2003: Starting with Foreign Trade

Chapter 948 There's no reason not to eat meat delivered to your door (Seeking monthly votes!)

Before formulating the ET5 promotion plan, Tan Jincheng received an unexpected yet not entirely unexpected visitor.

"Soldiers, you guys have had a really bad year."

At the Shanghai branch, Li Bing waited all day before finally meeting Tan Jincheng. Although Tan Jincheng's attitude was as usual, and the two had often exchanged such opening banter in the past, Li Bing found it somewhat grating at this moment.

There was a time when he wanted to see this "little brother," but now he has to wait all day like this.

"It really can be considered an unlucky year. If we're talking about 36, that age is long gone."

Since March, the Wenjie M9 has been experiencing a series of spontaneous combustion incidents. In the past two months, there have been three more incidents. Although no one was injured, the negative impact has still caused Li Bing a lot of headaches.

Wenjie's public relations department has officially initiated the recall process for all 4803 Wenjie M9 vehicles, which will be recalled by the end of August, with free replacement of the battery packs and upgrades to the safety system.

According to estimates, this recall will cause Wenjie a loss of more than 4.8 million yuan. Most importantly, it will cause a crisis of trust in the brand, which will likely face a very serious test in the short term.

"It's good that nothing major happened. Recalls are also a way to show a company's attitude. We've had recalls before, haven't we?"

Car recalls have always been a common occurrence for OEMs of all sizes. Large-scale recalls certainly have a significant impact on companies, but as long as subsequent product quality and service keep up, the impact can be gradually mitigated.

Look at Japanese brands; their recalls a few years ago covered the entire globe, but they've recovered in recent years.

Speaking of the localization of Tesla Model 3 in China, the biggest impact is not on traditional new energy vehicle companies like WYI and BYD, but on emerging brands. These companies, which were already at a disadvantage in competing with traditional car companies, now have to face a new and powerful competitor.

The one who felt the pressure the most was definitely Li Bing, who was the unluckiest person this year.

The first chain reaction to Tesla's factory construction was that the Shanghai Stock Exchange directly canceled Wenjie's factory construction plan and poured all its resources into Tesla. This directly triggered a large number of questions from Wenjie's investors and a class-action lawsuit.

From March to May, over a three-month trading period, Wenjie's stock price plummeted by 70%, and is now worth less than two US dollars. Compared to its highest point of $13.8 after listing, the drop is nearly 90%.

Its market capitalization is just over $20 billion, which is not even as high as that of Flashpoint Technology.

"Wenjie needs a white knight right now. I wonder if President Tan has any suggestions or if he can help us."

Li Bing came to provide assistance, and he roughly understood Tan Jincheng's personality, so there was no need for him to beat around the bush.

Declining deliveries, financial risks, product safety concerns, and competitive pressures have made Wenjie the first of the three leading new energy vehicle companies to fall behind, and also the first among them to be questioned about bankruptcy.

The more glorious he was in the past, the more miserable he is now. It would not be an exaggeration to describe Li Bing's current state as utterly terrifying.

In reality, only he himself knew that Wenjie's problems were far more serious than imagined. If a series of issues, including funding, were not resolved, Wenjie would really not survive this year.

At this critical juncture, Wenjie has already begun to make changes internally, starting with cost control and significantly reducing operating expenses. This includes lowering the hotel allowance for employees traveling to first-tier cities from 900 yuan to 400 yuan and implementing flat management structures.

In addition, management has also begun to make changes. Zheng Xiancong will leave the company at the end of this year. In the process of seeking new investment, Wenjie must first make a change.

How do you want us to help you?

In terms of Wenjie's overall business strategy, apart from the high cost, there are no other problems. It takes a customized service differentiation route, and the battery swapping model does not conflict with the fast charging model in essence.

Even with advancements in fast charging, battery swapping remains a viable alternative. To put it simply, battery swapping and fast charging are like power banks and data cables – both can coexist.

