2003: Starting with Foreign Trade

Chapter 929 "Come on, do you think I'm afraid of you?"

"Achieving seventh place in national sales by selling SUVs leaves our competitors speechless."

The traditional peak sales season of September and October didn't seem to work as well in 2018. Compared to last year, the overall sales of the car market declined by 13.2%, and the overall sales of SUVs also declined by 13.2%.

In comparison, Weilai's sales in October declined by 2% year-on-year, but this was much better than the overall market. Thanks to the group's overall efforts, sales have begun to show signs of recovery.

"The series of reforms have been somewhat effective."

In the Shanghai branch, Tan Jincheng was reviewing last month's data. Through a series of reforms, the Yuechi Group's overall sales had rebounded significantly, with the Yuechi A1's monthly sales exceeding 40,000 units.

The Yuechi A1 achieved monthly sales of over 41,000 units, marking its best sales performance since February. Tan Jincheng is quite satisfied with this data, noting that the Yuechi series' sales recovery is commendable given the overall market situation is largely predetermined.

"So far, we have achieved about 78% of our overall sales target, and we are basically confident in our sales forecast for 2018."

Overall market demand is sluggish, sales continue to decline, and smear campaigns continue to escalate. This year can be said to be the year with the most serious smear campaigns, even more exaggerated than the BYD dealer scandal back then.

Great Wall and Geely have already gone to court, but Dizi's situation is even more outrageous. In July, a woman named Li Juan impersonated Dizi and signed an advertising contract worth 11 billion yuan, which dazzled the market. Although there were subsequent reports that some of the advertising companies involved had participated in negative publicity against Dizi's competitors, there is no direct evidence, but the industry suspects that there was a use of black public relations to suppress competitors.

The funniest thing is the infighting between SAIC Volkswagen and FAW-Volkswagen. Dealers and fan groups from both Volkswagen companies attacked each other on forums and online communities. Although it was not an official action, it reflected the vicious competition at the channel level.

In addition, emerging electric vehicle manufacturers have also encountered various attacks. Wenjie, which went public in September and began delivering vehicles, has been exposed to problems such as system crashes and reduced range.

The abundance of extremely negative content appearing on self-media and social platforms has led to Li Bing's Wenjie being described as an unfinished product. Li Bing has also publicly hinted that some of the content may have come from organized attacks.

Although no specific competitor was named, it is widely speculated in the industry that traditional automakers or emerging competitors are involved.

"It's about right, not bad, but we still need to be careful with these self-media outlets. If we have solid evidence, we still have to sue them."

In a market where overall sales are declining, intensified competition is bound to lead to this situation. Moreover, the rise of short video platforms, led by Douyin, has lowered the barrier to entry for creation. Anyone with ideas wants to make a living through self-media, and the conditions for a collective outbreak of black PR are in place.

The fierce competition among major automakers has intensified since the beginning of this year, and Weilai will also face the same problem, especially the Yuechi series. The Yuechi series, which has always been in a leading position in the SUV market, is blocking the path of other automakers.

Faced with attacks from numerous online trolls, including accusations of high fuel consumption and poor safety performance, it's fair to say that this year, the public relations department has devoted a significant portion of its energy to dealing with these issues.

Just as the wealthy are undergoing a generational shift, the media landscape is also entering a phase of transition. New self-media outlets, in order to make money, will accept these black PR jobs regardless of how famous Mr. Tan is or how well his cars sell.

Wei Lai has its own partner media outlets, but Tan Jincheng is unlikely to spend a lot of money on marketing. Marketing expenses are necessary, but they cannot be outpaced by R&D expenses, Tan Jincheng clearly instructed each company.

"The benefits of the traffic era are obvious, but the drawbacks are also obvious. Some smart self-media outlets are hard to find any evidence of."

"There's nothing we can do about it. Ultimately, the market environment has changed. A few years ago, although there were some black PR tactics, they weren't as obvious."

