2003: Starting with Foreign Trade

Chapter 990 2021 Sales Forecast: Aiming for Number One!

"Are there any issues with production capacity?"

After concluding his trip to Shanghai, Tan Jincheng immediately returned to Ningbo and convened a meeting with Zhang Li and other production department heads to discuss production capacity.

Car manufacturers' production capacity is a complex issue. To achieve a balance between production capacity and sales, factors such as capacity utilization, market fluctuations, and inventory strategies need to be considered comprehensively.

Capacity utilization rate is a key indicator reflecting production capacity and the degree of resource matching for automakers. The reasonable capacity utilization rate in the automotive industry is usually between 70% and 85%.

Low utilization means idle production lines, high fixed asset depreciation costs, and poor economic efficiency. High utilization may lead to supply chain tension, increased pressure on quality control, and even an inability to cope with sudden order growth.

For a car company with annual sales of one million vehicles, a reasonable annual production capacity is between 120 million and 150 million vehicles (corresponding to a utilization rate of 67% to 83%). Throughout 2020, many car companies had relatively low utilization rates.

There are many reasons, but some companies have very high capacity utilization rates, such as Tesla, which has only two production bases and a capacity utilization rate of 92.5%, meaning its capacity is almost saturated.

Weilai currently has a production capacity of 198 million vehicles per year nationwide, which is relatively low. However, there are reasons for Weilai's low utilization rate. For example, it has integrated with car companies such as Lifan Motors and Zhidou Motors, but these companies have not been put into production, which has reduced the utilization rate.

In 2020, Weilai Automobile's main production goal was to utilize its existing production capacity, achieve a balance between production and sales, and absorb the existing capacity.

Unlike the automobile capacity utilization rate, although the overall performance of the automobile market in 2020 was average, the explosive growth in new energy vehicle sales led to a continuous surge in the production capacity of Weilai in the field of power batteries, and the capacity effect brought about by the construction in the previous years became increasingly obvious.

Currently, Jinlai has the world's largest annual production capacity of power batteries, with a utilization rate as high as 75%. Its global installed capacity has reached 34GWh, ranking first for four consecutive years. With the rapid development of overseas markets such as Europe, Jinlai's overseas power battery business revenue has grown significantly.

According to the company's internal financial data, Jinshidai's overseas revenue reached nearly 80 billion yuan in 2020, accounting for 15.71% of total revenue, representing a year-on-year increase of 295.3%.

In the domestic market, Jinsheng Technology's market share rose to 48.4%. In 2020, the Ministry of Industry and Information Technology announced a list of more than 6800 new energy vehicle models, of which more than 3400 models used Jinsheng Technology's power batteries, accounting for about 50%, making it the power battery manufacturer with the most models using Jinsheng Technology's batteries.

In August of this year, Jinsheng Technology Co., Ltd. approved an investment plan totaling 190 billion yuan, which will be used to increase investment in the upstream and downstream industrial chains and improve its battery supply business.

Undoubtedly, Jinshidai is already the most profitable company in the Weilai Group. In addition to providing Weilai with a large amount of revenue, it is also currently the most outstanding company in Weilai Group's overseas business segment.

This year, Jinsheng Technology will continue to expand its production capacity to solidify its position in the power battery sector. In addition, Jinsheng Technology has also experienced rapid growth in energy storage in recent years.

From 2018 to 2020, Jinxinshi's energy storage system sales revenue was RMB 1.89 million, RMB 6.01 million, and RMB 19.43 billion respectively, with the fastest growth in 2020, accounting for 3.86% of total revenue.

Although this number is still small, the decreasing cost and increasing cycle life of lithium batteries, coupled with the accelerated move towards cleaner electricity, are driving a sustained increase in demand for energy storage on the generation side.

Economic viability and risk awareness will drive an increase in user-side energy storage shipments, and the energy storage market will be a new business growth point for Jinshidai in the future.