The business strategy is sound. Although there are many remaining issues, they are all solvable. The biggest problem in the short term is the recall, which aims to address battery safety concerns and alleviate car owners' worries. Li Bing is already working on these tasks.

Fortunately, there weren't many vehicles involved. Although the losses were significant, for Wenjie, which is expected to lose over 10 billion yuan this year, a loss of less than 500 million yuan is really not much.

The most important issue is actually regaining investor confidence. The sudden cancellation of the conference call on the day of the earnings call caused Wenjie's stock price to plummet by 28% that day, dealing a heavy blow to investors.

The estimated loss of over 10 billion yuan for the whole year is nothing compared to Li Bing's future. However, this is 2019, a year in which investment is gradually shrinking. For a new force company to have an annual loss of over 10 billion yuan is still quite frightening.

Especially since Wenjie is already listed, it can't hide it even if it wants to, unlike WM Motor and Xiaopeng, which have also suffered heavy losses but don't need to publish detailed financial reports like Wenjie.

"The first issue is definitely the battery. I hope Mr. Tan can help us resolve this. We plan to replace all the batteries in this batch of recalled vehicles with battery packs of the same level as those in the Weilai ES8."

The batteries used by Wenjie are not all supplied by Wei. Moreover, like Tesla, they only purchase battery cells and then package them themselves. There is nothing wrong with this approach. However, Wenjie's technology is not up to standard at present. In addition, they do not have a complete factory and industrial chain, and their ability to integrate the industrial chain is not strong enough.

This is also the reason why their batteries frequently have problems.

The battery pack will be replaced with one of the same level as that used in WIL's high-end models, and WIL will be fully responsible for it. With WIL's leading battery technology, there should be far fewer problems. In addition, we can also establish a certain connection with WIL's channels for future maintenance.

Although it will increase costs significantly, this is the best solution in the short term.

After its first live-streamed battery test on May 18, Wei Lai conducted two more tests, one on lithium iron phosphate batteries and the other on ternary lithium batteries. One test was held at the company's headquarters in Ningbo, while the other was conducted at the battery factory in Luzhou.

The social impact of the two live broadcasts was not as great as the first one, but the effect was still significant, especially the crash test of ternary lithium batteries, which was a joint effort with CATL, generating a lot of buzz.

"By using the Weilai battery pack, we should be able to restore the confidence of these car owners to the greatest extent possible. We hope that Mr. Tan can provide us with enough batteries."

Ultimately, it comes down to technical issues. If you don't have the skills, don't take on the job. Li Bing spends money on other things, like tens of millions on a single press conference, making a grand show of it, but he's not so generous when it comes to the most important technical aspects.

"In addition to the recalled vehicles, we also need Weilai to provide some battery leasing services. We also want to cooperate with Weilai to establish a battery swapping alliance to expand the coverage of the battery swapping network."

After thinking for a moment, he said, "No problem. I'll talk to Jinxin and we can finalize the battery replacement and battery rental arrangements. As for establishing a battery swapping alliance, I'll need to discuss that with the board of directors."

In the past two years, the price of raw materials for lithium batteries has risen sharply. Although Weilai has a cost advantage, it cannot arbitrarily increase production capacity. With the European factory not yet fully operational, Jinshidai's battery production has been carried out in an orderly manner.

The sudden influx of orders still requires coordination of production capacity. However, if the quantity is not large, Tan Jincheng can place the order directly. As for establishing a battery swapping alliance, this model is good and will also benefit car owners in Weilai.

Li Bing has shown his sincerity.

"Of course, thank you, Mr. Tan. Also, I would like to ask Mr. Tan to help me connect with the Luzhou government and act as an intermediary. I want to have a good talk with them."

Li Bing breathed a sigh of relief. After obtaining the production license, they were too eager for quick success. In addition, the investors also wanted to get rid of Tan Jincheng's influence on Wenjie. There were also some differences in business ideas, which led to the relationship between the two parties becoming increasingly distant.

After Wenjie went public last September, ByteDance began to gradually reduce its holdings in Wenjie, and now it has very few shares left, completely exiting the list of the top ten shareholders.

