2003: Starting with Foreign Trade

Chapter 793 The Unicorn Concept and $19 Billion!

P.S.: Please vote for me!
In the second quarter of 2013, everything seemed to be accelerating for the entire automotive industry.

Tesla's stock price surged 183.35% in the second quarter, closing at $107.36 on the last trading day of June, making it one of the most outstanding stocks in the US and even globally.

Tan Jincheng's Tesla holdings have also surged to $10 billion, finally exploding after years of holding back.

Besides exceeding sales expectations, the biggest change is that Tesla's financial situation has improved significantly.

Tesla sold 4500 vehicles in the second quarter, but the published figure was 5150, with the growth mainly coming from the European and Chinese markets.

Tesla officially entered the Chinese market at the end of April, and its sales period in the second quarter was only two months. However, the Model S sold more than 100 units. This growth rate is truly astonishing. Wealthy people are really willing to spend money.

Due to the continued popularity of the Tesla Model S, Tesla has discontinued production of its sports cars, and there are only a small amount of inventory left to buy.

"The fundamental reason for Tesla's soaring stock price is not that it sold a few hundred more cars in the second quarter, but that its finances, especially its gross margin, have improved significantly."

Tesla's official financial report was released on August 9th. By then, its stock price had risen to $153, an increase of more than 8 points compared to the end of June, adding several hundred million dollars to Tan Jincheng's wealth.

Li Xiang has been with the company for more than three months. In these three months, he has not been involved in any specific practical work. Instead, he has been traveling all over the country under the leadership of Tan Jincheng to inspect Weilai's industries and product lines across the country.

Today they came to the capital again, this time to see the horizon. Over the past three months, Li Xiang has gained a comprehensive understanding of Wei Lai.

Tesla's financial report is naturally the hottest topic in the automotive industry recently.

"Take Tesla's gross margin as an example. Their gross margin in the second quarter reached 22%. In our automotive industry, a gross margin of 20% is a very important standard. If you want to manufacture cars yourself in the future, you must pay attention to this."

In the automotive industry, there is a standard: if a car company or a particular car model, especially a new energy vehicle, can achieve a gross profit margin of 20%, it can survive. A gross profit margin below 20% could lead to its demise at any time.

Weilai's current gross profit margin is still below 20%. If it weren't for strong sales, capital, and policy support, Tan Jincheng wouldn't dare to expand so aggressively. The bigger the game, the more miserable the consequences.

Currently, only two models from Weilai have gross profit margins exceeding 20%: the Yuechi A1 and Yuechi A3, with gross profit margins of 20.7% and 20.81% respectively. The Yuechi series is currently Weilai's core product.

Tesla's ability to achieve a gross profit margin of over 20% within six months of the Model S's launch, thereby improving the company's overall financial situation, is the fundamental reason for its soaring stock price.

Of course, it is also closely related to its sales and revenue. In the two quarters combined, Tesla's revenue has reached 10 billion US dollars, while its revenue in the same period last year was less than 2 million US dollars.

With annual revenue of $20 billion, supporting a market capitalization of tens of billions is not a problem.

Li Xiang smiled wryly: "Boss, how can you be so sure that I will definitely build cars? Everyone wants to build cars, but not everyone can do it. There is a big difference between wanting to and doing."

"Haha, don't be modest. I believe you can do it. How about 2015? If you have the idea of ​​building your own brand in 2015, I will support you."

Unlike Zhang Yong, who has experience working at Beiqi Foton, Zhang Yong is skilled in major customer strategy, such as the procurement of taxis, government vehicles, and even ride-hailing vehicles. These are all areas in which Zhang Yong is good at.

Zhang Yong's strategy of targeting major clients has led to rapid growth in recent years, but Zhang Yong has a clear weakness in dealing with ordinary consumers, as does Yu Liguo.

Previously, Tan Jincheng personally led the C-end market for Weilai. His series of marketing and unconventional tactics, coupled with his personal image, brought huge traffic to Weilai, and the biggest feedback from this traffic was in sales.

Furthermore, the Yuechi series truly delivers quality that matches its price, which is one of the reasons for Weilai's success.

However, Tan Jincheng cannot directly intervene in and dominate the market forever. He does not have the energy to expand his business. Li Xiang is the product manager he found to lead the C-end market at this stage.