As for Weilai Motors, there are no plans to build any new factories this year. By integrating Lifan Motors and Zhidou Motors, Weilai's production capacity this year is sufficient, with an annual capacity of 198 million vehicles. After the integration is complete, it can solve Weilai's production capacity problem for at least two years.

"Our production capacity plan for this year is expected to be over 150 million vehicles, with a capacity utilization rate of 77% to 80%, which will allow us to make reasonable use of our existing capacity."

In 2020, Weilai delivered a total sales figure of 117.12 million vehicles, showing significant growth, all of which were in the new energy vehicle sector.

Considering the boom in new energy vehicles, and the fact that Exeed and Zhidou will officially start deliveries and enter the mass production stage in April this year, the sales target for 2021 is 150 million vehicles.

Compared to the sales figures for 2020, the expected growth is as high as 28%, a growth rate of nearly 30%, which is quite rare given Wei Lai's typically cautious sales forecasting style. However, Tan Jincheng is confident in this.

According to Tan Jincheng and the company's plan, by 2021, the sales share of the group's new energy vehicles is expected to increase to between 40% and 50%, further aligning with BYD.

Exeed has fully joined the competition with the Qin EV, entering the market in the 10 to 15 yuan price range. This is because only in this price range can sales be rapidly increased.

What about the production capacity of Xingtu and Zhidou? How much inventory do they currently have?

Market volatility also affects inventory strategies. Typically, automakers need to reserve 10% to 20% of flexible production capacity to cope with peak season orders, and also need a certain amount of inventory buffer.

Generally speaking, traditional automakers typically maintain an inventory of one to two months, ranging from approximately 8 to 17 vehicles, and production capacity regulations also include this redundancy.

Both Exeed and Zhidou have sales targets of around 100,000 units in their first year of operation, so they need to maintain an inventory buffer of at least 8000 to 16,000 units.

According to Wei Lai's plan, 10,000 vehicles are reserved for inventory. The most important thing for the mass-market models is to deliver them to users as quickly as possible. Only by getting users the car keys as quickly as possible can sales be increased.

Playing the scarcity marketing game in a market priced between 10 and 15 yuan is practically suicidal.

"We are currently working overtime to produce in order to complete the inventory buffer for the Exeed brand before delivery in April."

"What about Mr. Bao?"

"We're facing some difficulties with Zhidou, but we'll do our best to complete it."

Bao Wenguang manages the production of Gansu Zhidou. Wei Lai has high requirements for quality. He has been busy with the transformation for several months, but both the debugging of equipment and the purchase of new equipment take time.

This was only because Wei Lai provided timely funding; otherwise, given Zhidou's capabilities, it would have taken at least a year to officially resume operations.

Tan Jincheng could understand Zhidou's current difficulties and nodded, saying, "Okay, let's try our best. We need to ensure at least 5000 vehicles in stock. Our requirement is that for A00-class models, except for customized ones, it would be best to be able to deliver the car on the same day."

"As for Exeed, let's pick up the car within a week and seize the market as quickly as possible."

"no problem."

Compared to Zhidou's difficulties, Zhang Li readily agreed. Weilai's sales plan for new energy vehicles in 2020 is 30 vehicles for the main brand Weilai, and a total of 40 vehicles for the three major brands: Aion, Exeed, and Zhidou.

Zhang Li has already made a plan regarding capacity allocation.

"Well, if possible, let's help Zhidou. It's fine if Rainbow isn't popular in the market, but if it is popular but we can't deliver the cars, that would be really embarrassing."

Then, Tan Jincheng said to Bao Wenguang, "Although Zhidou is facing difficulties, I hope that President Bao can overcome these difficulties."

Tan Jincheng's words left no room for doubt, which put some pressure on Bao Wenguang. Although he had been acquired several times, he was a successful entrepreneur and a boss who had once enjoyed great success. Now, he was changing his perspective to become a professional manager.

I've adapted to it long ago, but the collaboration model with Weilai is quite different from that with Zhongtai.

