differentiate yourself, so that consumers don't just have the very general impression of your car as an electric vehicle.

"We hope that in the future, when people mention new energy vehicles, they will not think about saving fuel and money, but about intelligence, giving users a better driving experience."

"In my opinion, the best self-driving cars should be those that do not require a driver's license, making it as convenient for ordinary people to buy cars as buying mobile phones, and they can use them right away."

"Of course, this is a bit unrealistic, and it may not be achievable even many years from now, but what if it does happen one day? Right?"

Actually, there are some, like the "old man's car" (or similar vehicle for elderly people). Although it cannot achieve driverless operation, it doesn't require many strict conditions; you can buy it and use it right away. This is why the "old man's car" may seem insignificant, but its market prospects are very good.

Any good consumer product has a low barrier to entry.

"Mr. Tan's idea is very interesting, but as you said, it is indeed impossible to realize for a long time."

Driving without a license isn't just a technical requirement; it's also a battle for profit. The entire driver's license industry chain must be fighting tooth and nail to resist.

"Yes, let's take it slow. First, let's make our cars more interesting and provide users with a different experience."

"I must say that Mr. Tan's ideas are truly imaginative; no wonder everyone calls you the best product manager."

He Xiaopeng was deeply moved, realizing that what truly made Weilai strong was not their technological reserves, but rather the presence of such a passionate, insightful, yet not reckless leader.

With sales of nearly 37 units last year and almost no new energy vehicles on the market, Weilai's sales target for this year is still only 40 units, which was already achieved in November.

Given Tan Jincheng's understanding of the new energy vehicle industry, he couldn't possibly doubt the explosive growth in production capacity this year, especially after July.

"Thank you for your praise."

He had met He Xiaopeng several times before, but they weren't exactly close. Lei Jun was always present when they met, and Lei Jun was the key figure in their meetings.

There was not much in-depth communication between the two sides.

Furthermore, he was aware of UC's future trends and had no interest in learning more about them.

However, this time I had an in-depth conversation with He Xiaopeng. Xiaopeng, who is still just a shell company, seems to be quite capable. His headquarters and R&D center are located in Guangzhou, and he is preparing to build a large-scale, diversified, and self-developed cross-industry team.

Moreover, 90% of He Xiaopeng's initial team consisted of technical personnel, which is quite unusual.

Companies that value technology are generally not bad, and Tan Jincheng is well aware of this.

His career is like that; he invests huge sums in technological research and development every year. Although he doesn't seem to do much usually, when he does, it's always a big deal.

Even Flash, which has relatively low technical requirements, has maintained an investment of more than 5% in technological research and development over the years, instead of simply relying on its past achievements.

When FlashCar held its shareholders' meeting, some shareholders did raise questions about this point.

In the words of the shareholders, FlashTech is already the absolute leader in the industry. Instead of investing large sums of cash in R&D, it would be better to appropriately reduce some of the R&D investment and use it for shareholder dividends.

Tan Jincheng immediately refuted their short-sighted remarks, saying that wanting to earn more money and get more dividends was understandable, but it couldn't be done in this way.

Take the two giants in the home appliance industry as an example. The reason why Midea surpassed Gree is simply that they were willing to spend money to develop more small home appliance businesses, instead of sticking to air conditioners.

Gree claims to have mastered core technologies, but why is its market share being gradually eroded?

Aside from the failure to improve the business philosophy in a timely manner, the fundamental reason is that they are unwilling to invest.

Ms. Dong always mentions in public how much dividend they have distributed to shareholders, but is that really the case?
Just look at who the major shareholder is and you'll know.

If FlashDrive follows Gree's model and distributes large dividends every year, does that money go to the minority shareholders or to Tan Jincheng himself?

Dividends are distributed proportionally.

The shareholder who put forward this view is one of the major shareholders of Flashpoint. They do not want to reduce their holdings and cash out, but they want to get more dividends. So they tried to use this illogical way to get all the small shareholders to stand with them.

After all, minority shareholders are happy to receive a larger share of the profits. They don't care about the future of the company; once they've received their share, they can always sell off their entire stake.

"Since Mr. Tan is also involved in investment, I won't hide it anymore. Besides learning, I also wanted to ask if Mr. Tan has ever considered investing in our Xiaopeng?"

With GAC Group, a local powerhouse in Guangzhou, backing him up, Xiao Peng's team building shouldn't be a problem. However, GAC's technological reserves in new energy vehicles may not be as strong as Wei Laiqiang's, or at least not as innovative.

He Xiaopeng also wants to find more backers. If he can be backed by traditional car giants and new energy leaders, it will be very beneficial to his development.

"No problem. I mentioned before that Li Xiang from our company also had the idea of ​​building cars, and I will invest in him. Of course, Mr. He has no problem with that either."

Since it's building cars using an internet-based approach, Xiaopeng will likely go through multiple rounds of financing, just like Xiaomi.

Regarding the equity stake, He Xiaopeng is prepared to sell it.

"I just want to ask again, Mr. He, are you sure you want to continue working at Ali for a few more years?"

In the past two days, He Xiaopeng has also revealed his plans. He will become the chairman of Xiaopeng Motors, but he will not resign for now and will stay at Ali to learn for a period of time.

However, Tan Jincheng does not quite agree with this point.

There is a big difference between a company's chairman and CEO. Although Tan Jincheng did not hold the title of CEO, he actually performed most of the duties of a CEO.

A chairman can be a hands-off manager, but a CEO cannot.

He Xiaopeng was a little confused: "Yes, I wonder what President Tan has to say? Please speak frankly."

(End of this chapter)