It can be said that what remains between the two parties is his personal relationship with Tan Jincheng. Tan Jincheng's willingness to "clean up their mess" is probably more due to their personal relationship.

Jinshidai's batteries have never been in short supply. Instead of temporarily increasing Wenjie's production capacity, it would be better to prioritize meeting the needs of the soon-to-be-domesticated Maodou 3. Moreover, he also knows that Weilai has been implementing a dual-track supply chain system since this year, which has already created a significant demand for batteries.

"You want to build a factory in Luzhou? I can introduce you, but whether you can persuade the Luzhou government is up to you. I can't make any promises about that."

What is the news industry lacking most right now? Funding and technology are certainly the top priorities, but the most important thing is definitely not these two, but policy.

The reason why Wenjie's stock price has plummeted is ultimately because the Shanghai Stock Exchange government rejected their factory construction plan. What a new car company needs most is the support of local governments. Without the support of local governments, it is very difficult to succeed.

Back then, Li Bing placed Wenjie's headquarters in Shanghai because he saw that there wasn't a single decent private car company in Shanghai, and the two sides did indeed enjoy a fairly good honeymoon period at that time.

Until Tesla came along.

However, while Tesla's factory construction was inevitably influenced by the will of higher authorities, Tan Jincheng's role in facilitating the process greatly accelerated Tesla's establishment. Whether in Shanghai or Luzhou, Tan Jincheng possessed the necessary capabilities.

Li Bing is now anxious because he regrets being too hasty in eliminating Tan Jincheng's influence on Wenjie. If the other party were still a major shareholder of Wenjie, would things be different?
Li Bing believes it is entirely possible, and at least in terms of public opinion, it would be much better.

Looking at Xiaopeng, several rounds of financing not only did not dilute ByteDance's shares, but actually increased ByteDance's stake from the initial 10% to the current 12%. Leapmotor also received a lot of attention because it introduced ByteDance.

These two companies took the exact opposite path to Wenjie, and now they are both thriving.

WM Motor, one of the leading companies among the three emerging electric vehicle manufacturers, was initially ranked last. But look at it now! Xiaopeng Motors has announced that its 10,000th pure electric vehicle will officially roll off the production line at its Zhengzhou factory on June 18th. WM Motor took 321 days to produce its 10,000th vehicle, Wenjie took 345 days, while Xiaopeng only took 188 days.

In terms of sales, Xiaopeng Motors delivered 2200 vehicles in April and 2704 vehicles in May, becoming the champion of new energy vehicle delivery for two consecutive months. As of May this year, Xiaopeng Motors' deliveries have exceeded 7500 vehicles.

Based on this trend, Xiaopeng Motors' deliveries this year will be between 1.5 and 2 vehicles, and it is very likely to surpass WM Motor to become the champion in deliveries among new energy vehicle startups.

In terms of building their own factories, in addition to WM Motor, which has always taken the path of building its own factories, Xiaopeng Motors, which also uses contract manufacturing, has also accelerated the pace of factory construction after its Series C financing.

The construction speed of the Zhaoqing factory has increased significantly, and Xiaopeng has already built 30 supercharging stations, which is much faster than Wenjie's.

Unbeknownst to many, the once-glorious Wenjie has fallen far behind these two companies.

Li Bing sighed and said, "Let's give it a try. How will we know if we don't try? For now, I still prefer to put the factory in Luzhou."

The direct rejection of the factory plan by the Shanghai Stock Exchange is a major blow to Wenjie. Many investors, including Tencent, were actually drawn to Wenjie because of the support of the Shanghai government. But now Wenjie is like a rootless duckweed.

Most emerging car manufacturers are taking the OEM route, but OEM is only a transition. Cars and mobile phones are two completely different products. If you want to build good cars, you will eventually have to build your own factories.

Currently, leading brands, mid-tier brands, and even some emerging small brands all have plans to build their own factories. Xiaopeng, which has its own factory, is already developing its second model, which it plans to produce in its own factory.

