2003: Starting with Foreign Trade

Chapter 991 The Demeanor of an Industry Leader

With its overwhelming publicity, ubiquitous advertising, pervasive internet marketing through big data algorithms, and various endorsements from car reviewers, Exeed entered the consumer's field of vision in a very short period of time through this method.

In this cold winter month, both target and non-target customer groups know that Weilai has launched a Class A pure electric sedan targeting the C-end market.

Official media outlets have also given this model a great deal of attention, and some organizations that have already obtained the vehicle have begun to analyze the Exeed S01 in an attempt to calculate its total cost.

With a starting price of 12 yuan, is he actually making a profit? This is of great significance.

"In terms of marketing capabilities, we can't compare to Weilai, and in terms of funds, we can't compare to Weilai either. How can we maintain the advantage of the Qin series in this competition? Everyone, please share your thoughts."

The Exeed S01 has received a lot of attention. In terms of both configuration and parameters, it is superior to the existing Qin EV version. BYD has given it great importance from top to bottom, starting with the boatman.

While Exeed was conducting large-scale marketing, BYD was also considering corresponding policies to see how to stabilize the sales of the Qin series. The same question was being addressed within Xiaopeng Motors.

The one who is most troubled is not Boatman, but He Xiaopeng. The pricing of Exeed S01 directly impacts their core product in terms of sales. If the price difference with the Qin series is only 10,000 yuan, consumers may not feel the impact as much.

However, there is a price difference of 50,000 yuan between the Exeed S01 and the G3, which is enough to buy a Zhidou Rainbow. Moreover, the Exeed S01 has a higher configuration, so consumers cannot remain indifferent.

Xiaopeng's stock price has been extremely sluggish ever since the launch of the Xingtu S01.

Just like the attention from authoritative media, this car is not only cheap, but also represents extraordinary significance.

Unlike gasoline-powered cars, whether it was traditional car companies, emerging brands, or Tesla, when they entered the pure electric vehicle field in that early era, they all unanimously chose to set the price of their cars at a high level.

Dizi's first serious model targeting the pure electric market, the E6, was priced between 30.98 and 36.98 yuan. This was the 2011 model, and the price was by no means low. Although there were subsidies, the price was still the price.

Everyone knows that cars priced between 10 and 15 yuan are the best-selling and have consistently the highest sales volume. But so far, why haven't any car companies dared to launch this type of car on a large scale?
Even Volkswagen's ID series, which only priced under 30 yuan, already caused a huge sensation. People on the internet were celebrating Volkswagen like it was New Year's.

It sells well, but lower prices mean lower profits, more difficult cost control, and a greater difficulty in achieving profitability.

To put it bluntly, making money in the low-end car market is actually more difficult than in the high-end car market. Luxury goods can generate huge profits through brand premium, but ordinary consumer goods do not have this advantage.

“Wei Lai already has the capability to enter the mass market. Since it has this capability, entering this market is a natural progression.”

Tan Jincheng has been making frequent appearances lately, and he is no longer stingy with reporters' questions during various events.

"Strictly speaking, the S01 is the first truly mass-market model, and everyone at Weilai is very proud of that."

Previously, subsidies were available, but now they are almost gone. The dual-credit policy is very attractive, but it requires sales volume to support it. Without sales volume, the so-called dual-credit policy is useless for OEMs.

In the real market environment, the market below 15 yuan is not easy to navigate. It's not as simple as just launching a model; you have to make money.

For more than a decade, Weilai's new energy vehicles, except for the Aion series, have always been priced above 20 yuan. In the early stages, they were targeting the market above 30 yuan, which they described as high-end.

However, the fundamental reason is that they lack the capability to manufacture models priced below 15 yuan. They should take advantage of the subsidies and policies to build up their own strength.

Of course, building a high-end brand image is indeed a corporate strategy, and the two are not contradictory.

Although the Qin and Aion series are also models targeting the mass market, they mostly do business in the B2B market, which is completely different from the real C2C consumer market.

Large-scale procurement and one-off orders not only ensure the stability of the production line, but also guarantee a higher profit margin.

“A model that is truly aimed at the mass market has a completely different meaning. The launch of the Exeed S01 means that our entire vehicle production line in Weilai has matured.”

"Based on a mature industry, we have the ability to produce higher quality and cheaper cars to serve consumers."

Tan Jincheng is full of confidence, but he puts a lot of pressure on his peers.

Throughout February, besides discussions about whether to go home for the Chinese New Year and how many cases had occurred in various places, the Xingtu S01 and Zhidou Rainbow were also very popular online, consistently ranking in the top ten on Douyin.

Boatman is right. In terms of marketing capabilities and resources, the layout he laid in the Internet in previous years is now showing. Tan Jincheng has resources in professional platforms and traffic hubs such as Bitauto, Autohome, and Douyin.

