2003: Starting with Foreign Trade

Chapter 899 The Role of Wei Chi Power

"What we lack now is a decent vehicle manufacturer to fill the gap."

On the last working day of June, the leaders of the Economic Development Zone who attended the groundbreaking ceremony of the Yuchi Power Automobile Co., Ltd. factory were very excited and said the words they had been looking forward to for a long time in front of the camera.

Just like a large shopping mall, fast food chains like KFC, McDonald's, and Starbucks may not be the best, but without them, it feels like something is missing, and people unconsciously think the mall isn't high-end enough.

As a national-level economic and technological development zone, Zhangjiagang Economic and Technological Development Zone has established itself in the Yangtze River Delta region with its "two new and one high" industrial structure.

There are many new energy, new materials, and high-end equipment companies, and several of them are listed on the A-share market. However, the problem is that these companies are not well-known enough, or rather, they are not well-known among the general public.

To put it simply, if a development zone organizes a group recruitment event, will the promotional effect be the same whether it's advertised under the name of XX Auto Parts Company or under the name of Weilai or BMW?

Zhangjiagang City attaches great importance to the settlement of Weichi Power, and has directly defined it as the "No. 1 Project" this year.

According to the plan, the Yuchi Zhangjiagang factory covers a total area of ​​approximately 930 acres, with a building area of ​​approximately 28 square meters after completion. It includes four major workshops for stamping, welding, painting, and final assembly, as well as an analysis center, a PACK workshop, a test track, and other supporting facilities.

All of the vehicles produced are pure electric passenger vehicles. With a total investment of 51 billion yuan, it is currently the most advanced intelligent manufacturing plant in China and the only production base in China that focuses on pure electric passenger vehicles.

As a smart factory, the number of employees at the Weichi Zhangjiagang factory will not be large, estimated at around 3000. However, a complete vehicle manufacturer can drive the upstream and downstream industrial chains and promote the industrial upgrading of new energy component companies in the Economic Development Zone.

Not only Zhangjiagang City, but also the Jiangsu Provincial Government has listed Weichi Power as a major foreign investment project, as a model for regional economic transformation.

Actually, this thing was signed by a leader surnamed Li who has since been transferred to Shanghai.

BMW also has high expectations for the Zhangjiagang plant, hoping to make it a benchmark factory that meets global regulations and market requirements.

"We are very grateful for all the help provided by your city. We and BMW will do our best to get this factory into production as soon as possible, and strive to enable BMW MINI to be shipped from Zhangjiagang's port to all parts of the country and the world."

The speed at which Tesla's Gigafactory was built, thanks to the efforts of its founder, Jack Ma, and the Shanghai Stock Exchange, has truly astonished the world. The project was initiated, construction began, and production commenced in less than a year.

The Yuchi factory is not as large as Tesla's Gigafactory, and Zhangjiagang City cannot compare to Shanghai City, but Tan Jincheng still hopes that the factory can start production in July next year. Building a factory in 12 months is not too unreasonable.

Most importantly, Tan Jincheng wanted the MINI Cooper to catch the tail end of the subsidies. According to the regulations of the four ministries, the subsidies for new energy vehicles will end on December 31, 2022.

Although there are still five years to go, the subsidy policy will definitely decrease year by year before then. The best time will probably be around 2020. If the pure electric version of MINI Cooper can be officially launched by the end of next year, then we can still get some benefits.

In addition, there is more room for pricing. The pricing methods with and without subsidies are completely different. There is a big difference between a falsely advertised price of two or three hundred thousand and actually taking two or three hundred thousand out of your pocket.

"We will definitely cooperate fully. Everyone in China knows that Mr. Tan and your company value efficiency. Rest assured, we can absolutely guarantee the construction period and the quality of the project."

After Labor Day, Weilai’s investment projects in various places are in full swing. The two plots of land acquired from Lifan in Shancheng are being rapidly transformed. The first domestically produced Lotus series vehicle from the Lotus Jiangcheng plant has also officially rolled off the production line after multiple rounds of testing.

In addition, factories in cities like Luzhou, Ningbo, and Shanghai have also developed new planning schemes.

According to data from the International Energy Agency, global sales of new energy vehicles from January to June this year totaled approximately 45 units, with the Chinese market accounting for about 43.3% of the global market share, or about 19.5 units.

According to Weilai's own big data model and its own sales statistics, these two sets of data are basically accurate. Weilai sold approximately 6.5 vehicles from January to June.

This success was partly due to the sales of over 5000 vehicles in the European market. Sales were so-so, but they still managed to capture about 5% of the market share in Europe, which could be considered as opening up overseas sales.

Despite a drop in domestic market share to 30%, the three leading companies – BAIC, BYD, and BAIC – still control over 70% of the national new energy vehicle sales.

