2003: Starting with Foreign Trade

Chapter 946 Untying Yuechi (Seeking Monthly Tickets)
P.S.: Happy May Day holiday everyone!

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The competition in the car market in the second half of May began with a live broadcast meticulously planned by Wei Lai. Against the backdrop of the National V and National VI emission standards and major car companies clearing their inventory, the competition remained extremely fierce.

"Japanese brands have started to lower prices too. Goodness, this year is really tough for domestic brands."

The rise of short videos has had a significant impact on professional websites such as Autohome and Bitauto, and forum activity has declined considerably. However, it still hasn't changed the usage habits of some users.

Just like Baidu Tieba, although it has declined, it cannot be completely replaced in a short period of time and will continue to live on tenaciously.

"This is good news for us consumers. Joint venture brands that used to be high-end are now taking the initiative to lower prices to cater to the market. Who would have dared to do that a few years ago?"

Following the widespread price cuts and promotions by luxury brands represented by BBA (BMW, Mercedes-Benz, and Audi), Japanese brands have also followed suit. Two Toyota and two Honda companies have launched major promotions on many of their best-selling models, which has had a significant impact on the already sluggish car market.

Are Japanese brands making a last-ditch effort?

Car enthusiasts on the forum raised this question: although Japanese brands are still the most popular brands in the Guangdong and Guangxi regions, it is an undeniable fact that their sales have declined nationwide.

Japanese brands, which initially captured the domestic market quickly thanks to their fuel efficiency and durability, have continued to set records since entering the Chinese market. Localization has reduced costs and catered to the consumer market.

The three major Japanese automakers, along with niche brands like Mazda and Mitsubishi, once dominated the streets. Despite consumers' cries of boycotting certain brands, sales figures don't lie. In a sense, this represents a kind of progress in consumption.

Consumers prioritize affordability and value for money; other factors are secondary concerns for those at a higher level.

"Japanese companies don't invest enough in new energy vehicles, but they do have their own advantages in gasoline vehicles. It's too early to say they've fallen out of favor."

Boss Wei Lai, who has been jokingly referred to by netizens as someone who uses 5G for internet access, has also taken notice of this topic.

The development of new energy vehicles over the years represents both a strategic shift and a change in consumer trends. This overall trend is irreversible. However, no matter how much oil prices rise, gasoline-powered vehicles simply cannot be replaced in the short term.

In recent years, countries around the world, especially in Europe where environmental protection has become a major focus, have been calling for a complete replacement of gasoline-powered cars. However, apart from places like Norway and Sweden, it is almost impossible for other countries to make such a change, and this slogan has been largely abandoned in the last two years.

The fact that gasoline-powered cars have been sold for so many years naturally indicates that there is demand and market demand. Even companies whose core business is the new energy vehicle market dare not say that they have completely abandoned gasoline-powered cars. The same is true for BYD. Although gasoline-powered cars are no longer the mainstream for them, they still have a portion of their gasoline-powered car business.

The fact that the Nissan Sylphy has consistently ranked among the top sellers of gasoline-powered vehicles is the best proof of this. Criticisms about the Sylphy are everywhere, yet it still sells well, a trait somewhat similar to the Volkswagen Lavida.

"It's fortunate that we don't have a car business, otherwise such fierce competition would really take up a lot of our energy."

The Nissan Sylphy, Volkswagen Lavida, and Toyota Corolla are incredibly competitive. With combined discounts, even the Geely Emgrand, which has always sold very well, couldn't withstand the impact, with sales declining by 20% year-on-year and dropping out of the top ten.

"Mr. Wang is under a lot of pressure after taking over."

Weilai Auto's sales rankings this year are not as impressive. Starting this year, Weilai has separated the sales of gasoline vehicles and new energy vehicles. The sales of gasoline vehicles are attributed to Yuechi Auto, while Weilai only counts the sales of new energy vehicles.

"The market is constantly changing. We had considered these things to some extent, but the impact was indeed huge."

