Rebirth 08: Rise from copycat phones

Chapter 625 Turning Car Manufacturing into Cabbage
In the first half of this year, in addition to the good performance of Zhiyun Group, the other important companies under Xu Shenxue's control also performed well.

Hailan Auto's car sales in the first half of the year benefited from the large-scale application of solid-state batteries, resulting in continuous sales growth. In particular, at the May launch event, solid-state batteries were made standard on all Hailan SLMC and Hailan MEV models, as well as on the high-end models priced at 300,000 yuan for the Hailan YEV and Hailan HEV entry-level models.

This led to a large number of new orders for Hailan Auto in May and June. Although most of these orders have not yet been delivered, the results are still remarkable.

This year, Hailan Auto's Hailan brand has a high probability of achieving a delivery volume of 3.5 million vehicles.

A delivery volume of 3.5 million vehicles is an outstanding achievement for a high-end luxury car brand, far exceeding the sales figures of traditional luxury car brands such as BMW, Mercedes-Benz, Audi, and Cadillac.

Including the MITE brand, which focuses on the Americas market, especially North America, and the ELA brand, which focuses on the low-end market, the total sales of Hailan Automotive Group's three major car brands this year should reach 4.5 million vehicles, barring any unforeseen circumstances. If the situation is better in the second half of the year, especially if the sales of ELA's low-end models are better, it might even be able to reach 5 million vehicles in annual sales.

Hailan Automotive Group is performing quite well, with continuous growth in car sales, and other businesses such as battery, auto parts, and after-sales service also maintaining steady growth.

The strong sales performance of Hailan Auto has brought it ample revenue and profits, enabling it to continue its high-investment capital in solid-state battery production capacity and extensive R&D in new technologies.

According to the plan formulated by Xu Shenxue, the main development goal of Hailan Auto in the next stage is to develop the sub-brand represented by Aila, further expand the production and sales volume of the whole vehicle, and rely on the increased production and sales volume to reduce the overall cost and obtain more revenue and profit.

However, this is not easy. It is very difficult for low-end models to gain traction in the domestic market. BYD and other domestic car manufacturers are not to be underestimated. In recent years, they have made a name for themselves in the domestic low-end electric vehicle market and have been very aggressive in pursuing a cost-effective strategy.

Opening up markets in other countries is not easy either!

Compared to high-end models like the Aqua brand, which have an easier time entering various car manufacturers' markets, it is much more difficult for low-end models like the Ella brand to enter various markets on a large scale...

Well, even if other countries allowed you to sell high-end models like the Hyland brand, you wouldn't actually sell that many... Hyland's sales of over three million vehicles are achieved through the global market, but in specific overseas markets, the sales figures aren't actually that great.

Because the price is too high, many people want to buy it but can't afford it!
However, if low-end models like the Ella were allowed to enter various markets, their relatively low price and good value for money could easily make them popular in those markets, ultimately causing a sharp drop in sales of other cars in those markets.

Many major automotive markets have their own automotive industries, and they mainly produce cars themselves or through joint ventures. In order to protect their domestic automotive industries, they often restrict the import of various cost-effective cars.

Even in a country like India with an underdeveloped industrial system and low technological content, they still have a large automotive industry. India's Tata Motors, as well as many Japanese and other car manufacturers, have set up factories in India to produce various low-end cars, with an annual output of several million vehicles.

India's automotive industry is so underdeveloped that it lacks international competitiveness. To protect its local automotive industry, India has imposed notoriously high tariffs on automobiles.

Major automobile producing countries include Germany and Spain in Europe, the United States and Mexico in the Americas, and Japan and South Korea in Asia.

Even countries like South Africa and Morocco, which don't receive much attention, produce hundreds of thousands of cars.

The majority of this car production capacity is actually for various affordable passenger vehicles, which, when converted to the domestic car market, would be in the price range of 50,000 to 150,000 yuan!
This also means that if domestically exported cars simply want to enter these major car markets by relying on cost-effectiveness and price advantages, they will face a lot of external factors: the other side simply won't let them in!
If we open the market and let your cheap cars in, won't the local car industry just collapse?

Therefore, these are some of the problems that Hailan Auto faces: it is relatively easy for high-end Hailan Auto to open up overseas markets, and many industrialized countries do not really care about the entry of high-end models like Hailan Auto... anyway, you can't sell many.

However, it is much more difficult for the low-priced Ella brand to enter overseas markets. In most car markets, you can sell cars, but you have to build a factory here and bring jobs and tax revenue to the local area.

Exporting complete vehicles alone is extremely difficult!

On the contrary, some countries that do not have an automotive industry are very welcoming of these domestically produced cars with good cost performance... Since they don't have an automotive industry, whatever car they buy is imported, so they will naturally prefer cars with better cost performance.