Globally, Toyota performed strongly in the first half of the year, briefly losing its position as the world's number one in new energy vehicle sales before regaining that position thanks to strong sales of its newly launched models in its home and North American markets.

Despite not opening up the North American market, Weilai returned to second place with a market share of 13.33%.

The lack of the North American market is a weakness for Weilai, but even without the North American market, Weilai is still able to maintain a market share of 14.19%.

Despite concerns about the North American market, the inability to penetrate it has been a major worry for Tan Jincheng and Wei Lai. They are reluctant to invest too much, unsure of what the future holds, but they are also unwilling to sell anything at all.

Why can Tesla make money from us, but we can't make money from Americans?
The current collaboration between Weichi and BMW has given Weilai and Tan Jincheng a glimmer of hope, perhaps allowing them to open up Weilai's sales in North America in another way.

Yuchi Automobile, with a final annual production plan of 16 pure electric vehicles, integrates BMW's global quality management system and Yuchi's efficient production experience from a technology integration perspective. It applies cutting-edge technologies such as intelligent production lines and digital management platforms, focusing on the research and development of electrification and intelligence.

The former is BMW's advantage, while the latter is WILER's advantage. In terms of intelligent technology, WILER has already gained a certain voice.

One notable feature is that the Weilai L1 has replaced Mobileye's intelligent driving chip, and uses Horizon Robotics' Journey 1 intelligent driving chip.

After being acquired by Intel, Mobileye also engages in the development of intelligent driving chips. Its customers are mainly from gasoline vehicles and entry-level new energy vehicles, and its market share is relatively high globally.

However, this company has a major flaw: it controls its own technology too strictly, delivering it as a black box and creating a closed loop between hardware and software, leaving car companies no room to develop their own software.

With Intel as its backer, Mobileye is quite assertive, even towards Tesla.

If you eat all the meat yourself and try to be a closed-off, egotistical company, you're bound to lose customers. Tesla developed its own autonomous driving system because of Mobileye's attitude, and decided to do it on its own in a fit of anger.

The same applies to Wei Lai. The Horizon Robotics startup team, supported by Tan Jincheng, actually thought of making a domestic alternative to Mobileye as soon as they decided to make intelligent driving chips.

With insufficient computing power, it's still quite difficult to play with high-end chips for the time being. Starting from the low end and capturing a portion of the market to survive is the priority.

With an open and confident spirit, Horizon Robotics does not follow Intel's model and does not prohibit automakers from developing their own software. The Weilai L1 is the first model equipped with Horizon Robotics' technology and represents a breakthrough for Horizon Robotics in intelligent driving chips.

With the strong sales of the L1, Horizon Robotics' Journey 1 intelligent driving chip has also gained some exposure, showing initial promise in its domestic substitution of Mobileye. This is a big step for Horizon Robotics and also a big step for domestic substitution.

The WILAI L1 performed well in intelligent driving, which was one of the driving forces that ultimately led BMW to decide to cooperate.

Even Tesla, a mainstream electric vehicle manufacturer with the same roots in North America, couldn't stand Intel's closed and monopolistic approach. How could BMW, which maintains an absolute dominant position in the gasoline vehicle market and has been committed to localization, possibly tolerate this?

In fact, it's not just BMW that can't stand it; most OEMs that want a piece of the intelligent driving market can't stand it either. To a certain extent, although it's a range-extended electric vehicle, the performance of the Weilai L1 in intelligent driving has received a lot of attention in the industry.

If Journey 1 doesn't have any major problems, then Mobileye is not far from being completely kicked out of the low-end intelligent driving chip market.

Horizon Robotics, which has been around for many years, has attracted the attention of many institutions and car companies after launching specific products to the market. Currently, several investment institutions, including SK Hynix and Volkswagen, have been in contact with Yu Kai.

Currently, Hynix is ​​likely to reach an investment agreement. As for Intel, which previously thought Horizon Robotics' Series A funding was too expensive, it has returned to the negotiating table and is now interested in investing in Horizon Robotics again.

Previously, they thought it was too expensive and couldn't bear to spend an extra two coins, but now they're rushing to do things that are so abstract. Intel has done this kind of thing quite often over the years.

Between 2014 and 2015, they sold one of their companies, which was dedicated to developing artificial intelligence chips, at a low price. However, in March 2016, Google's AlphaGo defeated Lee Sedol, which completely changed the world's perception of artificial intelligence.

This landmark event also marked the beginning of Nvidia's explosive growth, because AlphaGo used Nvidia's chips and computing solutions. The marketing savvy Jensen Huang immediately announced that Nvidia was no longer a semiconductor company, but an artificial intelligence company.

Intel saw that this was a good opportunity and wanted to buy back the company. They are currently in negotiations. They're really pulling one stunt after another.

Another issue is mobile phone chips. Apple, which has been plagued by Qualcomm's tax, originally wanted to team up with Intel to compete, but the established technology company failed to live up to expectations, leaving Apple to do it alone.