The current state of the automotive market clearly shows that only the SUV segment still has room for growth, while the sedan market has already reached its current size. In the past two or three years, more and more companies have entered the SUV segment.

If Weilai sells 10 fewer SUVs a year, that's enough for many car companies to get a share of the pie. The same applies to the new energy vehicle sector. Weilai dominates the mid-to-high-end electric vehicle market. In the past, everyone could boost sales and get subsidies by using A00-class models, but this strategy has stopped working since this year.

Internal problems and intensified external competition have kept Tan Jincheng extremely busy this year. In more than ten years, this year has been the most difficult year for him to run his business.

It was even more difficult than when Zhang Xupeng and I started from scratch in 2004.

"Yes, in the end it's because the cars aren't selling. Otherwise, people wouldn't be making such a scene. They're all respectable people."

Tan Jincheng has always attached great importance to media resources, from Yiche to Douyin, including the management of his personal IP image, all in order to provide companies like Weilai with an additional channel for dissemination.

In addition, Weilai has always been quite restrained in its marketing. It's true that they might make fun of competitors or engage in some defamatory behavior, but they would never use smear campaigns against their rivals.

Therefore, although most competitors would attack Weilai's products and use social media to smear them, they were still better at competing with other companies. In addition to these, Tan Jincheng was also quite ruthless.

For self-media outlets that deliberately smear others, once you have collected concrete evidence, you can directly sue them one by one. Although this may seem like a form of suppression, it does serve as a warning to others. You can make money from this, but you should also be prepared to suffer the consequences.

Once you're sued, paying compensation is a minor issue; in serious cases, the officer might actually send you to jail.

For example, a certain car blogger fabricated a review and spread rumors that the Weilai ET5 had safety hazards. Electric vehicles do indeed have safety hazards, and Weilai has always emphasized the importance of safe driving in its advertising.

If the review were truly honest, then even if Wei Lai was unhappy, there was nothing he could do. But the problem is that this guy is doing the review by spreading rumors, hiding some key features. Of course, it's also possible that he didn't know that either.

Having gathered concrete evidence, the legal department of Weilai didn't hesitate and immediately filed a lawsuit, sending the blogger to jail.

If it weren't for the involvement of other car companies' public relations efforts, no one would believe it. However, this person used inappropriate methods to attract attention. The legal department was responsible for sending the person to jail, and the public relations department also conducted publicity campaigns for this incident. A relatively major crisis has become a point of publicity for Wei.

"Alright, just keep an eye on it. I have to go to Tesla, so I'll leave this for now. There are less than two months left, so we must find a way to ensure the sales of the Yuechi series."

Sales have started to recover, and Boss Tan is in a good mood. His efforts since the second quarter have finally yielded some results, and it has also paved the way for Wang Fengying to take office.

Wang Fengying can be seen as a troubleshooter for the Yuechi series, but if she can make the independent Yuechi company run more smoothly, it can also be seen as a way for Tan Jincheng and Yuechi company to prove themselves.

With the boss personally taking charge, and catching the worst-ever peak sales season of September and October, sales have still managed to rebound. Isn't that a great gift for the new leader?

According to the plan, Wang Fengying will join Weilai on January 1, 2019, as Senior Vice President of Weilai and General Manager of Yuechi Company. Great Wall will announce the news of Wang Fengying's resignation as a director at the end of this month.

From July to November, a four-month handover period, Wei Lai officially stepped down from all positions at the end of November, leaving a month of free time in between. This was something Wei Lai and Chang Cheng had agreed upon, as it was Wei Lai giving Chang Cheng some face.

Otherwise, it would be too embarrassing for Wang Fengying to announce her resignation from Great Wall and then be officially announced to join Weilai, especially since Weilai's overall sales this year have already surpassed Great Wall's.

Great Wall Motors, which used to be number one among domestic brands, has fallen to third place this year. Geely, with its explosive growth across the board, and Weile, which is taking a step-by-step approach, are gradually eroding Great Wall Motors' original market share, plunging Great Wall Motors into various controversies this year.