In addition, after so many years of promotion, the Weilai APP has accumulated more than 1300 million users, with daily active users maintaining around one million and monthly active users exceeding 250 million.

For a niche app, this number of users and daily active users is not low.

There is also a lot of discussion about the Starway S01 in the Weilai community.

In the past month, Wynn has significantly increased its marketing investment, putting a lot of pressure on its competitors, especially the ambitious BYD and Geely.

The Qin series is currently BYD's main selling model, and BYD is showing great momentum in the face of market competition.

The boatman knew that it was pointless to engage in a price war at this point. Instead, he needed to focus on technological breakthroughs to compete in the market. After all, while the Exeed S01 was extremely popular, its actual sales figures were still unknown.

If a price war starts now, it would only be self-destructive. Haven't you seen that Wei's own Aion series hasn't made any moves so far?

Dizi's response was also very direct: to boost sales through technology.

"BYD's core technology is hybrid technology, specifically DM-i Super Hybrid technology, which boasts ultra-low fuel consumption and long range as its core selling points. This is the key factor driving the sales of plug-in hybrid models."

Based on the Qin EV, BYD developed the Qin PLUS DM-i version, attempting to face the upcoming market competition by offering the same price for both gasoline and electric vehicles.

In the pure electric vehicle sector, BYD is well aware that it lags behind Wynn in this area. This gap is not only in terms of technology, but also in terms of consumers' brand perception.

After years of competition, domestic brands have established a strong reputation among consumers: buy BYD for plug-in hybrids and Weilai for pure electric vehicles.

To maintain a competitive relationship with Exeed in the pure electric vehicle market, the most important thing is to change consumers' perceptions. At the same time, it is also necessary to launch more models. It is still somewhat difficult to maintain a competitive relationship with Exeed S01 with only the Qin EV series.

The research and development of dolphins and seagulls has accelerated, and the market launch of the dolphin project has been expedited.

Geely is also making internal moves. While Great Wall Motors is gradually being replaced by BYD, Chery is still making strategic moves. BYD, Geely, and BYD are the three strongest domestic independent brands. Although Great Wall Motors sold hundreds of thousands more vehicles than BYD in 2020, its popularity was not as high as BYD's.

After all, talking about new energy is fashionable these days.

Geely, which has adopted a multi-brand strategy, quietly established Geek Technology Co., Ltd. in February. Geek, which was previously part of Lynk & Co's electric vehicle business group, has begun to plan for independence.

Jike 001 is on its way and is also expected to be launched this year.

Currently, the best-selling pure electric vehicles under Geely are the Geometry series, with Geometry A and Geometry C being the mainstays of Geely's new energy vehicle sales. However, the brand's market awareness is not very high.

Initially, the brand was positioned as a high-end pure electric vehicle, but later found that it could not survive in the high-end pure electric vehicle market, so it switched to the entry-level market. The business it does is actually similar to that of the Aion series, mainly targeting the B-end market.

However, Geometry's sales figures are largely inflated. Geely's own Cao Cao Mobility alone occupies a significant share of the ride-hailing market, while the Geometry series, which targets the B-end market, is mostly absorbed internally.

If we're talking about Geely's best-selling pure electric vehicle right now, it has to be the Emgrand EV.

This "father" of Geely single-handedly supported Geely's sales and preserved its foundation during the era of gasoline-powered vehicles. In the new energy era, he has also acted as a pioneer for Geely. He is truly a hard-working and dedicated individual.

For Geely, Emgrand is more than just a car brand.

In addition to the independent development of the Geely X7, Geely is also accelerating the implementation of hybrid technology. Their internally developed Thor super hybrid technology has already been applied to the Xingyue L series.

Besides BYD and Geely, other domestic brands such as Chery are also accelerating their technological research and development and plans to launch new models under pressure from the Exeed S01.

"President Tan has really boosted the car market this time."

An outstanding entrepreneur and a market leader bring extraordinary significance. While Tan Jincheng is deeply involved in the automotive-grade semiconductor industry and Wei Lai is focusing on marketing the Exeed S01 and Zhidou Rainbow, changes are quietly taking place in the market.

Tan Jincheng has always been adventurous yet cautious. In his view, Weilai currently has many shortcomings and faces considerable competitive pressure, so he has always proceeded step by step. Take the sales forecasts announced at the beginning of each year, for example; Weilai rarely makes unrealistic projections, usually lowering them. Weilai has always developed with this cautious attitude.

However, from the outside perspective, Weilai is already a behemoth.

In terms of component suppliers, Weilai has its own Tier 1 suppliers, which can provide the best battery solutions on the market for nearly half of the new energy vehicle models on the market, and can also guarantee its own battery supply, reducing a lot of costs.