However, Apple is not doing well either. Apple has its own Apple tax, but even a powerful company like Apple has to swallow its pride and accept the Qualcomm tax.

Strategically, Wynn and BMW are in complete agreement. The two companies cooperate in technology and management, and Wynn also adopts an equal management model. The two parties jointly form a management committee to ensure balanced decision-making.

In terms of sales channels, the electric vehicles produced by Yuchi are sold through the sales networks of BMW and Yulai respectively, with MINI models sold through BMW channels and Yulai models promoted through its own network.

The two parties adopted an innovative cooperation model of joint venture without joint operation. Even so, Weilai was still able to gain some advantage over BMW in the global market and also had a breakthrough in its layout in the North American market.

Because of the old man's influence, we dare not invest on a large scale in his territory, but we can try in North American markets such as Canada and Mexico. In addition, we can also do some promotion in the South American market.

Getting Weichi back on track as soon as possible will greatly promote Weilai's global expansion strategy.

July 1st. The day after Weichi Power held its groundbreaking ceremony in Zhangjiagang City, another major event occurred in Luzhou.

"The palace intrigue drama is finally over."

JAC and Volkswagen have officially signed a cooperation agreement to establish a joint venture similar to that between WooLong and BMW. The two companies plan to build a joint venture factory in the Luzhou Economic Development Zone by the end of this year, with an expected annual production capacity of 10 pure electric vehicles. The basic approach is similar to that of WooLong; the establishment of these two joint ventures, one after the other, officially marks the beginning of a new era of joint ventures.

Upon returning to the Shanghai Stock Exchange, Tan Jincheng once again encountered the eccentric Elon Musk.

How are the negotiations progressing?

Having spent some time in the country, Musk has shown a significant change in his energy and spirit, and the tall tech visionary is now wearing a smile.

"The progress is going well, just as you said, Tan."

In fact, Musk initially wanted to locate the Gigafactory in Beijing. However, after extensive research and consideration, and after listening to Tan Jincheng's advice, Musk decided to focus on the Shanghai market.

On the one hand, the advice provided by partners who are familiar with the ways of the world in China is very useful; on the other hand, the scale of Weilai's battery factory in the Lingang area is also something Musk cares about.

Imagine how much cost Tesla would save by having its Shanghai Gigafactory so close to the factory of its core battery supplier.
As Tan Jincheng said, the Shanghai Stock Exchange has shown considerable sincerity in this cooperation, promising to promote Tesla China's wholly-owned subsidiary plan through policy initiatives.

This alone is enough to justify the negotiations of the past two weeks and to make his wait worthwhile.

"That's good. This way, our cooperation can officially begin sooner."

From January to June, Tesla delivered approximately 4.7 vehicles globally, with a market share of about 10%. Considering the order volume of the Model 3, this delivery volume is simply shameful. With the release of this data, Tesla's stock price in July looks like it's going to collapse again.

If it weren't for the good progress in negotiations with the Shanghai-based super factory, Factory Director Ma would probably have lost his temper again.

The two parties, Weilai and Tesla, plan to sign a new battery cooperation agreement through Jinshidai and Tesla (Shanghai) Co., Ltd.

According to the preliminary agreement reached with Musk, Jinshidai's battery cooperation plan with Tesla will be extended to December 31, 2021.

The Maodou S, Maodou X, and Maodou 3 will all be equipped with the new Xuanwu series power batteries, and the largest supplier is the Maodou 3, which Musk plans to produce domestically.

According to Musk's plan, the Gigafactory will be used to produce most of the demand for the EVO 3 after it is built, and the main battery supplier will be the domestically produced EVO 3.

Whether Tesla's Shanghai Gigafactory project can be quickly put into operation will directly affect the performance of Weilai Power Battery.

"Yes, I hope so."

Progress is good, but Musk also has his troubles. The wholly-owned company is only the first step, and the funds needed for the second step of building the factory are also giving him a headache.

Where will the billions of dollars in construction funds come from? This is also a problem that Musk needs to solve.

In addition, the Shanghai Stock Exchange's active cooperation must be driven by strong demands. Since you, Musk, insist on 100% sole ownership and break through the traditional joint venture framework, we can make concessions, but we can't let you take all the benefits.

After two weeks of urgent communication with higher authorities, the Shanghai Stock Exchange's demands, based on the overall situation, are very simple: to demand technology spillover and localization of the supply chain.

Following the Apple model, introducing Tesla can force the upgrading of local supply chain technology and give rise to a group of world-class suppliers in the new energy vehicle industry.

The localization of the supply chain has benefited the most Weilai, which mainly supplies batteries. In addition, Ningbo has also benefited greatly, with Beicang parts companies, including Xushen and Top, being suppliers to Tesla.