Nobody's money comes from thin air.

The problem is... countries without an automotive industry generally don't have a very large automotive market.

In order to expand into more overseas markets, Xu Shenxue's Hailan Automobile Group continues to pursue the "factory for market" strategy, circumventing local car import restrictions by building assembly plants in target markets.

Although these assembly plants lack core technologies and have low added value, they can still bring some employment and tax revenue to the local area and boost some local auto parts industries that have little technological content. Therefore, they are still quite popular in most countries.

Hailan Auto, on the other hand, keeps the production of power batteries, motors and other core components in China, keeping the main added value in China and avoiding the outflow of core technologies... The large-scale Hailan Auto Dongguan manufacturing base is an industrial cluster that specifically provides power batteries and other core components for overseas assembly plants.

Of course, the reason why Hailan Auto can adopt this strategy is because of the special nature of intelligent electric vehicles: the cost of their power batteries accounts for more than 50% of the total cost of the vehicle, and for some models it can even reach 60%.

Then, the motor and many core components of intelligent driving also account for a significant portion of the cost.

In conclusion, the cost of domestic components accounts for more than 70% of the cost of a smart electric vehicle produced in an overseas assembly plant, and in some overseas assembly plants, the cost of domestic components can even reach more than 90%.

In July, Xu Shenxue also held a special meeting on overseas markets with the management of Hailan Automobile Group. The meeting decided to accelerate the layout of overseas markets and invest in the construction of assembly plants in multiple target markets.

These assembly plants are mainly used to produce cars for the low-end car brand Ella.

As for the overseas production capacity layout of the Hailan brand, it has been almost completed... The high-end market has a ceiling. The sales volume of the Hailan brand is already more than 3 million vehicles a year. It is difficult to exceed 4 million vehicles if it continues to increase.

However, the market potential for low-end cars like Ella is huge, and there is a need to further expand production capacity, whether domestic or overseas.

In addition to its existing business operations, Hailan Automotive Group is also actively developing and deploying intelligent robot business. When Xu Shenxue visited Hailan Automotive, he also saw the intelligent robots they developed.

Although their intelligent robots are far inferior to those of Zhiyun Group in terms of technological maturity, they are still quite good and can at least enter the practical stage. After all, the core technology of their intelligent robots, namely artificial intelligence technology, is based on the artificial intelligence underlying the autonomous driving technology of Hailan Automobile that they obtained from Zhiyun Group in the early days.

Although the two are very different, it is extremely difficult to transplant the artificial intelligence technology used in cars to robots, but at least there is a feasible technical route.

Although there is a significant technological gap, at least we now have usable robotics technology.

Unlike other companies whose AI technology is inadequate and can only rely on some open-source AI algorithms from Zhiyun Group, or develop their own AI algorithms, which are both extremely difficult and even Google cannot handle.

In artificial intelligence technology, Zhiyun Group is far ahead of other companies, and this lead is estimated to be decades long... Apart from Zhiyun Group, Google has the most mature artificial intelligence technology, but their self-developed artificial intelligence technology cannot even reach the level of Zhiyun Group's first-generation Yun AI released many years ago!

And the gap is widening.

Zhiyun Group is far ahead in artificial intelligence technology and has already applied it on a large scale to many fields such as intelligent robots and virtual devices, while Google is still struggling to provide even a basic, surface-level application of large-scale generative AI.

Hailan Auto has developed Level 4 autonomous driving technology by relying on the artificial intelligence technology it acquired from Zhiyun Group in its early years, and now it is using this artificial intelligence technology to develop intelligent robots.

And they actually managed to create a practical robot, which is undoubtedly a huge achievement.

However, although they have created a basic prototype of their robot, its performance in all aspects is still far inferior to that of Zhiyun Robotics, and the cost is currently very high. If they were to launch it directly to the market, it is estimated that there would be very few sales...

Currently, the robotics team at Hailan Auto is continuously promoting the research and development of robotics projects, mainly focusing on the training and development of various advanced functions. At the same time, they are also striving to reduce the hardware costs of robots and reduce their overall cost.

According to their research and development progress, it is expected that the intelligent robot will be officially launched on the market next year... If nothing unexpected happens, Hailan Auto will become the second company after Zhiyun Group to launch an intelligent robot.

However, the robot market will not see any vicious competition between the two major companies... because both Zhiyun Group and Hailan Auto are companies under Xu Shenxue's control.

Healthy competition is acceptable and even beneficial.

However, vicious competition, especially competition through cost-effectiveness and price reduction, is impossible.