The supply chain reform in Weilai is ongoing. After clarifying the boss's ideas and assigning various reform tasks to different departments, Wang Fengying has more energy to devote to the operation of Yuechi Automobile.

Starting in April, a dual-track system was implemented for parts inventory, increasing the reserves of more core components. In terms of transportation, in addition to increasing rail transport via the China-Europe Railway Express, Weilai also cooperated with major airlines and express delivery companies.

Our long-time partner SF Express, along with other major express delivery companies like STO Express, YTO Express, ZTO Express, and Yunda Express, have all signed cooperation agreements with Weilai. In terms of transportation capacity and safety, Weilai has been able to provide relatively good guarantees.

With the SUV craze waning and joint venture brands drastically reducing prices, the Yuechi A1 remains the champion of the SUV sales chart, but the gap is getting smaller and smaller. Taking this month as an example, only two domestic brands remain in the top ten SUV sales.

Led by the CRV, Japanese brands, which had been plagued with problems in previous years, have made a comeback with improved product strength and service, coupled with major promotions, leaving some domestic brands in a state of utter defeat.

"The A1's average sales are currently steadily between 3 and 4 units, which is quite good. You shouldn't feel too much pressure."

Wang Fengying's joining brought about significant changes to the entire Weilai team. Her pragmatic work style also taught Tan Jincheng a lot. For example, at the Shanghai Auto Show in April, Wang Fengying spent several days at the Yuechi booth.

Unlike most people, she focuses on the feelings of ordinary users. She asks ordinary users about their experience while driving and riding, and asks them one by one, even if there are problems that need to be improved, and writes them down.

The revamped supply chain system is thanks to Wang Fengying, but in addition to being the vice president of Wei Lai, she is also the general manager of Yuechi Automobile. The number of vehicles Yuechi Automobile sells in a year is directly related to her performance.

Faced with a complex market situation, Wang Fengying is under great pressure after returning to work at Yuechi Auto. Although her boss fully supports her, she still has to produce some results.

Aside from bringing some changes to the company, wasn't the purpose of hiring her to save the Yuechi series, whose sales were declining frequently?
"Thank you for your understanding, boss."

Wang Fengying was somewhat touched. The young boss had been very patient with her and even came over to comfort her after hearing some rumors.

"Don't worry about what people outside or inside the company say. In my opinion, the sales of the Yuechi series are already quite good. What you need to do is try your best to maintain this advantage and at the same time accelerate the development of new energy."

The total sales of the Yuechi, Tank, and Yangzi series from January to May were roughly between 30 and 35 vehicles. Some investors may not be satisfied with this figure, but Tan Jincheng is quite satisfied.

"In addition, I have already spoken with Mr. Wang from BYD. In the future, Yuechi can cooperate with BYD in the field of plug-in hybrids, without having to take the company's strategy into full consideration."

"Really? I've never heard of this before?"

Every company has its own strengths. In the field of new energy vehicles, Weilai's strength lies in pure electric and range-extended electric vehicles. In plug-in hybrid vehicles, it really can't compete with BYD. However, when it comes to plug-in hybrids, there aren't many companies in the world that can beat BYD.

The Yuechi series, and even the Tank and Yangzi series, all have plans to develop new energy vehicles. However, among these three brands, the best development in the field of new energy is still plug-in hybrids, since the image of gasoline vehicles is too deeply ingrained in people's minds.

Rushing into pure electric vehicles might not be acceptable to the consumer market.

Tan Jincheng smiled and said, "I just talked about this with President Wang these past two days. For now, it's just a general idea. As for how to cooperate, it depends on your specific negotiations. Whether you can get Dizi's latest technology in plug-in hybrids and learn and digest it depends on your own capabilities."

The live broadcast of the puncture experiment only generated temporary buzz outside the industry, but it had a significant impact within the industry itself.

Weilai's ambition to promote the new national standard for power batteries is now out in the open. A first-class company sells standards, and Weilai aims to be a first-class company.

