2003: Starting with Foreign Trade

Chapter 995 "The Porsche That Came from the Company"

"Sales figures for the Exeed S01? Haha, we won't reveal that for now. Let's wait for the new CEO, Wei Lai, to announce it."

Sometimes playing the mystery game can be quite fun, much like Lei Jun's scarcity marketing strategy, which can have some positive effects and generate more buzz around a star's career.

"Oh? So you've already chosen a new CEO for Wei Lai?"

The reporter, whose topic had been steered away by Tan Jincheng, indeed stopped asking about sales figures. If they really looked into it carefully, by finding insider information and the current delivery cycle, they could calculate how many Exeed vehicles had been pre-sold.

However, since Zhang Yong left office, it has been difficult to find anyone to leak information about the new CEO. It is rare that Tan Jincheng brought up this topic today.

Tan Jincheng nodded and said, "Yes, it's already in place. We will choose a suitable time to announce it soon."

With the CEO position vacant for a quarter, it's definitely time to build some momentum. Benefiting from Lotus's successful IPO, Li Xiang has been enjoying immense popularity and high media attention lately. Now based on Wall Street, Li Xiang has become a prominent figure in North America after several interviews.

"I suppose President Tan won't reveal who it is, but could you tell me where they're from?"

Lotus's move to poach Tesla's chairman to become its new CEO caused a sensation in the automotive industry. The market interpreted this move as a way to ensure Lotus's independence and alleviate concerns from the capital market.

Robin Danholm's joining the company is seen as positive, both in terms of maintaining Lotus's independence and in terms of business operations.

"They are our own people."

Tan Jincheng pointed to his face, which shocked the reporter. This richest man was indeed bold, but his idea was correct. Even if a company like Weilai wanted to go global, its top management should still be our own people.

This has nothing to do with the business itself. It's just a pity that even though the richest man dares to say this, he doesn't dare to broadcast it. However, it can be a topic of this interview. There have been many changes in the senior management of the domestic car industry. It's really hard to guess who it is.

The reporter reacted quickly, turning the topic to Lei Jun, who was standing nearby: "Mr. Lei, can you guess who will be the new CEO of Weilai?"

Lei Jun laughed and said, "I suppose it's an internal promotion by Wei Lai? I wonder if I'm right?"

Today, the two of them gave a joint interview, discussing a wide range of topics, from mobile phones to cars to semiconductors. This can be seen as a preliminary step towards Xiaomi's car manufacturing project.

Tan Jincheng smiled noncommittally, which was taken as tacit agreement, making the interviewing reporter very happy.
-
"Congratulations to Lotus, and congratulations to Mr. Li."

At 9:30 a.m. Eastern Time on March 5, 2021, Lotus Technologies, headquartered in Jiangcheng Economic Development Zone, officially went public on the New York Stock Exchange with the stock code "LOT". The US stock market witnessed the birth of the first car manufacturing IPO in 2021.

Meanwhile, Lotus's $25 billion fundraising amount ranks second in China and fifth globally this year. The top spot belongs to a certain company, which raised $54 billion on the Hong Kong Stock Exchange in January, becoming the world's number one IPO project this year.

However, since the main board of the Hong Kong Stock Exchange usually does not count overseas fundraising, Lotus is, strictly speaking, the domestic company that has raised the most funds overseas.

Following behind Kuaishou is a South Korean e-commerce giant, which claims to be the South Korean version of Amazon. It secured the highest IPO in the world this year, and also in the US stock market. Next are a European courier locker company and a gaming platform.

Without considering Didi in the second half of the year, there aren't many domestic companies that can actually surpass Lotus's financing amount overseas this year. To put it bluntly, those that should have gone public have already done so, and those that shouldn't have gone public have also done so. The remaining well-known companies don't really need to go public anymore.