Meanwhile, Jinshidai, with the world's highest power battery production capacity, can also guarantee the supply security of battery cells for globally renowned companies such as Tesla and BMW, giving it a superior market position.

In early February, Jinsheng Technology announced its full-year revenue forecast for 2020, ranging from RMB 495 billion to RMB 505 billion, with revenue from the power battery segment expected to be between RMB 390 billion and RMB 395 billion.

With just one subsidiary generating 500 billion yuan in revenue, the entire group's revenue this year is well over 2000 billion yuan. Admittedly, Weilai still has significant shortcomings, such as the supply chain security issue that Mr. Tan often mentions.

Looking at revenue alone, Geely is already number one among domestic independent brands. Although Geely sells a lot of cars, its business in other new energy component supply is not as good as Geely's. And BYD, which also performs well in the new energy component business and electronics business, lags far behind in overall vehicle sales.

The launch of the Exeed S01 is a disruptive move for the industry, leveraging its technological and supply chain advantages to drive the affordability of domestically produced new energy vehicles.

This is the demeanor that an industry leader should have. No matter what industry it is, it is impossible to live off subsidies forever.

The popularity generated by the launch of the ID4.X was not something that other OEMs and even parts suppliers could afford to ignore. On February 10th, the 27th day of the twelfth lunar month, Volkswagen announced that the starting price of its ID4.X would be reduced to 199,800 yuan.

Meanwhile, Volkswagen also announced plans to launch the ID.3 in October this year. This is a vehicle built on the MEB pure electric platform, with a rear-mounted engine, a 125KW motor, and a range of 430 kilometers across the entire series.

With an official guide price of 15.98 to 17.38 yuan, it is currently Volkswagen's most affordable new energy vehicle.

Although the Chinese New Year is approaching, the news about Volkswagen has caused a huge sensation. After establishing a joint venture with JAC, Volkswagen is about to join the competition in the mainstream market.

In addition, mainstream models such as the ET5, ES3, Maodou3, and MaodouY, which are currently on the market, have also quietly launched discount programs to cope with the upcoming market impact.

Compared to the Model 3, the Exeed S01 is priced at only half, which has a significant impact on Tesla, a company known for its technological prowess.

"That's right, I wonder how our car will perform when it hits the market."

In Beijing, even though it was already the 27th day of the twelfth lunar month, Lei Jun was still working at Xiaomi's headquarters.

Xiaomi's car manufacturing team has been initially assembled and is currently making intensive plans to accelerate their car manufacturing project. Lei Jun himself is in charge of Xiaomi's car manufacturing project.

Although he failed to recruit Hu Zhengnan, Lei Jun did recruit many well-known figures, including the president of BAIC Jihu, the exterior designer of BMW i brand, an AI expert from Microsoft, and the vice president of ZTE Corporation.

Besides these elites, the rest are internal personnel reassignments within Xiaomi. In other mid-to-senior level positions, Xiaomi has also poached many people from leading new energy vehicle companies, including Woolly, Geely, and BYD.

With the initial team assembled, Xiaomi's car manufacturing project has officially come to the fore; all that remains is to announce it to the public at an opportune time.

According to Lei Jun and Xiaomi Group's plan, Xiaomi plans to invest 100 billion US dollars in the car manufacturing project within ten years, with an initial investment of 100 billion RMB. These funds will all be raised by Xiaomi Group itself.

Like Tan Jincheng, Lei Jun and Xiaomi Group, as capital entities, are also known for their cash flow. Xiaomi has a large amount of cash in its accounts, enough to support Xiaomi's car manufacturing project, so there is no need for them to be independent of Xiaomi.

However, right now, Xiaomi's first priority is to solve the problem of obtaining the necessary qualifications to manufacture cars.

New energy vehicles are subject to a strict dual qualification system. First, they need to obtain factory construction qualifications through the National Development and Reform Commission, and then obtain product access qualifications through the Ministry of Industry and Information Technology. For new entrants, the first step is to solve the problem of production qualifications.

In fact, the approval of new energy vehicle production qualifications was suspended in May 2017. JAC Volkswagen was the last company to be approved before the suspension. To date, four years later, there are still only 15 new energy vehicle companies with dual qualifications.

For new energy vehicle companies established after May 2017, the only ways to legally manufacture cars are either through acquisition or by using contract manufacturing, relying on the qualifications of contract manufacturers to complete production.

Xiaomi undoubtedly follows the OEM route, because these products are basically unavailable for purchase now.

It's not impossible to buy, like Wei Lai did, by acquiring companies like Zhidou that are on the verge of bankruptcy or have already entered bankruptcy proceedings, and then reorganizing them to gain their survival. But obviously, Lei Jun wouldn't do that.