In the tumultuous past two weeks, there has been a great deal of discussion in the industry about the new national standard for power batteries. Tan Jincheng has also made several trips to Beijing to attend several meetings. If nothing unexpected happens, the new national standard will be released next year.

During the live broadcast, Lu Ruifeng mentioned that the rule that ternary lithium batteries should not catch fire within five minutes after thermal runaway should be forcibly added to the new national standard.

Tan Jincheng also argued this point forcefully at the meeting.

"Have any of you thought about how many lives and families could be saved in five minutes? Also, don't you drive your own cars? What if this kind of accident happened to you?"

"In the face of an accident, everyone is equal."

Tan Jincheng's statement slapped the face of many vehicle manufacturers and even parts suppliers. Unlike some people, since the launch of their own cars, Tan Jincheng has almost always used his own brand's products when he needs a car, whether for personal or official travel.

From the earliest Yuechi A1 to the now quite popular ET5 and ES3, almost every Weilai product has featured Tan Laoban riding in it. Occasionally, he would also be seen driving vehicles, including a Lotus, on the highway between Beicang and Meishan Island.

Meanwhile, some officials claim they want to support domestically produced new energy vehicles, but they are frequently photographed traveling in luxury cars, including Maybachs.

What kind of car one drives is a matter of personal choice, but in terms of publicity, this kind of image presented to the public is not good.

Promoting the establishment of the new national standard is what Tan Jincheng cares about most right now. In this regard, BYD and Boatman Brother share the same interests as him. BYD, which also mainly produces lithium iron phosphate, supports Wei Lai's live broadcast.

The two new energy giants have joined forces to promote the establishment of new battery standards, leaving other small and medium-sized manufacturers with no room to fight back. Even CATL, which mainly uses ternary lithium technology, is not able to compete, despite its rapid increase in global market share.

Wei Lai's early intervention caused Prince Ning to lose his former domineering presence. In fact, some investors even see Ningde Times as Wei Lai's underling, and the intricate relationship between the two makes it impossible not to think in this direction.

It's worth noting that Tan Jincheng himself is one of the directors of CATL's board of directors.

However, Ning Wang is still Ning Wang after all. In order to maintain his market share, he quickly came up with his own countermeasures to deal with the adverse effects of Wei Lai's live broadcast. In addition to conducting collision tests that are also beneficial to ternary lithium, he also increased his research and development efforts in lithium iron phosphate.

"If you can't beat your opponent, join them." This is a phrase that Boss Wei often jokes about. Boss Ning De, who has his own financing platform, fully understands the meaning of this phrase.

"After the meeting in Beijing last time, I talked with Mr. Wang to see if the two companies could cooperate in some areas. For example, we have more advantages in pure electric vehicles, so could we have some in-depth cooperation with BYD in pure electric vehicles? BYD has a huge advantage in plug-in hybrid vehicles, so could we cooperate to develop some plug-in hybrid models?"

"Mr. Wang thinks this is a good suggestion. There is a lot of room for cooperation between us, at least in terms of patent technology."

BYD has its own pure electric vehicle plan, and Weilai also has its own plug-in hybrid plan, but it is used in Yuechi cars. If Yuechi cars use some of BYD's plug-in hybrid technology to develop a hot-selling new energy vehicle, that would not be a bad thing.

“Weilai is an open company, and now Yuechi is also an independent subsidiary. Weilai has its own strategy, and Yuechi has its own strategy. Even if the two have the same strategic direction, the ultimate goal is for the good of the company.”

"Therefore, the parent company will not impose too many restrictions on Yuechi in terms of the choice of partners. You can cooperate with Great Wall."

"What you need to do is select the best partner for Yuechi's development. This partner doesn't need to be Wei Lai."

The Yuechi A1 is currently maintaining a stable monthly sales volume of 30,000 to 40,000 units, but things may change after next year. 2020 is the year of the full-scale explosion of new energy vehicles, and the impact on fuel vehicles is greater than expected.

Do you really think that those joint venture brands are cutting prices on gasoline cars on a large scale this year for the benefit of consumers?