Take Douyin as an example. For a company of its size, it would be very difficult to go public again. IPO projects are not necessarily better the bigger they are. The market capacity must also be considered. Companies like Ant Group, which reached a market value of trillions before going public, do not have much room for growth after going public.

As for Didi, given its current scale, its financing amount should be close to that of a certain company, between $40 billion and $50 billion. However, Tan Jincheng knows that Didi's listing process was a farce and a disaster.

"Congratulations, Ms. Robin, a new chapter for Lotus will begin with you."

At the Lotus bell-ringing ceremony, Li Xiang announced that Lotus would begin a new chapter, and the incoming CEO, Robin Danholm, also appeared at the ceremony. This powerful businesswoman has been officially confirmed and announced that she will serve as the CEO of Lotus.

Li Xiang's position at Lotus will transition to that of Lotus Global Senior Vice President, a position that will remain until the end of this year. This means that if Li Xiang wants to cash out from Lotus, he will have to wait a little longer.

Lotus's bell-ringing ceremony was quite a spectacle. In addition to Li Xiang and the domestic team, there were also the head of the Heysel factory, representatives from Malaysia, and a large number of investment institutions.

The bell-ringing ceremony was broadcast live online from digital billboards in Times Square, New York, and Lotus's three core models—the EVija, Eletre, and Emeya—were also on display in Times Square.

As the largest automotive IPO in the first quarter, Lotus, which is transforming into an electric vehicle company, is categorized as a new force in the automotive industry, alongside companies like Wenjie, Xiaopeng, and WM Motor.

Lotus, which was sought after by investors during its IPO, naturally had a poor performance on its first trading day. It opened at $23.5, up 10.85%. After experiencing significant fluctuations during the day, the stock price once broke through $26, but by the close, it had fallen back to $22.94, a gain of 8.21% for the day.

On its first day of trading, Lotus' total market capitalization reached US$257.62 billion, equivalent to approximately RMB1700 billion.

Li Xiang's shares in Lotus are worth approximately RMB 25.5 billion.

"The new energy vehicle sector is booming, and Lotus's scarcity is one of the reasons for its popularity. However, there should also be an element of building momentum for Rivian later on. By first hyping up Lotus, Rivian can get a better price for its IPO."

Rivian, touted as the next Tesla, is arguably the hottest electric vehicle company in the North American market and on Wall Street right now, even more popular than Tesla itself.

The investors are giant companies like Amazon and Ford, with both money and resources. Amazon recently announced that it will provide Rivian with a B2B order of 10 vehicles to ensure the stability of the order.

At the same time, Rivian also announced a joint development of EDV with Amazon and a collaboration with Mercedes-Benz to produce electric vans. Although mass production has not yet begun, sales of around 100,000 units have already been hyped up.

This provided excellent material for Rivian's IPO fundraising, coinciding with Lotus's listing at the same time. Although the two are completely unrelated, they both belong to the high-end niche electric vehicle sector and have very obvious scarcity, so it can be said that they complemented each other.

On March 8, a special day, Tan Jincheng, from the Imperial Capital Office, met with Robin Danholm, a former executive of Toyota, Giesecke & Devrient, and chairman of the board of Tesla.

Today is a special day, and Tan Jincheng prepared a bouquet of flowers for Robin and personally went to the airport to pick him up as a sign of respect.

The two are not strangers. As a Tesla executive, Robin has visited the mainland many times. They met multiple times during the production ceremony of the Shanghai Gigafactory in 2019 and during the negotiation meeting between Robin and Jinshidai regarding battery supply.

However, their statuses were different back then. Compared to Musk's high profile, Robin was much more low-key. Her visits were rarely reported by the media, and her main work involved internal meetings and supply chain negotiations.

In dealing with the mainland China market, Robin and Musk are in agreement. He has repeatedly emphasized the growth potential of the ZG market in Tesla's earnings calls. Robin has made significant contributions to the ramp-up of production capacity at the Shanghai Gigafactory and the Model 3.