He's managed to create something truly remarkable with products like Autohome, range extenders, refrigerators, TVs, and large sofas, making his brand a leading player among emerging electric vehicle manufacturers. This demonstrates his genuine understanding of the end-user market.

This is why Tan Jincheng spent several months guiding him through a comprehensive review of Weilai's product line.

Why 2015?

Li Xiang didn't want to argue anymore. In the past three months, his boss had indeed valued him highly. After joining the company, he was given 10 stock options and spent a lot of time taking him to meet clients, production lines, and local government leaders.

Li Xiang had never worked a formal day before, and became a boss before he was 20 years old, just like Tan Jincheng. This kind of long-term unrestrained work experience will inevitably bring about some changes in personality.

He was somewhat unaccustomed to the job when he first started, but after three months he was quite moved.

Given the boss's current status and position, unless he's an absolute industry tycoon, he doesn't need to treat him this way at all, and he even continues to support and encourage him to enter the automotive industry in the future.

"You can think of the current new energy industry as the smartphone industry in 2009, right? Does that make sense?"

Li Xiang nodded and said, "I understand."

Entering the market early has its advantages, but this only applies to players with substantial funds and resources. For someone like him, it's best to wait until the industry becomes more certain before entering. This is different from when he started his website, where he could just grab some money and get started.

"Another point is that automotive policies have become increasingly rapid in recent years. A company's decision can change in a short time. Established companies can still make a comeback, but newly established brands cannot withstand this kind of turmoil."

An ordinary person who makes a critical mistake may need half a lifetime to make up for it, and the same is true for a company.

Since the second half of the year, car policies have indeed been changing faster and faster. First, on July 1, Guangzhou relaxed the restrictions on the free replacement of fuel vehicles with an engine displacement of 2.5L or less. However, at the same time, many other cities joined the ranks of cities that imposed purchase restrictions.

With restrictions being eased on one hand and purchase limits on the other, it's difficult for startups to grasp market trends.

Conversely, corresponding adjustments have also been made in the field of new energy. In the previous round of policy promotion, local protectionism was very obvious. Taking Shenzhen as an example, even if Aion S were free, it would not be included in the Shenzhen municipal government's procurement list.

Conversely, the same applies to BYD in Ningbo. In this round of adjustments, it was stipulated that the number of out-of-town brands among vehicle brands must not be less than 30%, in an attempt to break this kind of local protectionism.

At the same time, the method of distributing subsidies has changed from local government to central government allocation, and it is clearly stipulated that the number of vehicles promoted in megacities participating in the promotion should not be less than 10,000.

Other cities or regions must not have less than 5000 vehicles. The number and scope of promotion have increased, but at the same time, the pressure of competition has also increased. However, this is a good thing for Weilai, as the Aion S still has an absolute advantage.

Currently, the only model on the market that can rival the Aion S is the BYD Qin, both of which hold a commanding lead in the new energy A-class segment.

With Zhang Yong, a leader skilled in major client strategies, Tan Jincheng is very confident in promoting the brands under Weilai.

In addition, the new automotive after-sales service policies implemented this National Day holiday will make the market more standardized, which is definitely a good thing for consumers, but it will also inevitably increase the costs for businesses.

But in any case, the overall policy situation is beneficial to Wei Lai.

With increased promotional efforts and the addition of more and more cities, the increase in sales is obvious. Since the implementation of the new policy, local governments have been placing more and more orders with Weilai, mainly targeting Aion S.

In addition, the number of registered drivers for Kuaidi Dache has exceeded 20. According to data released by Analysys International, Kuaidi Dache accounts for 41.8% of the overall market share of the national ride-hailing app industry, ranking first in the industry.

Didi and Dahuangfeng, ranked second and third respectively, are also making continuous efforts. More and more drivers are joining the ride-hailing industry, which has obviously boosted car sales.

The rise of ride-hailing services has benefited more than just Weilai Auto. Weilai Auto currently only has one model, the Aion S, suitable for ride-hailing services, while car companies like BYD, Chery, and Geely have a wide variety of A-class models.

Ride-hailing services aren't limited to electric cars. Cheaper A-class sedans costing tens of thousands of yuan can also be used for ride-hailing. Many long-time BYD users have joined the ride-hailing industry, and some consumers even use new cars to join.