However, this is the growing pain of a company in transition, and Great Wall needs to overcome it on its own. Mr. Wei expressed regret over Wang Fengying's departure. Great Wall needed to rejuvenate its senior management, and Wang Fengying's departure was inevitable.

However, Mr. Wei did not expect it to happen so quickly. According to his original plan, Wang Fengying would work for another two years to help the younger generation, and then retire or leave office, which would be the ideal situation.

Of course, if that's the case, he certainly wouldn't be stingy and would provide a decent pension.

Unfortunately, what he didn't know was that Tan Jincheng had been eyeing Wang Fengying ever since Zhang Li joined the company, and had never given up on it for nearly ten years. This time, he offered her even more generous benefits and absolute power.

Compared to the treatment offered by Tan Jincheng, what Great Wall offered was not good enough. Although both are listed companies and both are key figures in their respective companies, Tan Jincheng's words carry much more weight in the Weilai board of directors than those of Boss Wei.

After many years of development, it is almost inevitable that the founder's voice will decline. Tan Jincheng's voice has declined to some extent because he bullies Lao Wei. Of course, Lao Wei has also done some unethical things.

That is, the proposal for equity incentives for Wang Fengying was actually rejected by the chairman of Great Wall. If Lao Wei had stood up to support Wang Fengying at that time, there would have been no reason why the voice of the board of directors could not be suppressed.

It's just giving out some stocks, it's not a big deal. It's already outrageous that this was rejected, and it's even stranger that Lao Wei didn't step in. In fact, Tan Jincheng had already seen an opportunity after that rejection.

On the surface, it was the rejection of equity incentives, but in reality, it was an internal power restructuring. Mr. Wei's decision not to side with Wang Fengying at the time actually demonstrated his stance.

Although he had prepared in advance, Boss Wei was still somewhat unhappy about Wang Fengying joining Weilai. The two companies were similar in appearance and spirit, and were also the most direct competitors. Yuechi and Haval series were vying for each other's market share in the traditional fuel vehicle market.

As a latecomer, Wey directly attacked the mid-to-high-end electric SUV market of Weilai. It was very successful in the first half of the year and did affect Weilai's sales. However, in the second half of the year, with the reduction of subsidies, it completely lost its momentum.

With subsidies waning, consumers are clearly more inclined to trust the Weil series, which has been deeply rooted in the high-end electric SUV market for many years. A few years earlier, Weil might have had some opportunities, but now it seems unlikely. Weil can be seen as a major obstacle for Great Wall Motors in the high-end pure electric SUV market, and Great Wall currently has no way to deal with it. Under these circumstances, the fact that the company's second-in-command has joined a direct competitor is a significant blow to Mr. Wei.

The relationship between the two companies' top executives has thus reached a freezing point. Both sides are aware of Wang Fengying's joining the company, but both bosses have issued a gag order, prohibiting them from making any disclosure to the media.

Mr. Wei issued the gag order because he felt ashamed, while Tan Jincheng issued the gag order because he didn't want to embarrass the other party too much. After all, it's unrealistic for two companies in the same industry to say they won't cooperate at all; they will have some business dealings to some extent.

Taking advantage of someone and then going too far is a bit much and will also have a negative impact on Wang Fengying herself. Wang Fengying has made it clear that there will be no big welcoming activities for joining Weilai, and everything will be kept low-key.

Currently, in the pure electric high-end SUV market, only Tesla can compete with Tesla. However, Tesla is also facing considerable trouble, as rising tariffs have prevented the price of Tesla's imported models from being reduced.

Take the Model 3 as an example. With a 25% increase in tariffs, a Model 3 would cost around 40 yuan to enter the domestic market, which obviously doesn't offer much of a competitive advantage.

If it were to be produced domestically, the price of the E-D3 could be at least 10 yuan cheaper, allowing it to compete with the ET5.

"Tan, you guys are really fast."