If Wenjie wants to develop properly, building its own factory is now an urgent matter.

The Luzhou government is defined as one of the local governments with the strongest investment capabilities. Through the investment-driven approach, the Luzhou government has successfully created multiple industrial clusters, including the initial home appliance industrial cluster and its support for the local artificial intelligence company iFlytek.

In 2007, the government used nearly one-third of its fiscal revenue to support BOE, a classic example of a desperate gamble. This not only successfully saved BOE but also made Luzhou one of the world's largest display screen production bases.

BOE's success laid a solid foundation for Luzhou to cooperate with GigaDevice to establish Changxin Memory in 2011. Subsequently, in 2016, based on Weilai and JAC, it officially built a new energy industry chain, forming a trillion-yuan-level automotive industry chain, which has made local governments envious.

Li Bing was drawn to the new energy industry chain in Luzhou. Wenjie was definitely a junior player in Luzhou, but as the saying goes, if you want to get ahead, it's most important to follow the right leader.

With the support of the Luzhou government and under the leadership of Wei Lai, a leading figure in the new energy industry, Wenjie is expected to have even better development opportunities.

But the question is, would Luzhou even consider Wenjie?
With Weilai capable of directly competing with Tesla and JAC flirting with Volkswagen, Li Bing was uncertain whether Wenjie, abandoned by the Shanghai Stock Exchange, would receive policy or even financial support from the Luzhou government.

Most importantly, Li Bing knew that Tan Jincheng's opinion was crucial in gaining the support of the Luzhou government.

Weilai's headquarters is indeed in Ningbo, and its development is mainly based in Ningbo. However, it should be noted that in the beginning, Weilai was able to stabilize its position not only because of the full support of Beicang District and Ningbo City, but also because of the crucial support from Luzhou.

Jinxin Times has been operating at a loss for a long time, with revenue once approaching zero. However, it has received large plots of land and financial support from the Luzhou Municipal Government, leading to accusations that it is a project where fellow villagers are defrauding each other. Without the full support of the local government, it would be difficult to survive until it finally achieves results.

Today, Jinshidai has become one of the iconic enterprises in Luzhou. Although it is a subsidiary of Weilai, Jinshidai can be said to be a completely local enterprise in Luzhou. Moreover, Weilai's investment in power batteries is also centered around Luzhou, rather than Ningbo.

Like BOE, Jinshidai is also seen as one of the exemplary investment cases of the Luzhou government.

In a sense, Jinsheng Technology's position in Luzhou is no less than that of its parent company, JAC, which has been performing poorly for years. While BOE's TV panels are still subject to some criticism, Jinsheng Technology is a true global leader in power batteries, with its products sold to many countries.

"Has Mr. Tan considered investing in Wenjie again?"

Li Bing's greatest strength, which comes from years of entrepreneurship and numerous hardships, is his ability to adapt and persevere. He realized that internet investment institutions such as Tencent and JD.com could not provide more support in the automotive industry, except for bringing him money.

After summarizing the successful experience of Xiaopeng's rapid development and the lessons learned from his own experience, Li Bing's sincerity this time was even greater than Tan Jincheng had imagined.

"How exactly do you invest?"

Tan Jincheng neither agreed nor disagreed with Li Bing's investment invitation. Since Li Bing started making cars, perhaps he had witnessed the true allure of capital, or perhaps his true ambition had been revealed. He was a completely different person from when he was at Yiche.

How could Wen Jie's little schemes escape his eyes? Don't be fooled by Wen Jie's massive losses; Li Bing himself is getting richer and richer. What are those companies he set up in his wife's name for?

He hadn't bothered with it before, partly because most new forces had this problem—they were just ripping off capitalists—and partly because he had limited influence and would annoy people if he said too much, so he chose to withdraw.

Anyway, after Wenjie went public and the lock-up period ended, he basically sold off all his shares, and ByteDance didn't lose money.