They've been so powerful for so many years, always taking pride in selling at inflated prices. How could they possibly switch markets so easily? It's because they've seen the changing market consumption trends, and if they don't change, they really won't be able to sell anymore.

As an independent car company, Yuechi Auto needs to not only refine its gasoline-powered vehicles but also supplement them with new energy vehicles if it wants to stabilize its sales. Developing new energy vehicles independently now is already somewhat late.

In that case, why not cooperate with excellent companies? Using Dizi's plug-in hybrid system is nothing to be ashamed of; it's a way to make money.

"Okay, I will think about it seriously."

Wang Fengying nodded seriously. In the first five months of this year, the sales volume of Yuechi A1 was less than 30,000 units for three months. Although this was related to the sluggish market, there were still models that bucked the trend and grew.

For example, the parent company's ET5, L1, ES3, etc., as well as SAIC Roewe in the field of gasoline vehicles, the most crucial point is that the Yuechi series has not made any progress overall.

The boss's decision gives Yuechi more autonomy and loosens its constraints on operations, which undoubtedly requires a great deal of determination.

Yuechi and Weilai have always been a unified entity. Yuechi is the key to Weilai's success and a long-term strategic brand. After being separated from Weilai, Yuechi is more like an independent car company.

Going forward, it can be said that apart from having some financial ties with the parent company, Yuechi Auto is no different from any other company.

If Yuechi Auto is spun off and listed in the future, its relationship with Weilai will be similar to that of Lotus and Volvo to Geely. Apart from being owned by the same person, there will be little connection between them.

“Let’s make a three-year agreement. In three years, we can stabilize Yuechi’s sales and make some progress in the field of new energy vehicles.”

"As for sales volume, I won't set too high a target for you. Let's use the average sales volume from 2014 to 2018. Is that alright?"

"By the way, this three-year agreement doesn't count for this year. This year is a transitional year for Yuechi. I won't set too high a goal for you. How well you do is up to you, and I can accept it."

In 2014, Weilai's overall sales relied almost entirely on the Yuechi series. Since 2015, this reliance has gradually decreased, but it is still Weilai's mainstay. Without Yuechi, Weilai would probably have a hard time sustaining its vehicle business.

Wang Fengying smiled and said, "This is not a high request at all. The boss has given such great support. If we still cannot achieve this goal, then I will resign and am willing to give up my equity incentive in the parent company."

The sales figures for the Tank and Yangzi brands were increased, but the target was set at a five-year average, which is roughly between 60 and 70 vehicles. This requirement is indeed not high at all.

"Haha, the second one is unnecessary. I'm not short of money."

Providing support is definitely a task, and this has always been Tan Jincheng's style, whether it's company operations or investments. Take Li Bing's Wenjie as an example, in the early stages, he provided a lot of support, including funding and technology.

Lacking automobile production qualifications, Tan Jincheng used Wei Lai and his own resources to help him obtain them. Without a factory, Tan Jincheng acted as an intermediary to contact the Luzhou government and JAC Motors, providing them with a smooth transition before building their own factory.

He also supported Li Bing's idea of ​​battery swapping. Although Li Bing had secured support from a series of big names such as Tencent, Dongzi, and Lei Jun in terms of financing, Wenjie's development would not have been so smooth in its early stages without Tan Jincheng's strong support.

However, Wenjie's current development direction is different from what Tan Jincheng imagined. In fact, he even disapproves of some aspects of it. So, sorry, the resources have been given to other companies. I'm not playing with you anymore.

Regarding company operations, support was provided, and if targets were not met, the person directly responsible must bear the responsibility.

"Okay, I'll listen to the boss. We'll give it our all and try to live up to the boss's trust."

Wang Fengying, known as the Iron Lady, is a decisive and efficient person. With the strong support of her boss and Yuechi Auto, the goals he set for her were not excessive. If she couldn't achieve something, she would indeed have no face to stay in this position.

"Okay, then I won't disturb your work any longer. I still have to go to Shanghai."

Is it because of the pre-orders for the Tesla Model 3?