Sigrún has taught at the Iceland University of the Arts as a part-time lecturer since and was Dean of the Department of Fine Art from -. In – she held a research position at Reykjavík Art Museum focusing on the role of women in Icelandic art. She studied fine art at the Icelandic College of Arts and Crafts and at Pratt Institute, New York, and holds BA and MA degrees in art history and philosophy from the University of Iceland. Sigrún lives and works in Iceland.

Hailan Automotive Group is venturing into the intelligent robot business, attempting to create a third core business alongside its existing intelligent mobility and battery businesses: intelligent robots. This aims to diversify the company's operations, increase its resilience, and generate new revenue and profit growth points. Xu Shenxue's other companies are also, to varying degrees, exploring more and more new technologies and businesses.

The most typical example is Vcool Electronics Group!
Previously, everyone thought this company was a smart terminal manufacturer, mainly selling mobile phones, and also selling various other smart terminals, and even all sorts of miscellaneous home appliances and other electronic products.

Later, Vcool Electronics Group launched VR virtual reality devices to the market, which was its entry into the virtual reality device market to compete with VR virtual reality devices from manufacturers such as Apple, Four Star, Google, and Huawei... However, the market size of this business is not large.

Because consumers aren't really into the simple VR display plus mouse, keyboard, and joystick controls... The biggest attraction of virtual games isn't actually the VR display, but the fact that players can move around on their own.

The virtual equipment of Zhiyun Group is achieved by using an omnidirectional treadmill with artificial intelligence technology as the underlying technology and a robotic arm.

Other manufacturers lack this technology and cannot achieve it. They can only use traditional operation methods to realize the character's movements, which loses the most important aspect of virtual games: the user experience.

Moreover, VR virtual reality devices are not cheap, because they require a lot of computing power chips, especially APO graphics cards, which makes the price range from 70,000 to 100,000 yuan. The cheapest virtual reality device from Zhiyun can be bought for 260,000 to 270,000 yuan.

Those with money went straight to buy Zhiyun's virtual reality devices, while those without money went to virtual reality experience centers...

This has resulted in a relatively small overall market size for VR virtual reality devices, despite their emergence.

The market size of VR virtual reality devices is not as large as expected, which has forced Vcool Electronics Group to increase its investment in the electric vehicle field!

Last year, Vcool Electronics Group officially launched its first-generation smart electric vehicle, the "Little Blue 2020," to the market. Relying on its stunning design, good price-performance ratio, and the Little Blue brand and loyal users cultivated over the years, it achieved a successful start and very good sales.

For a brand-new smart electric vehicle brand to sell over 100,000 vehicles in its first year is no easy feat.

This year, Bluegogo Auto, a subsidiary of Vcool Electronics Group, launched an SUV model, which has achieved very good sales.

The success of Bluegogo has not only introduced a brand-new cross-industry player to the domestic automotive market, but has also shown opportunities to large companies in other industries, prompting them to accelerate their entry into the electric vehicle industry.

Even fruit companies haven't given up on their electric vehicle business; instead, they've increased their investment... This actually goes against some of the company's business philosophy, because the electric vehicle business has low gross margins and the supply chain is uncontrollable, which contradicts some of the company's business principles.

However, due to being severely suppressed by Zhiyun Group in the field of smart terminals, and the inability to take off VR virtual devices, and the lack of results in the robotics business despite its initial research and development, Apple was forced to find new supporting businesses, otherwise it would only suffer a slow death.

The electric vehicle business is the most promising new business that Apple can currently find. Therefore, although the electric vehicle business is very difficult and does not quite fit their business philosophy, they are still gritting their teeth and increasing investment.

Of course, they want to develop high-end electric vehicles, but they lack their own autonomous driving technology and core technologies for power batteries, making research and development quite difficult. It's still unknown when they will be able to bring their products to market.

Rice, on the other hand, doesn't have many burdens, so it's been easier for them to switch to electric vehicles... After all, like Weiku Electronics Group, they operate within a mature supply chain, so as long as they can make money, they don't have as many concerns as fruit companies.

The rice company has already announced that their new car will be available to consumers by next spring at the latest.

Whether it's the Bluegogo cars from Vcool Electronics or the electric vehicles from Dami that haven't been released yet, they are all built on a mature and comprehensive intelligent electric vehicle supply chain in China.

The domestic intelligent electric vehicle supply chain has become very mature over the years, thanks to the efforts of Hailan Auto and other domestic electric vehicle manufacturers.

The most crucial power battery component is backed by the giant Ningdai Battery, whose battery technology, including semi-solid-state batteries and lithium iron phosphate batteries, originates from Hailan Auto.

Hailan Auto's semi-solid-state battery technology is safer than traditional liquid lithium batteries. It is slightly more expensive than ternary lithium batteries, but the difference is limited. More importantly, it has a higher energy density, reaching 350 Wh/kg, and its low-temperature degradation performance is better than that of iron phosphate and ternary lithium batteries.