"Boss, your point of view is quite novel."

Robin had some understanding of ZG culture and internal customs at Weilai. She knew that Tan Jincheng preferred to be addressed as "boss" by senior executives. When they met, they discussed Lotus's valuation and its performance after listing.

Robin also gleaned from Tan Jincheng's words that the boss didn't actually think Lotus was worth that much money; it was just that the capital market was always so frenzied, and when they were optimistic about you, they could drive the price up.

"Right? But that's not important anymore. $25 billion is enough for us to live on for a long time. As for the stock price, that's no longer our concern."

In the process of electrification transformation, every aspect, including product research and development, electric technology development, and sales layout, is a money-burning endeavor, with investments often reaching billions of dollars, putting every company's financial resources to the test.

Undeniably, Lotus is still struggling to generate revenue on its own during its electrification transformation. Financial support from major shareholders and bank loans have resulted in a high debt ratio for Lotus.

According to the prospectus, Lotus, which increased its investment starting in 2018, returned to a loss-making state after a brief period of profitability. Last year, due to special circumstances, the loss increased by 43.6% year-on-year. The IPO was a necessity of the times and something Lotus had no choice but to do.

"That's true, but the first thing I want to mention is, could the controlling shareholder's debt be repaid later?"

At the beginning of last year, Lotus, which was stuck in Wuhan, received RMB 50 billion in aid from its controlling shareholder. This interest-free loan had a time limit, and Lotus needed to repay the RMB 50 billion before the deadline.

"Of course, we can pay part of the interest on the loan after the extension, but we hope the interest rate can be lower."

Seeing Tan Jincheng's somewhat surprised expression, Robin added with a smile that Lotus had already successfully gone public, so there was no reason for it to keep sucking the blood of the major shareholders. However, getting some appropriate benefits was something she, as the new CEO, could strive for.

She will not only talk to ByteDance, but also to the Malaysian State-owned Assets Supervision and Administration Commission (SASAC) to ask them for similar assistance.

After a moment of stunned silence, Tan Jincheng quickly realized: "No problem. We can sign a supplementary agreement with ByteDance later. We can talk to Mr. Huang from ByteDance about the specifics."

Elite-level executives adapt to the new work rhythm very quickly and dare to make demands on their bosses. It's not that Li Xiang is unaware of the benefits of debt extension for Lotus, but because of the relationship between the two, he would not make such a request unless absolutely necessary.

Robin, who had just arrived, didn't care about such things. She only considered the practicalities of Lutes and didn't take into account other interpersonal relationships or such matters.

“I am very grateful to the boss for supporting my work. The extension will greatly alleviate Lotus’s financial situation and will also be more conducive to my strategic planning and adjustment for Lotus.”

Robin's style is low-key and pragmatic. She is already acquainted with Tan Jincheng. During their first meeting as CEO, she didn't prepare much nonsense and went straight to the point. It could be considered her first performance report.

"Please speak, I'd love to hear more opinions." This zero-frame-starting style is just like Tan Jincheng's. If it were any other CEO who cares about appearances, they would have held a press conference or a welcome party or something. But Robin doesn't care about any of that and just gets straight to work.

"Tan, you've adopted a gradual approach to Lotus's electrification process. I think we can be more aggressive."

For any large-scale company, the first thing to formulate is a long-term strategy, which is crucial. Lotus's previous long-term strategy continued the style of its predecessor, which was to produce both gasoline and electric versions in parallel.

Lotus will continue to develop some gasoline-powered vehicle projects, just like Yuechi Auto. Yuechi Auto will maintain a certain number of gasoline-powered vehicle projects on its road to electrification, but the focus will be on electrification.

"Tell me your reasons."

"Lotus doesn't have the financial resources of its parent company. While going public provides a new financing platform, it's conceivable that once market enthusiasm wanes, financing will certainly not be as easy as it is now."

