Throwing three unavoidable questions to Nezha Auto

Nezha still has many unavoidable problems. But since it has chosen to face the huge "cake" of China's new energy market, it needs to grit its teeth and move forward no matter how difficult it is if it wants to share the pie.

"By 2025, Nezha Auto has to survive. First, we need to achieve sales of 500,000 units. Only with sales of 500,000 units can we survive. We also need to accumulate and settle technologies, improve the technical level of intelligence and electrification, and maintain the high cost performance of products. The second thing is to innovate in brand and user experience, form the Nezha Auto model, and create a distinctive label."

After entering 2021, I first met Nezha Auto CEO Zhang Yong in an interview room at the Shanghai Auto Show. When asked, he did not shy away from talking about the goal of the company, which had just survived its darkest hour and was gradually recovering, to build cars in the next five years.

At the booth event that just ended, 360 Group founder and chairman Zhou Hongyi appeared among the guests. Although it has not been officially announced, the intention is already very obvious.

In the end, the wait was not long. On May 11, the 360 ​​Group Smart Car Strategic Media Communication Conference was held at its Beijing headquarters. At the scene, Zhou Hongyi officially announced: "I will form a product manager CP with Nezha CEO Zhang Yong to jointly build a smart car for mass users with a price of about 100,000 yuan."

For a time, with the addition of a powerful "assistant", Nezha was in the second-tier echelon of new forces in car manufacturing, and the possibility of breaking through seemed to increase. However, after nearly three months of observation, it was gradually discovered that the direction of the story did not develop in the direction imagined.

On the contrary, as a bystander, I would like to ask Nezha three unavoidable questions.

1. How much can we empower by joining hands with 360?

It is undeniable that being on a completely new track that is completely different from the traditional automotive industry will inevitably lead to a complete change in the way the game is played.

Therefore, we can see that new entrants such as Li Bin, Li Xiang, and He Xiaopeng, who have successful Internet entrepreneurial experience, can adapt quickly and take the initiative. However, new car-making companies such as Nezha, which were founded by traditional car people, lack the "Internet gene".

On the surface, "holding hands" with 360 has more advantages than disadvantages.

Little did people know that just last week, an article titled "The person I'm afraid of is also going to build a car" was quickly circulated. The content directly pointed at Zhou Hongyi himself, and said that his investment in Nezha was more for stock price operations. At that time, only an agreement was drafted, and 360 only dispatched some technical personnel to Nezha Automobile. In fact, it has not paid a penny so far, and it is only a spiritual shareholder.

Soon, Nezha officials refuted the rumor: "The cooperation between 360 and Nezha Auto has always been carried out normally and orderly according to the preset progress of both parties, and both parties are performing their obligations normally in accordance with the requirements of the agreement." The implication is that the rumor is groundless, and the cooperation between Nezha and 360 is still proceeding at the established pace.

During the communication with Nezha’s internal staff, we learned that due to the arrival of 360, Nezha’s attention and voice in the entire industry have greatly increased compared to before.

But the bigger problem is that if what Zhou Hongyi said before is really true: "The smart driving and smart cockpit that this car company lacks, including Internet genes, Internet thinking and the entire in-vehicle safety, will all be provided by 360."

This means that Nezha will give up the initiative in the research and development of autonomous driving and smart cockpit, the two most important "lifelines" of smart electric vehicles. Compared with NIO, Li Auto, Xpeng, and even Leapmotor, which are in direct competition with them, Nezha hopes to firmly grasp the maximum authority of the above two sectors in its own hands.

Moreover, referring to 360's own past development path, its accumulation in the fields of autonomous driving and smart cockpits does not seem to be very strong, and it is more focused on the data security of the entire vehicle.

The current new energy market has already returned to the stage where each price segment is directly competing with each other in terms of product strength. So how much power can it give to Nezha in terms of specific models? There are still many unknowns.

I just hope that by then, it won’t just be a facade, but some flashy things without substance…

2. Can it be considered a success just by selling Nezha V well?

In June, according to the sales data officially released by Nezha, its monthly sales hit a new high of 5,138 units, a year-on-year increase of 536%. At the same time, sales from January to June 2021 reached 21,104 units. Behind the achievements, the contribution of Nezha V, which was launched in November last year, to sales seems to be indispensable.