Some models under the Hailan Auto brand, such as the entry-level models of Hailan YEV and Hailan HEV, most models of MITEK, and high-end models of the ELA brand use this technology.

After being licensed to Ningdai Battery, the semi-solid-state batteries produced by Ningdai Battery are mainly supplied to Tesla and other automakers for high-end models and models used in the northern market.

Despite its low price, the lithium iron phosphate batteries produced by Hailan Automotive Group actually perform quite well, boasting an energy density of 200 watt-hours per kilogram. This energy density surpasses that of liquid ternary lithium batteries from some less technologically advanced battery manufacturers.

Other lithium iron phosphate battery manufacturers generally maintain an energy density of around 130 to 150-160 watt-hours per kilogram.

If I had to point out any flaws, it would be that the battery's performance degrades significantly at low temperatures... but that's just how lithium iron phosphate batteries are.

Relying on these two types of batteries, Ningdai Battery firmly holds the position of the world's leading third-party power battery supplier, with its total battery production capacity second only to Hailan Battery under Hailan Auto.

With Ningdai Battery as a power battery supplier, both Weiku Electronics and Xiaolan can obtain good semi-solid-state batteries or lithium iron phosphate batteries.

Then there's the intelligent assisted driving part, which is even simpler. Zhuyun Group directly provides the complete EYEQ technology solution, which can easily achieve L2+ level assisted driving... If manufacturers are a bit more ambitious, they can also purchase the PX terminal computing power platform to develop their own algorithms!
The latest generation of PX terminal computing chips is based on Zhiyun Microelectronics' second-generation seven-nanometer process and uses automotive-grade packaging. Although its performance is not as good as the EYQ chip jointly developed by Hailan Auto and Zhiyun Group, it is not much different.

Strictly speaking, as long as automakers have sufficient capabilities in the field of artificial intelligence, they could completely achieve Level 4 autonomous driving based on this chip... Unfortunately, their artificial intelligence technology is not up to par, so they cannot do it.

Then, various sensors are also available domestically. Hailan Laser has high-end LiDAR, and other manufacturers also have some mid-to-low-end ones. Automotive-grade cameras are even simpler, with more domestic suppliers.

There are many domestic suppliers for motors and other core components such as conventional components, brakes, and energy recovery systems. Some of these third-party suppliers are also quite good, and some are even manufactured in factories in China by overseas automotive parts giants.

Now, the supply chain for smart electric vehicles in China is very mature, with a complete range from high-end to low-end.

This has led to the fact that manufacturing electric vehicles in China is actually quite simple now. Some people jokingly say that now any company can manufacture cars.

It's a bit like making car manufacturing so cheap... Of course, making a good car is still very difficult.

Nowadays, generally speaking, with a few hundred million yuan, you can develop a decent electric vehicle. Although almost all the parts need to be sourced from suppliers and production needs to be outsourced, at least it's achievable.

Of course, whether it can be sold is another matter entirely.

If you spend more money, say a few billion, you could build your own factory. A few billion is all you need; many so-called new energy vehicle companies can do that too...

If we can raise over 10 billion yuan, we can develop a very good smart electric vehicle and a supporting advanced automobile manufacturing plant, just like Vcool Electronics Group.

However, simply having money isn't enough, because there's also the issue of manufacturing qualifications. Most so-called new energy vehicle manufacturers can't obtain independent licenses, and they need to use licenses from other companies to produce and sell their vehicles.

Some well-funded new energy vehicle manufacturers have chosen to acquire poorly performing car companies that already have car licenses, thus indirectly obtaining car licenses.

That's how Vcool Electronics Group got its car licenses; they spent a lot of money acquiring a car company to obtain the licenses.

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With Vcool Electronics Group setting the example, and DaMi accelerating its progress, it would be quite normal for them to be able to develop their own smart electric vehicle next year.

With the complete maturation of the domestic intelligent electric vehicle supply chain, the gradual increase in production capacity, and the gradual decrease in prices, the domestic electric vehicle market will continue to experience growth.

Meanwhile, a large number of electric vehicles from China will continue to be exported overseas. Not only are electric vehicles from Hailan Auto Group being exported in large quantities, but vehicles from BYD, SAIC, GAC, FAW, Chery, Geely and many other automakers are also being exported to varying degrees.

Automobiles have become a new major export commodity in China, and the export volume is expected to increase even more next year.

However, a crucial reality is that the more cars China exports, the stronger the resistance will be to domestically produced, cost-effective electric vehicles in overseas markets, especially those with their own automotive industries.

(End of this chapter)