Boatman didn't want Qin to be associated with taxis or ride-hailing services, but reality left him no choice. After subsidies, the price was less than 10 yuan, and the spacious A-class sedan was perfect for ride-hailing.

"Isn't this automotive-grade semiconductor project very expensive? Also, can our technology reach an advanced level?"

Horizon Company currently has no specific business operations; it's purely a money-burning company. Li Xiang has gained a certain understanding of the company's organizational structure and has a thorough understanding of which businesses are profitable and which are not.

Like Tan Jincheng, he was a high school student and had no knowledge of technology, so it's not surprising that he had some questions.

"We definitely can't afford to burn money all the way through. In the early stages, we just need to burn money to get a rough idea and achieve some results. Later, we will cooperate with other car companies and let them increase their investment and share the technological achievements together."

"As for whether the technology is advanced enough, I can't answer that right now. What's advanced now might be obsolete next year, so there are definitely risks involved."

Technology is uncontrollable and unpredictable. Take 3G and 4G as an example. It took 10 years to go from 2G to 3G. After 3G technology was officially and successfully commercialized, China Unicom invested heavily in 3G, thinking that it would last for at least seven or eight years.

However, no one expected that 4G commercialization would happen so quickly, and China Unicom incurred huge losses due to its investment. As for 5G? Let's not even talk about 5G.

Tan Jincheng couldn't be sure if Horizon Robotics could produce mass-produced automotive-grade chips, so he could only choose to trust Yu Kai's team. If they could achieve mass production, Tan Jincheng's gains would be enormous.

Even if the technology is slightly behind during special periods, the benefits of mass-producing domestically made automotive-grade chips are immeasurable.

Tan Jincheng's ambition is to develop mass-producible automotive-grade chips through Horizon Robotics, which would allow Weilai to capture nearly half of the domestic and international market share of automotive-grade chips for new energy vehicles.

"Welcome, boss, for your inspection."

Yu Kai had heard that the boss was coming today, and greeted Tan Jincheng with a smile. Recently, the boss has been inspecting properties all over the country. Like a tour, he stays in each place for a few days. It's not that people are panicking, but everyone is taking it very seriously.

Weilai has only been established for less than five years. While it doesn't suffer from the typical problems of large corporations, it does have its share of minor issues. Tan Jincheng is particularly concerned about the procurement departments in each region, as he wants to prevent a situation like that of a certain car company where overall procurement costs are 20% higher.

"This must be Mr. Li, I've heard so much about you."

Yu Kai greeted Li Xiang warmly. His boss's move was truly brilliant: merging Yiche with Autohome, and then inviting Autohome's CEO to join Weilai—this operation was unmistakably internet-savvy. Li Xiang had been Autohome's CEO for so many years; his abilities were beyond question. His relationships with the media and major OEMs alone would be a significant help to Weilai.

This year, putting aside everything else, in terms of media resources, the combination of Autohome and Bitauto almost makes Weilai invincible in terms of public opinion.

Oh, right, the boss also invested in ByteDance, which is also a media company. One of their posts already has over 5000 million users, making it another rising internet company.

"Not at all, Mr. Yu is the role model I should learn from. I'm here today mainly to broaden my horizons with the boss."

Horizon Robotics currently has two teams: one researching automotive-grade chips, and the other, formerly known as the W3D Intelligent Driving team, researching intelligent driving assistance systems. Currently, they are researching a prototype ADAS product system for lane line/vehicle/pedestrian detection.

This system now has its own name: "NIO Pilot".

According to industry norms, if a new product has a name, it means that it has achieved some success. Wei Lai's L2 intelligent assisted driving system has already achieved some success.

Tan Jincheng plans to make a big push when the second-generation ES6 is released, fully implementing the L2 intelligent assistance system to truly make new energy vehicles intelligent. Since the advancement of new energy vehicles seems to have been a bit too fast in this lifetime, he doesn't mind making the speed even faster.

In the original timeline, Tesla entered the Chinese market in 2014, but now it's clearly a year earlier. The launch of the ES6 was even earlier, and the current market response is quite good, so speeding up the process shouldn't be a problem.

When the second generation of ES6 was launched, 4G was already fully commercialized, and there were no problems with the network.