There's nothing inherently wrong with the battery swapping model. Tesla also wanted to take this route back then. Consumers have a natural range anxiety about electric vehicles, and even if the range exceeds 1000 kilometers, they will still have this anxiety.

Battery swapping is a good supplement to solving range anxiety, and it's a good model. However, it would be too difficult for a new car company to lead it.

First, there's the issue of funding. Building more battery swapping stations requires a lot of capital, and new players without their own revenue-generating capabilities can only solve this problem through financing. This inevitably leads to Li Bing's shares being diluted more and more, and his influence gradually diminishing.

In a sense, some of Li Bing's later questionable actions were actually an inevitable result of his gradually diminished influence.

Secondly, the most important point about battery swapping is that there must be a wide variety of car models. How can you swap batteries if you can't even sell a few cars? Secondly, the battery specifications must have their own standards, which are things that new energy vehicle startups do not have.

Lack of funds, insufficient model range, and lack of their own battery supply chain are all weaknesses for emerging electric vehicle manufacturers in the battery swapping field.

However, none of these are problems for Jinshidai.

With partnerships with multiple automakers and models, and ample funding, power battery companies possess natural advantages in building battery swapping stations. In a sense, even if Weilai Auto were to lead the battery swapping business, it wouldn't be as successful as Jinshidai.

Fast charging + battery swapping?

This idea is really good. At least it will bring endless room for imagination in terms of market value. With fast charging technology not yet fully broken through and battery form not yet changed, Wenjie's battery swapping market space is still very large.

"First of all, I want to say that the Luzhou government definitely needs to be involved. At least we need them to support us with policies, or other local governments would also be fine. This would make it much easier for Wenjie to acquire land and obtain loans."

"Of course, if Ningbo City is interested, that's also possible."

From the current perspective, the best course of action to align with Captain Lai is to locate the car factory in these two cities, as these are the cities where Captain Lai has the deepest strategic presence.

Tan Jincheng nodded, signaling Li Bing to continue.

Li Bing's idea is correct. Wenjie is currently short of money, but it is even more lacking in policy. With policy, there will be no shortage of funds. If he has the ability to persuade the Luzhou government to support Wenjie, he may not even need to come to him.

Because other speculators will invest money in the future. Wenjie's current market value is just over 20 billion US dollars, which is still very attractive to capital. The returns from acquiring most of the shares are quite considerable.

Although the risks are immense, Li Bing has already publicly revealed that Wenjie's current funds are only enough to last for six months.

"If the Luzhou government takes the lead, and there are other investment institutions to solve the funding problems for Wenjie's factory construction and subsequent development, we can start over and Wenjie will have a bright future."

Among emerging companies, Wenjie's unique business model and the high-end image it has cultivated have effectively guaranteed its survival. As long as it doesn't self-destruct and has sufficient funds and time to support it, it will take Wenjie a long time to go bankrupt.

Time is the biggest advantage that Jinshidai has in getting involved in battery swapping. If Wenjie goes to explore the path and does it well, there will naturally be no problem. They can make money together and also increase their influence on new players.

If Wenjie were to go out of business one day, could Jinshidai take over its battery swapping business?
Even if one day fast charging technology makes a substantial breakthrough, or the form of batteries changes, Tan Jincheng can ensure that he can withdraw before then. Overall, for him, ByteDance, or Jinshidai, it is an investment with relatively low risk.

This investment is worthwhile, but only if Li Bing changes his ways; he can no longer ignore those old tricks.

“I can consider it, but if I were to invest, I would need more say; Wenjie is changing, but it's still not enough.”

This is like meat delivered to your door; there's no reason not to eat it.

"What changes are needed? Please give us some suggestions, Mr. Tan."

Since he had been offered this opportunity, Li Bing was prepared to be ripped off. However, he didn't really have many other options at the moment. No one was more suitable for the current entertainment industry than Tan Jincheng, who had both money and skills.

He wasn't naive enough to think that their personal relationship alone would be enough to secure Tan Jincheng's unconditional support.

(End of this chapter)