Tan Jincheng nodded: "Yes, I'll go and find out."

The progress of Tesla's Shanghai Gigafactory has attracted great attention worldwide. With trial production confirmed in September this year and mass production by the end of the year, the Shanghai Gigafactory has demonstrated infrastructure capabilities that have amazed the world.

The domestically produced Tesla Model 3 will officially begin pre-sales on the last day of this month, but the price has not yet been announced.

Despite its ambitious plans and impressive progress at the Shanghai Gigafactory, Musk and Tesla still faced numerous challenges in 2019. Tesla reported a net loss of $7.02 million in the first quarter, its biggest quarterly loss ever.

In addition, Tesla faces significant challenges in production and delivery due to traditional automakers increasing their investment in new energy vehicles and the increasing pressure from European automakers.

The two models that the US has been competing with Tesla's existing models, the ET5 and ES3, are becoming increasingly popular in the European market, especially in Norway, Sweden and Germany, forcing Tesla to offer some discounts.

This has led to Tesla's gross margin dropping from 15.5% a year ago to 14.5% now. This one percentage point difference in gross margin is crucial to a car company's survival.

As is well known, a gross profit margin of 15% is the standard for evaluating an automaker.

In addition, Tesla has not done well in terms of vehicle safety, especially the Model S, which was involved in a fire in Guangzhou on March 26, in Shanghai on April 21, in Hong Kong on May 12, and again in Guangzhou on May 18.

In just two months, Tesla has been involved in four serious accidents in the Chinese market alone, raising public concerns about the safety of Tesla vehicles.

Without exception, these models are all Tesla's current high-end models, all using ternary lithium batteries, and Wei Lai's live broadcast on May 18th dealt Tesla a fatal blow.

In the first five months of this year, Tesla's stock price fell by more than 44%, especially in May, when it fell by more than 20% for the entire month.

The stock price has nearly halved, hitting a new 30-month low. Questions about Musk are coming one after another. More importantly, Tesla is facing serious cash flow problems.

Tesla's cash flow dropped by 40% quarter-on-quarter in the first quarter, leaving only $22 billion. If this cash flow situation is not improved, it will be difficult for Tesla to sustain itself until the Shanghai Gigafactory starts mass production of the Model 3.

"Starting pre-sales six months in advance is probably a move Musk had to make out of necessity, right?"

On the cross-sea bridge, several Tank300s surrounded an ET5, which was Tan Jincheng's convoy. Inside the ET5, Tan Jincheng chatted casually with Cheng Linfeng, who was also going to Shanghai on official business.

"There must be a reason for this. If the cash flow in the second quarter does not improve, Tesla's stock price will fall further. However, I think now is the best time for us to buy at the bottom."

Cheng Linfeng went to the Shanghai Stock Exchange to find Liu Fangyi. He was in charge of the liaison work for Inco Medical. After the Shenzhen Stock Exchange officially accepted the application, Inco Medical's private placement plan was progressing step by step.

The capital markets are all calculating when Tesla will go bankrupt, but from various perspectives, neither the Shanghai Stock Exchange nor North America can afford to let Tesla go bankrupt. Buying at the bottom is the best opportunity.

"Haha, if you think you can buy at the bottom, then go ahead and buy. But I'm more concerned about the price of the domestic version of the Model 3."

Based on the current exchange rate of RMB to USD, Tesla, which claims to produce a $3.5 pure electric car, should price its domestically produced Model 3 at around 23.8 RMB.

However, this is obviously impossible. Currently, the lowest starting price for the imported version of the Model 3 is 42.1 yuan, which is 18 yuan cheaper. How can the imported version be sold then? Existing owners must be furious.

"The starting price of our ET5 has indeed put a lot of pressure on Tesla."

Several months after its launch, the sales of the ET5 have steadily increased. Weilai plans to formulate corresponding policies and launch a major promotional campaign for the ET5 after Tesla officially announces its pricing, in order to counter the impact of domestically produced Teslas on the existing market.

(End of this chapter)