"Haha, no problem, please go ahead, boss. I'll show you our research results. Let's start with the intelligent driving system. There were no problems with the intelligent driving direction when Wei came here before, so we can get started very quickly after taking over."

People with technical skills speak with authority. Yu Kai's implication was that the previous intelligent driving team was technically incompetent. However, Tan Jincheng couldn't refute this, as the previous intelligent driving team did indeed seem like a makeshift operation.

"Will the L2 intelligent driving system be mature when the second-generation ES6 is launched?"

The planned second-generation ES6 will undergo an iteration after 2015 to adapt to the 4G era. At that time, it will be fully equipped with an L2 driver assistance system. We won't discuss how much it will actually be useful, but it will definitely be a great selling point.

"There's no problem. We can start updating and testing it on the existing vehicle infotainment system, but it still needs more fine-tuning."

"That's good. We don't understand the technology, so we'll leave it to you guys. Just make sure you can keep up on schedule."

Horizon Robotics currently has only 50 employees, but this team of 50 is considered top-notch in China, and its expenses are no less than those of any large company.

Signing up with Horizon's financial statements every month would make even the most frugal boss feel like they're being ripped off.

Since the boss didn't understand technology, Yu Kai couldn't use too many technical terms, so he had to use written demonstrations and on-site simulations to make it as easy to understand as possible. However, one thing that made Yu Kai happy was that the boss's comprehension was definitely not low.

He can't use the technical jargon, but he understands many companies very quickly.

"Actually, we can optimize the automatic parking system in the future, which will attract more female users and male users who are not very good at parking."

Female drivers have always been a topic of discussion in society, but we can't ignore this consumer group. As long as they look good, they don't care about the features. If they can also improve their parking skills, their reputation will be even better.

"That's a good direction, but I have a question. Besides ensuring the supply of products to Weilai, how should Horizon Robotics cooperate with other car companies in the future?"

"We should cooperate however we see fit. Horizon Robotics is an independent entity. You can also provide intelligent driving solutions to other car companies. They can use our solutions directly without any problem, as long as they pay us."

"At that time, you can divide the customer group into levels such as T1 and T2, and provide different solutions according to the level, which can also generate some revenue for you."

Horizon Robotics also needs to take on some business, such as developing intelligent driving systems for other manufacturers, or even developing intelligent systems for some appliance companies. Smart homes are nothing new, after all.

This way, the company can generate some business and offset some of its R&D costs.

Yu Kai nodded: "Understood, then I'll start taking orders as usual. But don't worry, boss, we'll definitely put our own company first."

It seems the boss's plan is to make Horizon Robotics completely independent of the BYD system, reducing its influence from the BYD group, rather than having it be solely subordinate to BYD like BYD Semiconductor.

"Haha, just go ahead and do your job. My dream is for you to turn Horizon Robotics into a unicorn company within a few years."

Yu Kai was somewhat surprised: "Huh? Boss, you've also heard of the unicorn company concept?"

The concept of unicorn companies was proposed by an American entrepreneur at the beginning of this year. It refers to high-tech companies that have been established for less than 10 years, have a valuation of more than $10 billion, and are not publicly listed.

Even people in the US don't know about this, and very few people in China would even mention it.

"Yes, I know, but I think a valuation of 100 billion US dollars is too low for a unicorn. I think it should start at least at 10 billion US dollars."

At the current valuation of $10 billion, there are truly unicorns everywhere.

Xiaomi and Weilai can both be considered unicorn companies. In addition, it won't be long before Kuaidi and Didi will also join, not to mention Meituan. It's already 2013, and they're still talking about 10 billion US dollars. This way of thinking is too outdated.

"100 billion?"

Yu Kai's eyes gleamed with surprise. He hadn't expected his boss to be even more ambitious than him. But what he said wasn't wrong; a valuation of 10 billion US dollars was indeed too modest.

"Yes, 100 billion. Just work towards that goal. I believe you can do it."

Speaking of unicorns, there's a reason why Tan Jincheng chose Beijing as the last stop of his national inspection tour. It's because Baidu's CEO, Li, finally couldn't hold out any longer. After a year of harassment, they were determined to acquire 91 Mobile Assistant!
This time, the handsome Li personally called Tan Jincheng to arrange a meeting.