"At that time, the problem facing Lotus will still be the issue of continued funding."

Going public also means that the controlling shareholder will relinquish control of the company. Financial support will no longer be as available as before. Instead, Lotus will need to address profitability and be responsible to investors. Cash flow is a key factor in Lotus's profitability.

The $25 billion in funding will eventually run out.

"please continue."

Tan Jincheng neither agreed nor objected directly. Robin, with her finance background, could understand whether it was extending debt or cutting projects she deemed unnecessary, as these were within her rights.

"My ideal Lotus is not to transform from a niche sports car manufacturer into a sustainable and profitable high-performance electric vehicle brand."

"Under my management, Lotus will be a company with Tesla-like efficiency, Toyota's supply chain management, and a wealth of resource integration capabilities. I want to build it into a competitor to Porsche and Ferrari."

After finishing speaking, Robin took out a document from his briefcase and handed it to Tan Jincheng: "Here is my detailed plan. Please take a look carefully, Boss."

“I know the boss’s English is good, but I still prepared both Chinese and English versions.”

Smiling, Tan Jincheng took the document and said, "Thank you for your thoughtfulness. I'll take a look now, and if possible, I can give you an answer today. However, it will take some time. Robin, you can go to the hotel to rest."

"In addition, we have prepared apartments for you in Jiangcheng, Ningbo, Beijing and Shanghai, but I suggest you work in Jiangcheng, which is a very nice city."

According to the contract, Robin must spend at least three months each year working in China in order to gain a more comprehensive understanding of Lotus's R&D and production progress. Tan Jincheng has also generously provided her with an apartment in a major city.

Tan Jincheng has always been generous in his treatment of executives. These apartments include some of Tan Jincheng's private properties, as well as those held by ByteDance, Weilai, and Lotus.

"I know Jiangcheng. It's a sunny city, very nice."

These words seemed to have a hidden meaning, but Tan Jincheng just smiled and let it go.

Robin's strategy was indeed more aggressive, as she said, while Tan Jincheng adopted a gradual approach, which was more stable and ensured a certain sales volume of Lotus gasoline vehicles each year.

The downside is that it costs more money.

Robin's plan is more aggressive: abandon or postpone existing gasoline vehicle projects, go all-in on electrification, and quickly achieve profitability through commercialization methods such as subscription models and technology output.

In terms of specific business measures, Danholm hopes to launch the Lotus Eletre SUV version in 2022, bringing the SUV to market ahead of schedule, targeting the domestic and North American markets, and replicating the success of the Porsche Cayenne.

In terms of the supply chain, she hopes to leverage the resources of the Weilai Group to reduce the cost of independent research and development, while maintaining Lotus's lightweight characteristics and securing Jinxinshi as Lotus's long-term battery supplier to avoid production capacity constraints.

“Ms. Robin, let me take you to rest for a while.”

Seeing Tan Jincheng engrossed in the documents, Li Xiang whispered to himself, "This bell-ringing ceremony for Lotus was led by me, which can be considered as fulfilling my dream of listing the company. I have no regrets now and can devote myself wholeheartedly to my work in Weilai."

Robin glanced at Tan Jincheng, smiled slightly, and then nodded to Li Xiang.

Robin had been paying close attention to this new boss for a long time. When he talked to Elon before, they both believed that Tan would be their biggest help in expanding in the ZG region. And that was indeed the case, whether it was when Tesla was in dire need of funds, or when Tan Jincheng played the role of the white knight.

Later, in terms of power battery supply and the establishment of subsequent supply chains, in addition to providing Tesla with a more stable supply chain, it also greatly reduced the cost of the whole vehicle, and also provided considerable assistance in terms of domestic network resources.

However, both also believe that the US will be Tesla's biggest competitor worldwide.

With its supply chain advantages in the Chinese market, its own pursuit of technology, its rich resource integration capabilities, and its strong financial resources and government support, Tesla has faced immense pressure.

