Wei Xiaoli: The one hundred thousand mark, the one hundred thousand mark declines

Source: Snow Leopard Car Observation

Author: Yan Xuegong

In less than a year, the top three new forces all stepped on the brakes, and the sweet dream was completely awakened.

At the end of 2021, Wei, Xiaopeng and Li Auto, which were just one step away from crossing the life-and-death line of annual sales of 100,000, have all begun to outline a broader new blueprint, some of which include the ambitious goal of achieving annual sales of over one million in three years.

In 2022, the annual sales targets of NIO, Xpeng and Li Auto are 150,000, 250,000 and 200,000 vehicles respectively, but there is always a gap between reality and dreams. Now that two-thirds of the race has passed, NIO, Xpeng and Li Auto have achieved deliveries of 72,000, 90,000 and 75,000 vehicles respectively, failing to achieve half of their planned targets. It is not difficult to see from the rather conservative outlook in the financial report that even with the support of new cars, they do not have the confidence to achieve their preset goals.

For the growing new forces, annual sales of 100,000 vehicles can be regarded as the first important competition point. According to He Xiaopeng, "Annual sales of 100,000 vehicles is the premise for everything to be possible." However, with the awakening of traditional giants, the advancement of second-tier new forces, and the entry of new Internet players, new energy vehicles have become a fiercely competitive red ocean market.

After crossing the 100,000 life and death line, in the acceleration race from 1 to 10, Wei, Xiao and Li will face an even more brutal life and death battle.

Only by crossing the life-and-death line of 100,000 vehicles can they have a chance to survive - the leaders of many new forces have said this in public.

Annual sales of 100,000 vehicles are generally recognized as an important milestone in car manufacturing. A senior person in the automotive industry told Xuebao Finance, "The automotive industry attaches great importance to economies of scale. Annual sales of 100,000 vehicles is the first starting point for quantitative change to qualitative change. It means the healthy operation of a factory and also indicates that the brand has been recognized by the market."

The development history of Tesla, the leader in new energy vehicles, also verifies this statement.

Starting with the mass production of the Roadster in 2008, it took Tesla 7 and a half years to reach a cumulative production of over 100,000 vehicles in 2015. In 2017, Tesla delivered more than 100,000 vehicles a year and has been on the fast track since then. In March 2020, Musk tweeted to celebrate the rollout of Tesla's 1 millionth car.

At this point, Tesla only has less than three years left to cross the 100,000 life-and-death line.

It was also at the critical juncture of annual sales of 100,000 vehicles that Tesla was on the right track to make profits.

In 2018, Tesla delivered more than 200,000 new cars and began to make a profit. In 2021, Tesla's delivery volume was close to one million, and its net profit was as high as US$5.5 billion. Musk said that Tesla's profit margin in 2021 exceeded that of all automakers in the world.

Wei, Xiaoli and Li Auto, which took only two or three years to increase their cumulative sales from 0 to 100,000 vehicles, are obviously more optimistic about their prospects and have set higher goals for themselves. Li Xiang, CEO of Ideal, once claimed that Ideal's annual sales will reach 1.6 million vehicles in 2025.

However, after crossing the line between life and death, Wei Xiaoli did not wait for a rise, but the dilemma of "the starting point is the peak".

Judging from the delivery volume from January to August this year, Wei Xiaoli’s cumulative sales were 72,000, 90,000 and 75,000 vehicles respectively. The new force delivered the championship, but Nezha took it away with a score of 93,000 vehicles. In the past two months, "Iron Wei Xiaoli", who used to firmly occupy the top three on the list, gave up the championship and runner-up positions to Nezha and Liepao.

Behind this embarrassing situation is the collective slowdown in sales growth of the three new forces. From January to August, the year-on-year growth rates of Wei, Xiaopeng and Li Auto's deliveries were 28.3%, 96% and 57% respectively, far lower than the three-digit growth rate in the same period last year, and also lower than the overall growth rate of new energy vehicles of 123%.

Wei Xiaoli collectively slammed on the brakes, but his competitors stepped on the switch and rushed forward.

From January to August this year, BYD's sales increased by 267% year-on-year, and the year-on-year growth rates of new energy vehicles owned by traditional car companies such as Chery, GAC, and Changan also exceeded three digits. The second-tier new forces Nezha and Leipao saw year-on-year delivery growth rates of 176% and 179% respectively.

Wei Xiaoli, who failed to copy Tesla's growth myth, also failed to reach a turning point in turning losses into profits at the threshold of 100,000 vehicles. Financial report data shows that Wei Xiaoli’s net losses in Q2 this year were 2.75 billion, 2.7 billion and 640 million yuan respectively, and the losses are still expanding. Calculating Wei Xiaoli's "loss of X million on selling a car" after each financial report is released has become a hot topic on the Internet.

The sweet dream was suddenly awakened. In a situation where the enemy is advancing and we are retreating, the war Wei Xiaoli will face in the future will be even more cruel.

The story of the new rich subverting the old rich sounds beautiful, but in the real business society, it is more of a cold reality that the giants are late and new companies become the pathfinders.

Although they have attracted a lot of attention and popularity, judging from sales, NIO, Xiaoli and Li Auto are not as successful as people imagine.

The sales ranking of new energy manufacturers in August released by the China Passenger Car Association shows that the top three places are occupied by traditional independent brand car companies, and Wei, Xiaopeng and Li Auto failed to make it into the top 10. Even if Tesla is included, only one-third of the top 15 are new forces.