In terms of investment style, Tan Jincheng's investment style is more comprehensive, which can be understood as a model of capital and industrial integration. As long as it is beneficial to the development of the enterprise or himself, he does not mind taking over enterprises that are in difficulty.

This is true for Yangzi Motors, Meizu mobile phones, Lifan Motors and Zhidou Motors, and National Technology as well. Tan Jincheng has enough patience to integrate these companies by trading time for space.

As for the integration failing, so what?
However, Lei Jun is different. His investment style is closer to pure capital. He either invests in companies in industries he believes in during the venture capital round, or he seeks investment opportunities when the industry and the company are in a mature stage of development.

Integrating bankrupt companies is something that pure capital rarely does, as it is time-consuming and labor-intensive.

Even in the technology manufacturing industry, whether it's the mobile phone or the automobile industry, the timing of Lei Jun's involvement was very subtle; to be honest, it was when the industry was fully mature.

Xiaomi was founded during an era when counterfeit phones were rampant. Although the market was chaotic, both the supply chain and business model, thanks to counterfeit phones, contract phones, and Apple's promotion, enabled smartphones to enter a mature stage.

By entering the mobile phone industry when it was mature, Xiaomi was able to maximize the advantages of the entire industry, including the most mature contract manufacturers, good screens, and CPUs. Once the industry integration was completed, it was able to quickly enter the consumer market.

The same applies to the automotive industry. By 2021, the domestic new energy vehicle industry chain had fully matured, so Xiaomi no longer needed to worry about the industry chain. Moreover, industry chain integration is Lei Jun's advantage.

This is also what most Xiaomi and Lei Jun's haters criticize him for: accusing him of reaping the benefits, saying that everyone else had matured the market before he entered it.

However, from a business perspective, this is perfectly acceptable. Utilizing one's own advantages and entering a market as quickly as possible is the most correct choice.

"After the New Year, Mr. Yu, please contact BAIC. We need to obtain the production qualification as quickly as possible."

The fact that Xiaomi poached their president is more a direct result of the move by Beijing authorities than Xiaomi.

To be fair, BAIC was also a disappointment. In the first phase of the new energy vehicle industry, BAIC was undoubtedly a leading player, ranking among the top in terms of sales and investment. For a long time, BAIC's models were among the top three in sales.

Unfortunately, it fell behind again when the subsidy policy ended and the real market competition began. Now, even Hyundai is not doing well, and its performance in the new energy vehicle sector is also poor. Although it continues to increase investment, once you fall behind, you fall behind.

In the commercial vehicle sector, Foton, after a period of turmoil, has also fallen behind, and now BAIC is relying on Mercedes-Benz to survive.

BAIC is still the same BAIC. If it had been more competitive, Xiaomi probably wouldn't be making cars now.

"No problem. The group's initial plan is to use BAIC Off-Road as the main manufacturer to produce cars for Xiaomi."

"Okay, it's settled then. Everyone will have to work harder after the New Year, and we need to speed things up."

Although he had a dream of building cars for a long time, Lei Jun also felt a lot of pressure when he actually started building cars. First of all, he had to unify the thinking within the group. There were two opinions within Xiaomi Group on the issue of building cars.

But once he got involved in the industry, he realized how difficult it was. At the same time, he admired Tan Jincheng very much. Over the years, Tan Jincheng had accumulated wealth little by little, and almost all the money and resources he earned were directed towards car manufacturing, gradually building Wei into a leader in the industry.

You can't understand it unless you actually get involved in this industry.

But now that we've started, we have to do it well.

"What a pity. We originally wanted to poach the director of the Weilai Research Institute, but President Tan is too cunning and had already made preparations long ago."

Poaching Hu Zhengnan was one aspect; through Hu Zhengnan, a group of outstanding talents could be brought over to the Weilai Research Institute, which would greatly accelerate Xiaomi's car manufacturing progress. However, Tan Jincheng guarded the Weilai Research Institute closely, and although a group of people were recruited, the desired effect was not achieved.

The group of people they poached from Geely, however, are quite good.

At the turn of 2020 and 2021, Xiaomi was accelerating its car manufacturing plans, and Huawei's ideas for the car manufacturing business were also becoming clearer. However, the first model in cooperation with Seres became a market failure, with only a few units sold.

However, it was through the cooperation with Seres that the model of Chrysanthemum Factory in the field of car manufacturing became clear. On November 25 last year, Mr. Ren signed an internal resolution, reiterating the strategy of Chrysanthemum Factory not manufacturing cars, but helping car companies to build good cars, and clarifying the positioning of Chrysanthemum Factory as a supplier of incremental components for intelligent vehicles.

However, in terms of specific implementation, Chrysanthemum is clearly not content with being a component supplier like Bosch.

(End of this chapter)