New car manufacturers want to make electric cars, who can survive?

"As long as traditional car companies start making electric cars, there will probably be only one non-traditional electric car company in the world that can survive, and that is Tesla. The others will probably die!" At the 2019 China Business Leaders Annual Conference, Professor Yao Yang, Dean of the National School of Development at Peking University, once again expressed his concerns about the new forces in car manufacturing.

The views raised by Yao Yang at the annual meeting were indeed too absolute, which caused some controversy, but they also made sense.

It is not difficult to see that the above-mentioned viewpoints raised by Yao Yang are mainly aimed at the new forces in domestic car manufacturing. In his view, the electric vehicle products of the new forces in car manufacturing are very different from those of traditional car companies, so it is impossible for them to survive.

As we all know, new car-making forces are mainly committed to the development of pure electric vehicles. The electric vehicles they produce have certain advantages over traditional models in appearance and intelligence. However, pure electric models are electrified products, so the technology of engines and gearboxes is basically not involved. The biggest development bottleneck of a car may be the engine or gearbox.

Currently, the more well-known new car-making forces in China, such as NIO, Xpeng, and WM Motor, have not been in the automotive field for a long time, so it is difficult to accumulate relevant experience and technology. In most cases, they poach executives or technical personnel from traditional car companies by paying them high salaries to enter the company for development.

In contrast, traditional car companies have a much longer development history. For example, SAIC, GAC, FAW, Dongfeng Motor and other car companies have developed gradually in the automotive field. Under such circumstances, they have accumulated a lot of experience and technology, which is incomparable to the new forces in the automotive industry. Therefore, the new forces in the automotive industry entering the automotive field to develop hybrid and pure electric vehicle products are also seen as a manifestation of "overtaking on a curve".

In addition, most new car manufacturers have not yet obtained the "dual qualifications" and can only produce through OEM or by purchasing companies to obtain the corresponding production qualifications. Of course, there are also new forces that have obtained the "dual qualifications", but they are on the verge of the market without mass production.

Judging from the current market environment, the shrinking market has caused a decline in sales and performance of many automakers. In response, they have also formulated corresponding cost-cutting and efficiency-increasing plans to reduce costs by laying off employees, cutting products and production lines, etc.

Li Bin, founder of NIO, once said, "Car manufacturing is a very expensive business. If a new company wants to build a car, 20 billion is the entry ticket." NIO has been developing in China for several years, but its sales are still very unstable and its profits are continuously losing money. It is difficult to form a blood-making ability. It is still unknown when it will turn losses into profits. NIO's current situation is enough to foresee the development of new car-making forces. What NIO is currently experiencing is also what other new car-making forces will experience.

It is worth noting that Tesla is also a member of the new car-making forces, but why does Yao Yang think that Tesla is the only new car-making force that can survive? It is understood that Tesla was first established in 2003. Tesla's development time is much longer than that of the current mainstream new car-making forces in China, and it has accumulated a lot of experience and technology. Tesla has also experienced twists and turns. In fact, when the Model 3 was mass-produced, Tesla encountered great difficulties, but under the leadership of Musk, Tesla finally survived.

Tesla's products still have many problems, such as safety issues caused by intelligent technology defects and product quality, but Tesla's current development has indeed improved to a certain extent. According to data, Tesla's sales in China in the third quarter were US$669 million, a year-on-year increase of 60.40%; the cumulative sales in the first three quarters were US$2.183 billion, a year-on-year increase of 51.07%. In the third quarter of this year, Tesla delivered about 97,000 vehicles.

Tesla is seen as a common benchmark and competitor by traditional car companies and new forces. Even Dr. Herbert Diess, CEO of Volkswagen Group, the traditional car company that has been most active in the electrification transformation, believes that although there is a gap in size between the two, Tesla is a competitor worthy of attention.

On the other hand, traditional auto giants including Volkswagen are actively or passively transforming to electrification due to restrictions on fuel vehicle sales and increased emission requirements in various countries, and have set production and sales targets for electric vehicles in the next few years. Recently, Daimler, Audi and other internationally renowned brands announced layoffs of nearly 20,000 people for electrification transformation, and the first to bear the brunt are those workers who do not have professional skills in electrification.

However, it remains a question whether traditional car companies, which have made a lot of money in the era of internal combustion engines, can produce electric cars with the same quality as fuel cars like Tesla.

In addition, the new car-making forces mentioned by Yao Yang almost unanimously regard Tesla as the benchmark of the industry. The leading forces, such as Weilai, Weimar, and Xiaopeng, have launched their own electric models earlier than traditional car companies, although they have only been established for about five years. In 2019 alone, the delivery volume of the above three car companies exceeded 15,000 vehicles, even surpassing many traditional fuel models that were washed away by the cold wave of the auto market.

Despite the difficult situation, the new forces have not stopped their plans to release new cars. However, the new forces have been established for a relatively short time and lack profitability. Most of them even rely on OEM to produce their own brand cars. More importantly, the new forces still rely on financing to survive, and the sustainability of their development prospects has also been subject to considerable criticism.

Among them, Xpeng received US$400 million in financing led by Xiaomi in November this year, but it is still some distance away from the amount of financing it sought before; WM Motor announced in July this year that it needed US$1 billion in Series D financing, but there has been no clear result so far; as a listed company, NIO has suffered heavy losses, with a sluggish stock price, and there has been no follow-up on its financing cooperation with Beijing Yizhuang Guotou, Huzhou Wuxing and other places.

After subsidies were reduced in the second half of the year, sales of electric vehicles also plummeted. However, the founders of new forces are still confident about the prospects of electric vehicles and their start-up brands.

同样在近日举行的中国汽车企业创新评价大会上，被部分媒体评价为“2019 年最惨的人”的蔚来创始人李斌就在发言中表示，蔚来 11 月的销量达到 2528 辆，创下今年新纪录，而且是按需生产：“现在定车起码要等 1 个月，展车都卖空了。”；小鹏创始人何小鹏面对张维的质疑时反击称，做批评者容易，做建设者难；威马创始人沈晖在广州车展期间接受采访时指出，传统车企在产品、渠道、人才储备上相比专注于电动汽车的新势力并没有优势。

Yao Yang said that except for Tesla, other new car-making forces will die, but he used words such as "probably" and "probably", which did not actually directly declare the death of these new car-making forces. It's just that in the current severe market environment, the products and processes of new car-making forces are difficult to meet the standards of traditional car companies, but because of their active thinking, they make up for the shortcomings through intelligent technology, appearance design and other aspects.