The efficiency of Zhongtai is simply incomparable to that of Weilai. Take recombination as an example. Generally speaking, companies are usually quite cautious when participating in mergers and acquisitions or bankruptcy reorganizations. To put it nicely, they proceed step by step.

To put it bluntly, they are overly cautious, and it is often this very caution that wastes a lot of time. Zhongtai is even more different; in addition to these factors, there is also the power struggle within the group.

However, this is not the case with Tan Jincheng. He personally handles the negotiations, quickly and decisively. Once the agreement is reached, he immediately makes the payment and signs the contract. Even if you want to back out, he won't give you time. The subsequent restructuring is carried out on multiple fronts, and he is not afraid of suffering losses.

The most obvious thing is that after gaining control, the first thing they did was to have Zhidou cooperate with Weilai Research Institute to improve the Rainbow model, striving to launch the new model to the market as quickly as possible.

It can be said that, in terms of efficiency, Weilai was the most efficient among all the companies he had worked with, without exception.

The entire company, from top to bottom, is like a tightly running machine. After Tan Jincheng issues his instructions, everyone from senior executives to grassroots employees executes them without hesitation. Bao Wenguang, who has only been with the company for a short time, is under tremendous pressure.

"Okay, if we encounter any difficulties, I hope Mr. Zhang can provide assistance."

Under pressure, Bao Wenguang didn't hold back. If he didn't bring it up now, he would have to be mindful of others' attitudes if he asked for help later.

"No problem, no problem, let's all work together."

"Alright everyone, 2021 will definitely be a year of explosive growth in new energy vehicle sales. The launch of the two brands has received good reviews based on recent market feedback, so production capacity must be guaranteed."

"The sales target of 150 million vehicles is a milestone for us, and I hope everyone will work together."

If the sales target of 150 million vehicles is achieved, Weilai will very likely surpass Geely to become the number one domestic independent brand in terms of sales!

Everyone understood what this sales target meant.

Aiming to become the number one domestic brand.

"With the full cooperation of all departments and major component subsidiaries, and given the positive market feedback, it is necessary for us to make both brands a resounding success." 2020 should be a pivotal year for the structural transformation of the domestic auto market. New energy vehicles have grown from a "policy testing ground" to a "quasi-market main force," and domestic brands have also overtaken joint venture brands by virtue of their technological accumulation and market insights.

Against the backdrop of the supply chain crisis, the industry has been forced to achieve self-reliance and control. In terms of exports, it has also moved from a major automobile producer to a leading automobile power. These changes have not only reshaped the domestic market landscape but also provided a model for the transformation of the global automobile industry.

Although Tesla and WooLan belong to two different camps of automakers, the full-scale competition between the Model 3 and ET5 in the European market can be described as a competition between domestic cars.

The main production capacity of the Maodou 3 and the newly launched Maodou Y comes from the Shanghai factory, and exports to Europe are also shipped from our ports. In addition, starting in the middle of the year, the localization rate of Maodou 3 parts has rapidly increased from 30% at the beginning of the year to about 70%.

Regardless of the gross profit margin of component manufacturers, they ultimately retain a portion of their profits domestically.

The increase in sales of new energy vehicles by Tesla and Wynn has played a very important role in the localization rate of auto parts.

"Okay, let's go get busy."

The meeting was almost over, and Tan Jincheng was too lazy to keep them there any longer. The two new cars were going to be launched in April, which was indeed a very important matter for production capacity allocation.

"Fortunately, we should still be working during the Chinese New Year this year; alright, let's go."

After everyone had left the meeting room, Tan Jincheng smiled.

The twelfth lunar month is almost here, and this period is usually a test for manufacturing companies. Fortunately, this year the problem is not so serious, as the whole country is calling for people to stay away from the country unless absolutely necessary, which has greatly boosted production.

This year, Weilai will not need to worry about production capacity allocation during the Spring Festival.