Once fully localized, these companies will undoubtedly experience rapid growth.

Tan Jincheng returned to Shanghai after finishing his trip to Zhangjiagang, also to help Musk come up with ideas to accelerate the progress of the cooperation.

"Lack of money?"

After Musk shared his predicament, Tan Jincheng was also stunned.

"Is Wall Street no longer providing you with financing?"

Musk spread his hands, pursed his lips, and said helplessly, "You've seen our stock performance recently. If it weren't for the progress in this negotiation, who knows how low it would have fallen. Do you think we can raise enough funds?"

"In addition, geopolitical reasons also make these capitalists very hesitant."

Since taking office on January 20, the old man has been doing endless things in the past five months, dismissing this person and that person, leaving groups, and overturning the policies of his predecessor. He has been very busy.

They also threatened to use some methods against the Russian bear, basically doing all sorts of dirty tricks, and their attitude towards us wasn't very good either.

Wall Street capitalists were indeed hesitant to grant Musk too much funding under these circumstances, especially since he didn't have a great reputation on Wall Street.

Tan Jincheng was also speechless: "Then what do you want to do?"

This guy is truly a madman. The Shanghai Super Factory plan he just mentioned is to build an electric vehicle industrial base with an annual production capacity of 50 vehicles, with a total investment plan exceeding 70 billion US dollars.

Based on the current exchange rate, the total investment is approximately 500 billion yuan!
Damn, this "poor bastard" is really bold.

Well, you can't really call him a poor guy. Musk's net worth is about the same as Tan Jincheng's right now. Although Tesla has been targeted by short sellers recently, the combined effect of several months of short selling and Musk's counterattacks still puts it at around $460 billion in market value.

This is the advantage of the US stock market: a car company that delivered less than 50,000 vehicles in six months has a market value of 3128 billion yuan, ranking fifth in the world.

If Tesla were listed on the A-share market, given its current negative factors, scale, and the unpredictable behavior of its controlling shareholder, even with very good expectations, a market capitalization of 1000 billion yuan would be the highest it could achieve.

"We don't have any leads yet. I'm planning to raise funds in China. What do you think?"

Tan Jincheng was directly involved in Tesla's negotiations with the Shanghai Stock Exchange. In Musk's words, Tan Jincheng was like his personal advisor, so he didn't mind letting Tan Jincheng know some details.

"It's not impossible, but what can you give us?"

Damn it, this guy is trying to use orders to "get something for nothing," but it's 2017 now, not 1997. The so-called technology for market access trick obviously won't fool us anymore.

It's certainly possible to raise funds, but you must offer more benefits in exchange.

It's true that the higher-ups intend to bring in Tesla to create a "catfish effect" in the new energy vehicle industry, similar to Apple's model. Tesla is indeed the best choice. However, whether Tesla can replicate the industrial effect driven by Apple, and whether Musk will keep his promises, are all uncertain factors.

The massive investment plan of nearly 500 billion yuan was enough to make even Tan Jincheng, known as the "Cash King of Zhejiang Province," tremble with fear. Why would investment institutions in Shanghai or across the country give you money?

"Yes, what can I offer?"

Tan's words were direct, but Musk didn't find them offensive; business cooperation is inherently an exchange of interests.

"Take your time to think about it. I have some things to do back in Ningbo. If you have time, you are welcome to visit Ningbo. You can also contact me anytime if there is any progress."

"If it's inconvenient for you to come forward, I can communicate on your behalf."

In 2008, the U.S. Department of Energy provided Tesla with a low-interest loan of $4.65 million, which became the key funding for the mass production of the Model S.

This money saved Tesla from its near collapse; without this low-interest loan, there would be no Tesla as we know it today.

This guy didn't mention any specific financing plan or any institutions to him. It's obvious he's trying to pull this stunt again. He really does rely on one trick to succeed!
"Okay, I'll think about it some more. I have to go back to China in a few days, so I'll see if I can resolve the funding issue."

"Okay, then I wish you the best of luck."

Factory Director Ma returned to China on July 3rd, working tirelessly for his Gigafactory. He contacted Tan Jincheng several times throughout July, but progress was not smooth. Tesla's stock, which had just stabilized in June, plummeted again in July.

Throughout July, Tesla's stock price fell by more than 10%. In August, it rose somewhat due to increased holdings by several mysterious funds, but then began to fall again in September.

Tesla delivered 2.61 vehicles in the third quarter, including 14065 Model S and 11865 Model X, both setting new quarterly delivery records.

However, the most ordered Maodou 3 only delivered 222 units throughout the entire quarter!
Tesla's stock price plummeted after the data was released. On September 24, Tesla's stock price fell by 7.47% in a single day. Faced with the plummeting stock price and growing customer dissatisfaction due to the delayed deliveries, Musk once again boarded a flight to Shanghai.

(End of this chapter)