As time goes by, Wei Xiaoli, who was the first to enter the new energy track, failed to grasp the early dividends of the trend, and the first-mover advantage is gradually fading.

The development of an industry usually goes through the start-up phase, introduction phase, explosive phase, mature phase and decline phase. Once the market penetration rate reaches the critical point of 10%, it will quickly enter the explosive phase from the introduction phase, and the entire market will usher in rapid development.

In 2018 and 2019, when Wei, Xiao and Li Auto delivered their first mass-produced cars, the new energy vehicle market was still in its start-up and introduction stages and was still a blue ocean. At that time, as the leader of the new car-making forces, Wei, Xiao and Li Auto won attention and momentum.

But by the end of 2021, the industry landscape was very different from what it was before.

The penetration rate of the new energy vehicle market has increased to nearly 15%, entering an explosive period. At the same time, models priced below 300,000 yuan have become the dominant market. According to the latest data from the Passenger Car Association, from January to August 2022, sales of new energy vehicles worth 200,000 yuan accounted for 64%, and products priced below 300,000 yuan accounted for 80% of the market.

In this case, Wei Xiaoli, which is positioned as a high-end company and has a single pricing range (vehicles with an average price of more than 200,000 yuan), continues to be involved in the small and increasingly saturated mid-to-high-end market, and has missed the explosion of the mid-to-low-end market. During the dividend period, the market share continues to decrease and the room for growth becomes smaller and smaller.

More importantly, traditional giants are awakening faster than expected.

Toyota, Volkswagen and other multinational automakers have publicly announced that they will shift their focus to new energy vehicles in the future, while domestic traditional automakers have reacted more quickly and aggressively. In April last year, BYD announced the suspension of fuel vehicles, becoming the world's first traditional automaker to fully transform into new energy vehicles, and surpassing Tesla to become the world's new energy sales champion. Zhu Huarong, chairman of Changan Automobile, said bluntly, "Stop selling fuel vehicles should be put on the agenda."

In the history of business, there are many examples of giants relying on their own strong resources and experience to come first and crush newcomers.

In the gaming sector, QQ Game Hall successfully caught up with Lianzhong Games, which had 15 times more users, in just one year, and successfully strangled it. With strong social traffic, Tencent games such as QQ Hall, QQ Speed, and QQ Dance have repeatedly taken the lead.

In the field of community group buying, Xingsheng Youxuan was once the earliest top student, with sales reaching 42 billion yuan in 2021. However, with the entry of Meituan and Pinduoduo, the war reached its peak by burning money crazily to open cities. Xingsheng Youxuan soon became obscure under the siege of giants and can only survive with difficulty.

Similar stories happen in every corner of the business world. In the second quarter just past, the century-old Disney, relying on its strong financial resources and powerful IP library, surpassed the newcomer Netflix in the number of users of its streaming media business in just three years.

Faced with fierce competitors, will Wei Xiaoli become a pathfinder involved in the wheel of history?

Achieving the life-and-death hurdle of selling 100,000 vehicles during the New Year, but failing to achieve what he boasted has become a common embarrassing situation for Wei Xiaoli in 2022.

Based on the delivery volume in the first half of this year and the highest value of Q3 guidance, Wei, Xiao and Li Auto are expected to deliver 84,000, 100,000 and 89,000 vehicles in the first three quarters, respectively. To achieve their respective annual targets, Wei, Xiao and Li Auto will have to deliver 66,000, 150,000 and 111,000 new vehicles in the fourth quarter, respectively, within three months.

This is an almost impossible task.

Surrounded by old giants and chased by new second-tier forces, under heavy pressure, Wei, Xiaoli and Li Auto chose the strategy of launching new cars and reducing prices for promotions, trying to find a way out by changing their tactics.

In the third quarter of this year, both Xpeng and Ideal offered certain price discounts, but sales did not improve. In addition, the new cars launched by Wei, Xiaopeng and Li Auto are still mid-to-high-end models, and the prices of the latest flagship models of Xpeng and Li Auto have been further increased. As the mid-to-high-end market becomes increasingly saturated, they have joined the internal competition without hesitation, but the results are also far from ideal.

As the expectations for third-quarter delivery volume were relatively conservative, the outside world generally interpreted it as NIO, Xiaopeng and Li Auto lacking confidence in the future. After Xpeng and Li Auto disclosed their delivery guidance in their financial reports, their share prices fell 10.8% and 4.5%, respectively.

Looking ahead to the more distant future, NIO, Xiaoli and Li Auto are also gearing up to enter the mid-to-low-end price range to seek greater development space. Li Xiang revealed that the new products to be launched next year will be priced between 200,000 and 300,000 yuan. NIO has not only established a sub-brand, Alpine, which focuses on the 200,000 to 300,000 yuan price range, but is also planning a third brand focusing on the low-end, preparing to expand its coverage to models below 200,000 yuan.

However, judging from Wei Xiaoli's past speed of new car sales, it will take at least one year to achieve the above goals, and it will take some time from launch to delivery. In the new energy market, which has entered an explosive period, this is enough to cause huge changes in the market structure, leaving Wei Xiaoli little time.

At least, the giants who have recovered from their shock have already built their own walls. Facing the new iron wall, Wei Xiaoli may never find a chance to break in.

This article is reprinted Observation. The content is the independent opinion of the author and does not represent the position of Global Internet of Things Observation. It is for communication and learning purposes only. If you have any questions, please contact us at info@gsi24.com.

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