For Weilai, Maodou 3 had a huge advantage in terms of orders. Elon Musk once said that he couldn't imagine how much Weilai would have expanded if it had the same number of orders as Maodou 3 at that time.

What Robin admires is that despite having almost no North American market, Weilai is still able to compete on par with Tesla, and its market share in the European market is almost on par with Tesla's.

It's important to understand that the North American market is currently the most mature electric vehicle market in the world, and it also has the widest acceptance. It's truly remarkable that they can maintain global competitiveness even after giving up such a market.

However, Robin could understand why Tan Jincheng would give up the North American market. If she were in charge of the Weilai Group, she would do the same. It's just that the situation with Lotus is different; Lotus can still do business in the North American market.

From a finance background perspective, Robin greatly admires Weilai's operating model. With a strong financial system as support, it integrates supply chain resources while focusing on independent research and development, which solves the problems of cost and efficiency while ensuring the security of the supply chain.

Such practices are not uncommon in the automotive industry, but few succeed; they require substantial financial resources.

Tan Jincheng didn't notice Robin's departure, but instead carefully examined the plans of this promising new successor of Lotus for the future of Lotus.

Upon careful consideration, Tan Jincheng could only say that the money was well spent.

From accelerating the electrification transformation, supply chain management, strengthening commercialization and brand monetization, financial discipline and operational efficiency, as well as how to balance tradition and innovation in brand positioning, and potential risks.

The analysis covered all aspects of Lotus's current situation and provided specific solutions, which can be described as very detailed.

"Take a look too. Judging from this document, it seems that Robin was already somewhat interested when we first started communicating with her."

This lasted for more than an hour. After arranging for Robin to rest, Li Xiang returned.

Li Xiang smiled and said, "I saw it when I was in North America. It is indeed very detailed, and Robin is more suitable to handle some of the details than I am."

"Haha, that's absolutely right."

Regarding financial discipline and operational efficiency, Li Xiang has been struggling with the transformation of the Heysel plant in terms of capacity optimization. The efficiency of these workers is simply too low. Li Xiang hopes to introduce more automated production processes to improve production efficiency.

But there's no way around it; when in Rome, do as the Romans do. Given the significant cultural differences between the two sides, even he, as CEO, would find it difficult to change. Robin, on the other hand, is different. Besides sharing the same cultural roots, as a new CEO, she wants to establish her authority by improving the efficiency of the Heysel factory, and Li Xiang fully supports her.

"That's true. Robin is definitely more suitable to host than you or me."

Tan Jincheng strongly agrees with this point. In overseas mergers and acquisitions, capital and even government departments are relatively easy to deal with. On the contrary, labor unions are the most troublesome, and many merger and acquisition deals have even been ruined by labor unions.

"You should stay in the capital for now. Do some interviews whenever possible. Also, see what Robin thinks. If she agrees, you can also do some interviews with authoritative domestic media."

A market capitalization of $25 billion would make a company a medium-sized listed company even in the US stock market. In contrast, as of March 1, there were only 143 listed companies in the A-share market with a market capitalization exceeding 100 billion yuan.

With nearly 4200 listed companies, this is just a small fraction of the total. If Lotus had listed on the Science and Technology Innovation Board, its current market value would probably be worth a whole new currency unit.

"Okay, I'll talk to her about it."

The automotive market saw significant changes in March, and Lotus's valuation was indeed somewhat high. To maintain this valuation and buzz, more news sources are needed. The arrival of Robin Danholm, a globally renowned woman, in Beijing on March 8th was certainly a great opportunity for hype.

Both Wynn and Lotus need more buzz to cope with the upcoming market competition.

"Also tell her that I agree to all her proposals and hope that Lotus can become the Porsche of the future under her control."

So what if the valuation is too high and there's a bubble? As long as sales volume increases and financial performance is strong, the current bubble can be sustained.

(End of this chapter)