Rebirth 08: Rise from copycat phones

Chapter 564 Negotiations for the Listing of Hailan Automobile
Hailan Motors' driverless taxis have caused quite a stir, especially in January of this year when Hailan Motors partnered with a local European company to launch a road test of an autonomous taxi based on the Hailan SLMC model. The result was strong opposition from local taxi and ride-hailing drivers.

It even triggered a large-scale driver strike.

It's no wonder the locals reacted so strongly; the autonomous driving technology of Hailan Motors is just too frightening...

Other people's autonomous driving technology is just hype; at most, it's only at Level 2+. What's wrong with letting them develop it? It won't have any impact.

However, the autonomous driving technology of Hailan Auto starts with L3 level as standard, while high-end models have L4 level autonomous driving.

This Level 4 autonomous driving technology is a true cutting-edge technology in this era, capable of replacing human drivers in most usage scenarios.

That would make a difference.

When other car companies try to hype up things like driverless taxis, everyone just watches for fun... anyway, everyone knows they can't actually pull it off.

But they were very worried about Hailan Auto's plans... because Hailan Auto really could pull it off.

After all, in the field of autonomous driving, Hailan Auto is the professional player, while others can only be considered amateurs.

It is precisely because of its top-notch autonomous driving technology that Hailan Auto has become a global leader in intelligent electric vehicles.

Even though Hailan cars are expensive, their sales still far exceed those of other manufacturers, almost monopolizing about 50% of the global new energy vehicle market.

This is an incredibly exaggerated figure!

After all, Hailan cars are really expensive!

The SLC Aqua, a large luxury sedan, starts at 1.5 million yuan. It's the same car driven by the world's richest man and the choice of many wealthy bosses in China... Whether the car is good or not is not important; the key is that you get to look good when you ride in this car.

The Lavida SEV, a large SUV, starts at over 600,000 yuan and is a popular choice for many wealthy business owners. Some ultra-high-income families also opt to purchase it as a family vehicle.

The Aqua SEC, a sports car series, starts at over 500,000 yuan and offers three types: a two-door coupe, a two-door hardtop sports car, and a two-door convertible sports car. In terms of price, it is actually an entry-level sports car, targeting young, fashionable, and wealthy consumers.

The Aqua SR, a new sub-model that has been separated from the Aqua SEC series, is a super pure electric sports car with a starting price of over 1.5 million yuan and a high-end version costing two to three million yuan.

The Aqua SR3, released last year, is the latest model in the series. It is the world's first smart electric vehicle to use solid-state batteries, with a pure electric range of over 1,400 kilometers and equipped with 4.2 autonomous driving... It incorporates many cutting-edge technologies.

Of course, the sales of the aforementioned models are not very good, at least not enough to support the exaggerated sales figures of Hailan Auto.

The three models that truly drive sales volume for Hailan Auto are the Hailan SLMC, Hailan MEV, and Hailan YEV.

The Hailan MEV is a mid-size SUV. The entry-level model is priced at around 350,000 yuan after subsidies, while the high-end model with L4 level options is priced at 500,000 to 600,000 yuan.

This model is very popular among domestic consumers and is one of the choices for many high-income families in cities. It has long dominated the top spot in the domestic market for luxury brand SUVs, with annual sales exceeding 250,000 units in China alone.

The North American version of this car, namely the 'Mite' brand mid-size SUV produced in the Mexican factory, has undergone slight changes in appearance, but the core design remains the same. This Mite mid-size SUV was officially launched in the United States last winter and sold very well.

Consumers in both China and the United States have a particular fondness for this mid-size SUV…

Including other markets, the global sales of this car are quite substantial, with annual global sales exceeding 400,000 units last year.

The Hailan SLMC is Hailan Auto's main sales-volume model. After domestic subsidies, the entry-level price for the L3 level assisted driving system can be around 320,000 yuan. Crucially, the higher-spec models can be equipped with L4 level autonomous driving, bringing the final price to around 500,000 yuan.

This is the cheapest L4-level autonomous driving model in the Hailan Auto lineup. The cheaper Hailan YEV does not offer the L4-level autonomous driving package as an option.

The Aqua Blue SLMC, including variants specifically for the ASEAN region, the European region, and the MITEK variants for the North American market, has achieved global sales of over 700,000 units.

Its sales volume is quite staggering for this price.

Then there's the Ocean Blue YEV, an entry-level mid-size sedan. The low-end version is priced at only 250,000 yuan after domestic subsidies. The sales of this car are even more phenomenal... With all the variant models combined, it has sold over 900,000 units.

These three models account for the absolute sales volume of Hailan Auto!
Then add in the sales of some high-end models, as well as the exclusive models of the two sub-brands.

Hylan Automotive Group, with its three major brands and more than ten models, delivered more than 2.5 million vehicles last year, generating revenue of over US$110 billion.