Wearing a safety helmet, Factory Director Ma and Tan Jincheng were inspecting the Tesla Shanghai Gigafactory project site. They were specially invited by Musk. The two chatted and laughed, and it was hard to tell that just a few weeks ago Tan Jincheng had threatened to cut off the battery supply to Tesla.

Since Tesla's Shanghai branch was registered in May, the Tesla Shanghai Gigafactory has achieved the miracle of signing the contract, acquiring the land, and starting construction all in the same year. Currently, Tesla's Gigafactory has completed land leveling, foundation construction, and other projects.

According to the infrastructure schedule provided by the project team, the main structure of the Shanghai Super Factory will be capped in January next year. Completing the infrastructure construction in ten months is simply a miracle.

"Don't even mention you finding it unbelievable, I find it unbelievable too. I'm quite envious of this speed."

The total investment plan is 50 billion yuan, with a planned annual production capacity of 500 vehicles. The first phase of the project alone is planned to have an annual production capacity of 25 vehicles. This super factory was completed in just ten months.

It's still the most difficult foreign-owned enterprise to get approved. Looking around, every owner of a domestic car company is incredibly envious.

The importance of infrastructure construction for a car factory is self-evident, but it is also one of the riskiest projects. The same is true for local governments. To put it simply, if something unexpected happens during the process of investing in and building a factory, and construction is halted, then the entire operation will be shut down.

Unfinished buildings are famous, but there are just as many unfinished factories.

For companies like Tesla that are constrained by production capacity, the risks are actually greater. If the factory construction period is too long and the factory manager does not provide sufficient financial support during the construction process, then it's all over.

Not only would he be ruined, but the Shanghai Stock Exchange would also face enormous pressure. Therefore, even if the factory had started production a month earlier, the pressure on both sides would have been much less.

The fact that the Shanghai factory was able to complete the project so quickly is simply because both parties had this need, and it is also a product of specific circumstances.

Even if the local government attaches great importance to the investment and construction of companies like Weilai and BYD, and no matter how much funding is prepared or how advanced the infrastructure is, it is difficult to replicate such a situation.

Under normal circumstances, it would be quite fast for a factory like Yuewei to be completed within 12 months and put into production within 16 months.

In just over a year, the market changes unpredictably. By the time your factory is built, it may be obsolete. This is why many new players are unwilling to build their own factories. Without sufficient orders, even if they have a lot of money, they find it difficult to have the courage to do so.

This is not just a problem for the automotive industry; in fact, it is a predicament for most physical businesses, especially in the current complex economic environment.

"Haha, our Shanghai factory will be able to officially start production next year, and we might even be able to roll off the production line in the same year. Tan, are you ready to compete?"

After the tariffs were imposed, in order to protect its North American domestic market and ensure the security of its supply chain, as well as because the tariffs increased export costs, Tesla reduced its exports to China, resulting in a severe decline in sales in China.

Compared to the ES3, which has a starting price of 28.99 yuan and the ET5, which has a starting price of 21.98 yuan in China, the Maodou 3, which now sells for 40 yuan, does the Maodou 3 have any advantages other than being an imported car?
This is no longer an era dominated by foreign brands. The rise of national consciousness and the friction between the two sides have led to increased public recognition of WELAY, a leader in the global new energy vehicle sector.

Especially after Tan Jincheng's strong statement last month, Wei Lai's public approval rating reached its peak. Even though Tan Jincheng strictly prohibited his companies from using patriotism as a banner for publicity and marketing, some consumers still thought about it in that way, and sales increased significantly.

Two extreme examples: Tan Jincheng, who took a tough stance, gained high approval ratings, while a certain brand, once a national brand, saw its image plummet due to this dispute, which even affected Didi, which has been embroiled in controversy this year.

This truly shows how fortunes can change dramatically over time.

"Haha, you think I'm afraid of you? Our ET5 is priced at 21.98 yuan, and even the ES3 is priced at 28.99 yuan. How much do you want to sell it for before you dare to talk about competing with me?"

