Dyson gave in while FF stood firm, how difficult is it to build a cross-border car?

After 7 months of hard work, Jia Yueting, who built cars in the United States, finally succeeded in going bankrupt.

The official bankruptcy announcement is one of the few good news for Jia Yueting in recent years. It means that Jia will have to transfer all of his Faraday Future (FF) shares to creditors, and he will be able to continue to promote FF projects. If FF is saved in the future, the debt can be paid off and the company can turn around again.

What about the creditors? For at least four years, they can no longer pursue the debts relentlessly. Instead, they have to transform themselves into shareholders of this car company on the verge of death, and together with Jobs, they will have to suffocate for their dreams for a long time.

In October last year, Sir Dyson, who was in the British Isles across the ocean, wisely announced that he had failed to build a car after investing 500 million pounds in three years. But this is not another version of "building a car with a PPT". At least not long ago, the stubborn Sir Dyson still exposed the "most expensive" Dyson electric car in history, which truly became a "closing work" that was unveiled as soon as it was released.

The bottomless pit of investment and the lack of business prospects are the main reasons why Dyson gave up after "having a taste of his own medicine". In contrast, Jobs, who only had FF as his trump card, still chose to go all out and was still struggling to find a large investment that would allow FF to be mass-produced. Can Jobs really make a comeback if he finds the money? The FF that amazed everyone back then has become a bit "indistinguishable" now. However, with a price of $200,000, can he still find consumers who will pay for his "dream"?

Looking back at China, lack of money and looking for money have always been the "new normal" for these new forces in the "cross-border car manufacturing" industry. However, getting money is only the first step on the road to car manufacturing. There are still a series of problems such as mass production, technology, operation, quality, after-sales, etc. waiting for these new forces that want to "subvert" the automotive industry to solve.

If Dyson and FF are just two small examples of failed "cross-border car manufacturing", then what are the general difficulties of "cross-border car manufacturing"?

As long as you have enough money, can you successfully cross over and build cars?

The trend of "cross-border car manufacturing" really started with Tesla. There has been a myth circulating on the Internet about how Musk used "first principles". It is said that after learning about battery technology and the cost of materials, Musk decided to build a pure electric car because he could not wait for "electric cars from traditional car companies".

Tesla's success after 2012 and 2013 has made many of our country's admirers see the possibility of "tribute". More importantly, after 2014, driven by favorable policies, new energy vehicles have ushered in a new blue ocean market with unlimited potential. In addition to those Internet upstarts who are eager to try, many giants in the real industry have also entered the market with heavy money, opening up a growth point of hundreds of billions of yuan in addition to their main business that has reached a ceiling.

In the words of real estate tycoon Xu Jiayin, "We are now talking about hundreds of billions of dollars, not hundreds of millions of dollars."

Among this wave of "new forces" in cross-border car manufacturing, there are Internet people who are relatively close to cars, such as Li Bin, the Internet car media person who founded NIO, Li Xiang, who founded Autohome, which founded Ideal Auto, He Xiaopeng, the Internet person who founded Xpeng Motors, and Jia Yueting, the head of LeTV who has been in constant turmoil; there is also a wave of executive founders who have worked directly in car companies for many years, such as Shen Hui, who came from traditional car companies to establish WM Motor, and Fu Qiang, who left Volvo to establish Aiways.

Among the more familiar "cross-border players" are celebrities and celebrity companies. For example, Dong Mingzhu, the head of Gree Electric Appliances. After the company failed to acquire Zhuhai Yinlong, she personally invested 1 billion yuan to buy Yinlong. Last year, Ms. Dong led Gree Electric Appliances to reach a strategic cooperation with WM Motor, and also established Guochuang Energy Internet Innovation (Guangdong) Co., Ltd., which shows her determination to enter the new energy vehicle market.