This pure electric car, which starts at 59,900 yuan, has been a hot seller since its launch. According to data from the China Passenger Car Association, Nezha V's sales ranked 10th among all pure electric vehicles from January to May, and ranked second among pure electric SUVs, second only to Tesla Model Y. In more than seven months since its launch, Nezha V has sold more than 20,000 units.

But what needs to be carefully considered is, can it be considered a success simply by selling Nezha V well?
 

"History has proven that the method of relying on A00 small cars to support sales is unsustainable. Cars below 100,000 yuan can only be called electric cars, not smart electric cars."

This slightly sharp point of view came from Shen Hui, the founder of WM Motor, at the mid-year media exchange meeting. After being surpassed by Nezha and Leapmotor in terms of sales, there was a constant fermentation of rumors that WM Motor was lagging behind. As an observer, regardless of the actual performance of the latter, from a rational perspective, the above point of view does make some sense.

Even from the statistics of the China Passenger Car Association, the wholesale sales of A00-class vehicles last month were 59,500, accounting for 32% of the pure electric market share. It can be said that the growth trend is still very obvious, and on the surface it seems to be a thriving scene, like honey that is very easy to touch.

Looking deeper, the A00-class pure electric car has always been hindered by the limitations of its own product positioning. Once too much focus is placed here, it is easy to fall into the vicious circle of promoting the "low-end route".

At the same time, due to the limited cost of the whole vehicle, it is also disadvantageous for the self-development of the assisted driving system, smart cockpit and even the three-electric system of the whole vehicle. The ceiling and bottleneck of the entire sector are visible to the naked eye.

Subsequently, with the rapid decline in manufacturing costs in the new energy industry and the continued increase in purchasing power of end consumers, the gradual shrinkage of the A00-class market has become a foregone conclusion.

Therefore, the temporary success of Nezha V is still largely due to the market dividend. An A00-class pure electric car is actually not enough to support a new force in car manufacturing and survive well in the terminal market.

3. Why is the brand upgrading progressing so slowly?

To be fair, Nezha itself must have discovered the problem described in the second paragraph. During the Shanghai Auto Show, it launched the Nezha U Pro, a compact SUV with a higher positioning than the Nezha V.

There are four models: 400 Cruise Edition, 500 Global Edition, 500 Moon Landing Edition, and 610 Mars Exploration Edition. The official price after subsidies is 99,800, 129,800, 139,800, and 159,800 yuan. Due to the competitive price, the cumulative orders exceeded 5,000 within less than a month of the pre-sale.

However, readers who are familiar with this car company must know that as the previous generation model, the price of the old Nezha U has actually been maintained at around 150,000 to 210,000 yuan since its launch. Seeing this, some people may say that such a large disguised price reduction is enough to reflect Nezha's determination to sell U Pro in large quantities.

But in the eyes of many people, this move also reflects that Nezha was too optimistic about its own brand's progress. After being educated and hit by the terminal market, it had to lower its profile and start from a lower price range, giving up the profit of each vehicle to a certain extent and being forced to pursue higher sales.

At the same time, due to the large proportion of Nezha V deliveries and the large-scale launch of some products in the B-end travel market, it is also constantly forming a reverse drag effect on itself. Therefore, it can be clearly felt that in the process of brand upward development, Nezha's progress is relatively slow.

However, as far as the current situation is concerned, the best way out for a new car manufacturer seems to be to move towards high-end products and enter markets with higher premium capabilities.

Therefore, another trump card that can be seen in Nezha's rise is the Nezha S, which will be launched next year and positioned as a B-class pure electric coupe. According to official information, this model adopts a chassis that combines luxury and sportiness, and achieves a zero-to-hundred-kilometer acceleration of 3.9 seconds.

In the future, it will also achieve L4 level autonomous driving and have ultra-high power fast charging. What's more interesting is that unlike other car companies that only develop pure electric technology, Nezha S will launch two power types: extended-range and pure electric. The extended-range version has a range of more than 1,100km, and the pure electric version has a range of more than 800km.