"That's right, this year's Spring Festival should be the year with the highest operating rate for us."

While organizing the meeting minutes, Zhao Xinyi answered Tan Jincheng's questions.

Tan Jincheng will be attending the groundbreaking ceremony for National Technology's Beicang factory shortly, which is a significant step for Weilai in the manufacturing of automotive-grade chips.

At 10:30 a.m., in the bonded south area, Tan Jincheng tightened his coat as he opened the car door.

Looking around, Tan Jincheng smiled and said to the leaders from Beicang District and Ningbo City, "Can I say that I'm revisiting this place?"

Flash Technology had a factory in the bonded zone back then. The area wasn't very large, but it was coordinated by the Beicang District to provide it to Flash Technology, which greatly alleviated Flash Technology's production space shortage at the time.

It's worth noting that the factory in Xiapu District was actually just a small workshop. The cars produced had to be stored in a separate warehouse, and the factory area was extremely cramped.

According to the standards at the time, Flashcar was not actually qualified to enter the bonded zone. The zone really gave it a lot of preferential treatment at the time, and it would not be an exaggeration to say that it was fully supported.

FlashTech has long since transferred all of its factories, including those in Xiapu and the bonded zone. Now, apart from its headquarters in the FlashTech Building, FlashTech has moved entirely into the FlashTech Industrial Park.

Through three phases of expansion, Shanchi Beicang Industrial Park has now become a comprehensive industrial park integrating production, R&D, and management, with complete living and supporting facilities for employees, and a very clear future development plan.

Through expansion and upgrading, Beicang Industrial Park now has the capacity to produce 200 million two-wheeled electric vehicles annually. The production line covers painting, welding, assembly and other processes, and its level of automation is among the best in the industry.

"Indeed, it's no exaggeration to say that Mr. Tan started his business in the bonded zone."

The staff in Beicang District who knew Tan Jincheng better also laughed. In the eyes of those who knew him, the Xiapu factory of Shanchi was a joke back then. It was still using the Shanchi Auto Industry brand, which was completely different from the listed company it is now.

However, this is roughly a microcosm of private enterprises in Jiangsu and Zhejiang provinces. The vast majority of seemingly high-end group companies have grown from small workshops.

Accompanied by staff, Tan Jincheng symbolically walked around the fenced-off plot of land and posed for a few photos with the reporter.

At 11 o'clock, Tan Jincheng and relevant leaders symbolically dug a few shovelfuls of soil, and the National Technology (Ningbo) Co., Ltd. officially started construction!
National Technology's factory in Beicang is mainly used to produce semiconductor power devices, CMOS integrated circuits, optoelectronic devices and microelectromechanical devices, providing high-value-added wafer manufacturing, process and device research and development for electric vehicles and new energy industries.

Specific products mainly include IGBTs, FRDs, photodiodes, and semiconductor power device chips used in new energy vehicles, etc.

"This 5.2-square-meter semiconductor factory is a new starting point for WILTECH in automotive-grade chips, and also an important part of our full-stack self-developed technology."

"Chip technology is a long-term investment project. In the future, we plan to continue to invest 500 billion yuan in chip research and development and production, contributing to the localization of automotive-grade chips."

尉来年销量150万辆的预期，已经公布出去了，2020年国产自主品牌销量第一的吉利总销量是132万辆，150辆之于132万辆也有超过13个点的年增长空间。

In such a market environment, Wei Lai's unusual announcement of such a sales forecast is quite unexpected.

"Judging from the sales forecast for 2021, Weilai seems to be very confident about this year? Does the increased investment in the chip field mean that Weilai is worried that the current chip shortage will affect this sales forecast?"

"No, thanks to our stockpiling plan for existing chips and our three- to six-month order lock-in plan, there hasn't been a significant impact on chip supply."

"I believe that the chip shortage in the market will definitely ease in six months. As for increasing investment in chips, this is something that any major host supplier must do. The current market environment is very different from before."