This allowed Hylan Auto to successfully enter the top ten global automakers, ranking around eighth in terms of revenue... In terms of profit, Hylan Auto can easily outperform a group of its peers... In the report submitted by Hylan Auto to Xu Shenxue, Hylan Auto's revenue last year was $110 billion, gross profit reached $33 billion, and gross profit margin reached 30%.

Of course, this gross profit of over 30 billion US dollars does not mean that Hailan Auto actually makes that much money.

These gross profits are actually reinvested in the construction of new factories and research and development after passing through one intermediary.

Not to mention the high R&D costs, the investment scale for expanding solid-state battery and vehicle production capacity is also very large.

However, this does not take into account the enormous costs associated with solid-state batteries, or the huge investments required for the rapid expansion of large vehicle production capacity in the short term.

Instead, like traditional automakers, it maintains a normal pace of R&D and expansion. Last year, Hailan Auto's net profit was estimated to reach over 15 billion US dollars!

This level of profitability is actually quite good...

The Volkswagen Group, which sells tens of millions of cars worldwide, has revenues of over $200 billion. However, due to the impact of the rise of new energy vehicles, its profitability is worrying, with profits of only around $11 billion, less than that of Hailan Auto!

Toyota, which ranks second in revenue, also sells tens of millions of vehicles and has revenue of over 200 billion US dollars. Its profits are slightly higher, but still only around 13 billion US dollars.

Based on vehicle sales, Hailan Auto ranks approximately tenth globally.

In terms of revenue, Hylan Auto ranks eighth globally.

In terms of profit, Aqua Auto ranks first in the world!

The reason for this situation is that Hailan Auto's gross profit margin is abnormally high compared to other car companies!
The reason for Hailan Auto's high gross profit margin is not because Hailan Auto has low manufacturing costs; in fact, Hailan Auto's manufacturing costs are not low at all...

Hailan Auto deals with high-end luxury car brands, which have very high requirements for the quality of their cars and also value the technological progress of their supply chain manufacturers. They do not exploit the supply chain, and the overall cost of car parts and even assembly is not cheap.

However, Hailan Auto is not just an assembly manufacturer, but a car manufacturer that researches and controls its own core components. Many of the most expensive core components in electric vehicles, such as power batteries, motors, and lidar, are all developed and produced by them. Other car manufacturers only make a little money from design and assembly, but Hailan Auto takes the majority of the profits from a car.

More importantly, the autonomous driving technology of Hailan Automotive brings a higher premium!
Hailan cars, which also use semi-solid batteries and have the same range, are much more expensive than other brands of electric vehicles!

This is the huge advantage brought by Biaozhiyun Group's autonomous driving technology.

While other electric vehicles sell for just over 100,000 yuan, consumers still find them expensive even at 200,000 yuan. However, with the support of autonomous driving technology, Hailan cars often command a significant premium!

The cheapest base model, the Ocean Blue YEV, has a range of only 400 kilometers. Even the one with L3-level assisted driving as standard costs 250,000 yuan. At that price, you could buy other domestic brands' pure electric vehicles with a range of 600 to 700 kilometers...

The Hailan SLMC, with a range of 700 kilometers and optional L4-level autonomous driving, costs more than 500,000 yuan.

By doing this, Hailan Auto can make a lot of money just from batteries... because the power battery is the biggest cost in an electric vehicle, accounting for about 50% to 60%.

Earning tens of thousands more yuan in the battery sector can significantly improve Hailan Auto's gross profit margin.

However, even with Hailan Auto's current high interest rate, there is a drawback... Despite Hailan Auto's high revenue and valuation, the money it can spend is still gross profit, plus bank loans.

However, while Hailan Auto makes a lot of money, it also spends a lot of money, especially now that it is promoting a comprehensive solid-state battery strategy... This stuff costs a lot of money.

The construction cost of solid-state batteries is much higher than that of liquid and semi-solid-state batteries.

Furthermore, if Hailan Auto wants to continue to expand its scale and capture more global markets, it will need more capital investment. At the same time, in order to maintain its technological leadership, it will also need more R&D investment. So, the current profits will eventually be reinvested in production.

Hailan Auto even plans to go public this year to raise funds to expand its production capacity, develop more advanced technologies, especially to launch new sub-brands, enter more overseas markets, and use sub-brands to penetrate the low-to-mid-end market.

Research and development requires money, expanding production capacity requires money, and marketing new brands also requires money. There are many places where money is needed.

Xu Shenxue will not allow Hailan Auto to rest on its laurels and become complacent. He needs Hailan Auto to continue to accelerate the research and development of advanced technologies and strive to become a true global automotive giant in the future.

Ten million vehicles sold globally each year – this is the initial goal Xu Shenxue has set for Hailan Auto!
With annual sales of just over two million vehicles, we're still a long way from ten million!
To achieve this, Hailan Auto alone is not enough; it needs more funding!