The representative of the cross-border real estate industry is Xu Jiayin of Evergrande Group, who is determined to invest 45 billion yuan in Evergrande's new energy vehicles in the next three years. Previously, Evergrande has invested nearly 30 billion yuan in companies such as FF, NEVS, Shanghai Kanai New Energy, and Tait Electromechanical Co., Ltd. In the list of real estate and automobile companies, following Evergrande are Baoneng, Country Garden, China Fortune Land Development, Wanda, R&F and other companies. Almost all of these companies have announced their entry into the new energy vehicle market with the attitude of "not lacking money" and have obtained the entry ticket to car manufacturing through buying or investing.

What is even more unexpected is that Wuliangye Group acquired a 51% stake in Kaiyi Automobile for RMB 2.491 billion. Kaiyi was originally a marginal model under Chery. At the end of last year, a new model that was mass-produced for the first time after Wuliangye acquired a stake went into production. It is expected to be officially sold this year, but the prospects are not optimistic. For a traditional winery to enter the new energy vehicle manufacturing industry, it is no wonder that some netizens joked that "If you can't drink well, you are embarrassed to drive this car."

Having enough money is usually the confidence of these newcomers. But once they really invest in it for two or three years, they will understand the meaning of "making cars means burning money". When Li Bin of Weilai kindly reminded those who want to join the industry that "don't make cars without 20 billion", Sir Dyson used a vivid case to tell everyone that even if you spend 20 billion (actually only spent more than 4 billion before giving up), you may fail in the end.

In addition to overcoming the difficulty of burning money, what other fatal problems does cross-border car manufacturing have to face?

Spending money may help you build a car, but increasing production and sales is the key to survival

The reason why Dyson decisively gave up on making cars is not because it is another failed case of "PPT car making". On the contrary, judging from the performance of the latest new car, the 960-kilometer range can beat all existing electric vehicles on the market, and even most fuel vehicles.

The design of having no buttons inside the car and completely replacing the central control screen with a heads-up display HUD also subverts the existing design habits. It imitates the tough temperament of Land Rover, the extra-long body and the low-angle Ferrari-style windshield, and also has the style of a luxury car.

The main reason for giving up on making cars is that the high R&D and manufacturing costs make the basic price of each car reach 150,000 pounds, or about 1.3 million yuan, to break even. If you add in profits and import tariffs, the price will be so high that it will be embarrassing to find no friends.

Controlling unit cost, achieving mass production and sales, and spreading unit cost again to win the market is almost an iron rule in the traditional automobile industry. However, this common sense actually "failed" in the beginning for the new car-making forces.

Here we should especially mention Weilan Automobile, which manufactures and sells cars in an Internet mode. Weilai has adopted a direct sales system that is completely centered around end users. As long as you are willing to spend a lot of money to become a Weilai car owner, you can enjoy services such as lifetime battery replacement, 1,000-mile power delivery, exclusive WeChat group, 24-hour customer service, etc. In order to take care of these supreme customers, they have also built luxury experience stores where car owners and prospective car owners can come and play at any time, and are also trying to build 500 charging stations across the country.

In order to provide this "supreme" experience, NIO has accumulated losses of more than 20 billion in the four years since its establishment. It is said that it loses 920,000 yuan for every ES8 sold. If NIO continues to follow its model, it will need to sell at least 400,000 vehicles to stop losses and make a profit.

However, if we take into account the cost of subsequent owner services, this is probably a money-burning road that will never see the end. Once the frenzied capital market gets "excited", it is easy to ignore logic and only tell stories, but when it calms down, it still has to face reality.

2019 has become a life-or-death year for new car manufacturers. The capital market has made a harsh statement: no new car manufacturer is worth investing in. At the same time, Tesla, which is regarded as a "mentor" by new car manufacturers, has accelerated its pace of layout in the Chinese market. Tesla's localization has landed, becoming a fierce rival for these car companies to compete with.

The capital market has given Tesla 15 years to make a profit, but how many years does Tesla leave for these apprentices?

After a series of setbacks last year, NIO was on the brink of collapse in the spring when the pandemic began. Fortunately, it received a 7 billion yuan "life-saving fund" from the Hefei Municipal Government last month, which helped it survive.

But does the government's support still give NIO the opportunity to continue to verify its business model? I'm afraid that this money will mainly be used for NIO to build its own production line in Hefei, and the fundamental purpose is to boost Hefei's economy and employment.