"Supply chain integration is very important, but supply chain security is equally important."

"Based on the OVNR data released by Weilai and the information we have received, as well as the recent changes in production capacity, we have heard that Weilai has an internal production capacity plan of 100,000 units per year for Exeed and Zhidou. Is President Tan being too confident?"

The Wuling Hongguang MINI EV sold 12.77 units in 2020. Although Zhidou Rainbow is comparable to the Hongguang MINI EV in terms of price and configuration parameters, is it too confident to try to replicate the success of the Hongguang in its first year on the market?

And then there's Exeed. Although it's affordable, has a generous configuration, and boasts a highly technological appearance, isn't its annual sales target of 100,000 units a bit too confident?

It's worth noting that the best-performing models in the same class, such as the Qin EV, Aion S, and Xiaopeng G3, all maintained annual sales of around 50,000 units in 2020.

Based on the delivery date of the Exeed S01 on April 19th, the total delivery time for the Exeed S01 this year is only a little over eight months.

To achieve sales of 100,000 units in eight months, it would mean that the entire company of Weilai expects the Exeed S01 to sell more than 10,000 units per month since its launch. Is that possible?
Throughout 2020, only two new energy vehicle models achieved an average monthly sales volume of over 10,000 units nationwide: the Maodou 3 and the Wuling Hongguang MINI EV.

Although the ET5 performed well in the second half of the year, it still did not achieve this goal.

"The 100,000 to 150,000 yuan market is a huge market. There were not many models with average monthly sales of over 10,000 units in 2020, but that doesn't mean there won't be any in 2021. Let's wait and see."

The Exeed S01 has not yet started pre-sales, so it's not a good time for Tan Jincheng to make any boasts. However, in Tan Jincheng's view, these reporters are clearly not very familiar with the changes in the current car market.

While overall sales have declined this year and car companies are having a tough time, leading new energy vehicle companies are doing quite well.

Subsidies have been reduced, but the dual-credit policy is still very attractive, especially for models like the WL-Elysee that rely primarily on pure electric technology. They can accumulate credits easily, and breakthroughs in lithium battery technology have led to cost reductions.

Furthermore, the transformation and upgrading of the industrial chain, spearheaded by companies like Tesla and Wanda, has also brought tremendous competitiveness to vehicle manufacturers.

This can be seen from the changes in the gross profit of major new energy vehicle companies. Throughout 2020, leading companies such as Wynn, BYD, and Tesla all had gross profit margins of over 20% for their vehicles.

The gross profit margin of the Tesla Model 3 Standard Range version once reached an astonishing 39.37%, with both sales volume and gross profit margin increasing significantly.

This gross profit margin is already close to that of gasoline vehicles. Even emerging brands like Wenjie achieved a gross profit margin of 17.2% in the fourth quarter.

Second-tier automakers, lacking supply chain advantages, maintain an overall gross profit margin of around 10%, with many even experiencing negative profit margins.

If we disregard overall revenue, it's fair to say that 2020 was the best year for new energy vehicle companies, with less competitive pressure and larger profit margins.

BYD firmly holds the top spot in the 10 to 20 yuan price range, Wuling is the king of the microcar market, and as for Weilai, it shares the global high-end market share with Tesla. A single dual-credit policy can bring in over a billion yuan in revenue – it's simply amazing!

Unfortunately, the good days will only last until 2020.

When Weilai entered the market segment of 10 to 15 yuan, it quickly launched a marketing campaign with advertisements everywhere. Various car reviewers on the Internet also began to test drive the Exeed S01. Whether at work or at home watching short videos, you could always come across topics related to the Exeed S01.

Of course, there's also the Zhidou Rainbow series. In terms of promotion, Wei Lai didn't neglect his godson Zhidou either, investing a considerable amount in marketing.

Faced with the overwhelming marketing offensive from Wei Lai, Xiao Peng and BYD, feeling the pressure, also began to make their own moves.

(End of this chapter)