Therefore, it is a foregone conclusion that Hailan Auto will be launched this year, and the launch location will still be in China!

In Shanghai, Xu Shenxue, while inspecting his own company, also took the opportunity to meet with several local investment institutions, primarily to discuss Hailan Auto's potential IPO.

Investment institutions naturally welcome and even look forward to the listing of Hailan Auto, a leading company in the intelligent electric vehicle industry.

Of course, this welcome and expectation does not mean that they will unilaterally accept the high valuation that Hailan Auto expects.

As for Hylan Auto, it hopes to raise funds and go public with a valuation of no less than $700 billion.

This valuation is a bit exaggerated. You should know that at present, the second largest player in the smart electric vehicle industry, Tesla, has a market value of only around $800 or $900. Another important smart electric vehicle manufacturer, BYD, has an even lower market value of only a little over $20 billion.

I know that you, Hailan Auto, are very powerful. You are the leading company in this field, with impressive sales and technology, but you can't go too far!

Seven hundred billion US dollars, you dare to say that... Do you really think every company is like Zhiyun Group, with a market value of trillions of US dollars that can be achieved so easily?

Although Hailan Auto is very impressive, it is still a capital-intensive manufacturing industry. The investment in each car factory, battery factory, and motor factory is enormous.

Although the gross profit margin is much higher than that of other car companies, it's still only around 20%.

Moreover, there are a lot of competitors. Although it seems to occupy 50% of the market share, this market share is gradually shrinking... Your Hailan Auto used to have a market share of more than 90% in the electric vehicle market. You're going downhill.

Back then, there weren't many electric vehicles, and Hailan Auto was one of the first to commercialize them on a large scale, so its market share was naturally high.

In the eyes of current investors, Hailan Motors is a capital-intensive company with huge construction and R&D investments, but its gross profit margin is only average. If we look at it from the perspective of conventional manufacturing, a valuation of $200 billion for Hailan Motors would be quite good.

Of course, your Hailan Auto is awesome, your autonomous driving is great, and we expect your autonomous driving to drive true driverless cars in the future. Your solid-state batteries are also amazing, and the technology is very advanced. So we don't see you as a traditional manufacturing company, but as a high-tech enterprise, and we've given you a valuation of 400 billion... That's high enough, isn't it? This is the kind of treatment that only asset-light internet companies get.

You wouldn't get this kind of treatment at any other company. It's only because Hailan Auto has such a promising future that we're giving you this valuation.

However, Bao Yongyan and his Hailan Auto management team repeatedly emphasized the future prospects of autonomous driving, saying that they are not a manufacturing company and that people should not regard them as manufacturing enterprises. They are a high-tech company that plays with artificial intelligence, and cars are just a carrier of artificial intelligence!
And then there's this talk of future smart city transportation networks, and then some kind of future flying car, saying they've already entered into a strategic partnership with Xiaojiang Technology, and the two sides will jointly develop low-altitude flying cars... Who knows, in a few years, I might just come up with a flying car for you.

Moreover, our company is also preparing to get into the robotics business. If Zhiyun can make robots, then Hailan can certainly make them too. We can also use the EYQ chip. Although we can't get the robot AI license from Zhiyun Group, we're thinking that if we modify and optimize the underlying algorithms of our own autonomous driving technology, we might be able to use it in intelligent robots as well.

The huge market potential of solid-state batteries that are now in mass production!

The future sales of tens of millions of electric vehicles.

Flying cars and smart city transportation of the future.

The future of robotics!

With so many great assets combined, a valuation of 700 billion isn't too high, is it?

Look at the robotics company next door, Zhiyun Group, they have a market value of four trillion US dollars.

Investors scoffed at Bao Yongyan's claims!
Heavy capital investment, high R&D costs, and the unique nature of the automotive industry, coupled with significant uncertainties in overseas markets... all these factors imply substantial risks.

Being affected by any of these points will severely damage investor confidence.

Even a powerful company like Zhiyun Group, with a plethora of cutting-edge technologies, still has a market capitalization of only around 17 or 18 times its earnings due to massive investments in the semiconductor field and concerns about developing foreign technologies... In terms of price-to-earnings ratio, it's not even as high as Vcool Electronics.

Unfortunately, Hailan Auto also fell into these traps... In other companies, doing things this way would have led to bankruptcy long ago, and investors would have desperately tried to drive down the price.

However, investors are still willing to give Hailan Auto a price-to-earnings ratio of nearly 20 times, and that's only because Xu Shenxue is in charge. If it were any other enterprise, there wouldn't be many investment institutions willing to give it a market value of 300 billion!

Xu Shenxue did not participate directly in the negotiations, but after the meeting he said to Bao Yongyan: "Prepare well for the May press conference, and let our solid-state battery shock these old relics!"

(End of this chapter)