Musk, in high spirits, was incredibly arrogant, but Tan Jincheng, whose reputation is currently at its peak, was equally arrogant and showed absolutely no humility.

Throughout 2018, the domestic new energy vehicle market accounted for 50% of the global market share, while Tesla, which mainly imports models, only had a market share of about 3% in China. After the tariff increase, the market was almost non-existent, dropping to a freezing point.

However, Tesla does have many fans in China and a huge potential market, which is why Musk is so eager to produce the Model 3 in China.

Musk aimed to build a $3.5 all-electric car. However, based on the current exchange rate, the actual price of the ET5 in China has dropped to $3.25, which is lower than Musk's target of $3.5.

Tesla and Model 3 do have a huge potential consumer base, but ultimately it all comes down to price. If the price is too high, it's highly likely that the ET5 or even the ES3 will be used as a more affordable alternative to the Model 3.

According to the news he saw in his previous life, the first batch of domestically produced Tesla Model 3 should be priced at around 30 yuan. Relying on its excellent supply chain integration capabilities, the domestically produced Tesla Model 3, priced at 30 yuan, can achieve a gross profit of 30%.

Tesla's market share in China has soared from 3% to 15%, which is 15% during a period of explosive sales growth. This guy has made a fortune, and at least half of his status as the world's richest man is thanks to us.

but!

It's hard to say in this lifetime. If we consider the price of the domestically produced Model 3, which was close to 30 yuan, it's uncertain whether Tesla can achieve such a large market scale in a short period of time.

Tan Jincheng doesn't know which consumer will choose between the 30 yuan Maodou 3 and the 21.98 yuan ET5, but he believes Musk wouldn't dare gamble on such a price difference of over ten thousand US dollars.

At the current exchange rate, a starting price of 30 yuan is roughly equivalent to 4.4 US dollars, which is quite different from the advertised 3.5 US dollars. Even if it were priced at 3.5 US dollars, the selling price would still be around 24 yuan.

It's still 20,000 yuan more expensive; the choice is up to Musk.

Of course, if this guy really dares to set the price at a starting price of 24 yuan, then the pressure on the ET5 will be immense, but Tan Cheng doesn't care.

Firstly, if Musk dares to set the starting price in China at 24 yuan, it will inevitably have a serious impact on his gross profit. With a starting price difference of 6 yuan, the gross profit of the Model 3 will be reduced to about 10%.

With a gross profit margin of around 10% for its main models, does Tesla really want to develop like it did in its previous life? Just look at Xiaomi's stock price; its 5% hardware gross profit margin is looked down upon by the capital market.

Tan Jincheng, however, did not care. The ET5 was not Weilai's main model, at least not yet. The ES3, which was comparable to Tesla's yet-to-be-produced Model Y, was Weilai's main model in the new energy vehicle market in the future.

There's also the Weilai L1 and its successor, and the Weilai is priced significantly higher than the L1 to ensure its profit margin.

Using non-mainstream models to wage a price war is something that can be easily sustained with the current budget. Even if Musk really sets the starting price of the domestically produced Model 3 at 24 yuan and completely kills the ET5, it would still be a good thing.

"Haha, I'll give you a surprise, see you next year!"

Tesla's pricing policy for the ET5 in China is indeed a major headache for Elon Musk. Tesla is determined to achieve significant sales in China, a market it values ​​most in the future. However, before even officially entering this huge market, it is already facing resistance from a giant.

The progress of the Gigafactory, the accelerated entry into China, and the enjoyment of the huge market and high-quality supply chain system have given Musk unprecedented surprises. However, his several visits to China have also made him increasingly aware of the pressure that the US is putting on Tesla.

However, none of this bothered him. Musk, who was extending his hand to give a high five, was filled with fighting spirit as he faced his competitor who was 14 years younger than him.

Tan Jincheng smiled and extended his palm, saying, "I'd be happy to keep you company."

Isn't it a kind of fun when today's partners become tomorrow's biggest competitors?
(End of this chapter)