Baidu, with its deep pockets, has increased its offer for 91 Assistant, currently the world's largest mobile application software, from $2 million last year to $18.5 billion!
Xiong Jun and his team were starting to feel the strain.

$18.5 billion, with Xiong Jun and his team holding 15% of the shares, worth $2.8 million. They were really stunned by the price. Tan Jincheng also knew that if they didn't sell soon, something unexpected might happen.

Baidu is helpless. The development of smartphones this year is so rapid it's almost insane. More than 1000 new models are planned for release throughout the year. Take ZTE, one of the "Coolpad, Huawei, ZTE and Lenovo" groups, for example. They plan to release 176 new models this year!
On average, they release a new phone every two days, all of which are contract phones. This market has been completely dominated by smartphones, and another company, Lenovo, should not be underestimated.

Xiaomi is very popular, but only in China. At that time, Lenovo was simply unmatched. This year, Lenovo has even become the world's fifth largest mobile phone manufacturer, and its shipments once accounted for 4.5% of the global market share.

In addition, their PC business is still thriving. Xiaomi is thriving, but it is still a child compared to Lenovo. Lenovo's CEO was in high spirits during this period. At any entrepreneur forum or similar event, everyone was his subordinate.

When Musk gave his speech in China, a certain CEO scolded him like he was scolding a primary school student.

But there's nothing we can do; they're really awesome at this time of year.

"You can stay here for a while or go visit your old friends. That's all for today's itinerary. I'm going to meet with Mr. Li from Baidu this afternoon; he's asked me to meet him."

After having lunch at Horizon, Tan Jincheng let Li Xiang do as he pleased. Meeting the handsome Li in the afternoon was not Wei Lai's business, so it was inappropriate to bring Li Xiang along.

Li Xiang didn't ask anything, just nodded. He really planned to stay here for another look that afternoon. This L2 intelligent assistance system was quite interesting, and he intended to learn more about it.

Baidu headquarters.

Tan Jincheng had met Mr. Li before, but this was his first time visiting their headquarters. The 2010s and 2011s should have been the most glorious period for Baidu, with its stock price soaring and it monopolizing the domestic search field.

In addition, it has also developed well in other businesses. Baidu Maps is now competing more and more fiercely with Gaode Maps, and its invested Bumblebee ride-hailing app has firmly occupied the top three position in China.

"Mr. Tan, it's been a long time. It's really been difficult to get an appointment with you."

Although I was quite annoyed with this kid, I still had to greet him with a smile. He had so many mobile applications under his belt, so why was he so determined not to sell 91 Assistant? It wouldn't be of much use to your company anyway.

The acquisition team couldn't even get a chance to see Tan Jincheng; he had to handle it himself.

"Haha, how could I dare? I came right away when Mr. Li summoned me."

In 2013, Baidu had a market value of $600 billion, equivalent to six Teslas, ranking second among domestic internet companies. Few companies across all industries nationwide had a market value exceeding this.

"You're not being fair. What do you think, 91 Assistant has to say?"

Mr. Li was very refined. He knew that Tan Jincheng didn't like nonsense, and so did he. So he simply got straight to the point and didn't waste any time.

"Mr. Li, if you're so straightforward, then I won't waste any more words. How about 19 billion US dollars? I made this special trip just for this, so it's worth 5000 million US dollars, right?"

Mr. Li, who was pouring coffee for Tan Jincheng, paused upon hearing this. He had been straightforward, but he hadn't expected Tan Jincheng to be so decisive.

But this kid really dares to say that a single trip is worth 5000 million US dollars?

"Alright, I'll give you face. 19 billion US dollars it is. Now hurry up and call someone to sign the contract."

Damn it, if it weren't for the harsh agreement this kid signed with Xiong Jun's group, and the fact that he was given too many shares, he really wanted to wipe out Xiong Jun's entire team.

Xiong Jun is so stubborn, saying that President Tan had shown him great kindness; damn it, who cares about that these days.

Tan Jincheng shrugged: "I'm fine on my end, I'll notify them right now."

Let's give 3 million US dollars to Xiong Jun and others, leaving 16 billion US dollars. Hehe, isn't that the money for privatizing Gaode? Thanks to the top donor, Mr. Li!
(End of this chapter)