2003: Starting with Foreign Trade

Chapter 971 Wei Lai's Technological Explosion and Million-Dollar Sales

"People may have some misunderstandings about our technological accumulation. We are not as weak as people imagine."

At the technology launch event of Jinxin New Era, a reporter asked why Jinxin New Era was able to release multiple related technical standards, including lithium iron phosphate, ternary lithium, and solid-state batteries, in such a short period of time.

Clearly, this question carries a strong sense of skepticism, and Tan Jincheng naturally chose to respond on the spot.

"As this reporter said, any technological accumulation takes time. This is the so-called 'great accumulation leads to great breakthroughs.' No company can achieve anything overnight and make a major breakthrough in just a few years."

"We can't do it either, but don't forget that we are the youngest traditional car company, but we have also been around for 13 years. If we are talking about the accumulation of battery technology, we can actually trace it back to the new era of navigation in 2006."

"Of course, many people may not know the background of this company's establishment."

Fifteen years ago, in order to break through the lithium battery technology for two-wheeled electric vehicles, FlashTech and the Institute of Physics jointly established Aerospace New Era. FlashTech provided the funding, and the Institute of Physics provided the technology. The two parties worked together to promote the commercialization of lithium batteries.

The initial team, including Lu Ruifeng, the current technical director of Jinshidai, and Hu Huaizhong, the deputy director, all came from the Institute of Physics. They are all technical experts who have been deeply involved in key national projects.

Furthermore, Lü Ruifeng has become an academician of the Chinese Academy of Engineering in recent years. With academician-level technical talents at the helm of Jinxin Technology, this is one of the reasons why Weilai has been able to maintain its position in the first tier of power batteries.

"Our team is quite strong."

In addition to the original physics research team, Tan Jincheng also recruited a lot of technical talents from BYD to enrich his technical talent pool. The continuous investment over 15 years was like a marathon.

Through this long-term investment in technological research and development, Weilai, or rather Jinshidai, has ushered in its first period of technological breakthrough.

In terms of technology research and development, Weilai can be divided into four major parts. The first major part is the research and development of power batteries and energy storage-related technologies centered on Jinshidai. This is the earliest project and the one with the largest investment. Although the team is very low-key in the industry, its strength is beyond doubt.

The second major part is the aesthetics that consumers have always praised, which refers to the car models and their exterior design. The team in this area is not weak today. From the initial makeshift team to the development project team led by BMW design director Thomas, it has become quite mature.

In addition, the presence of aesthetically pleasing car models that Tan Jincheng had encountered in his previous life, which were free of patent conflicts, further enhanced his already formidable strength. Furthermore, the addition of Lotus technology over the years, given Lotus's extensive experience in aerodynamics, further solidified his position.

The exterior design of a car is not a simple or cheap process. It involves everything from hand-drawn sketches to computer digital modeling and 3D model creation, to hand-sculpting clay models to scale, and wind tests.

Countless high-precision CFD and NVH adjustments, from the initial design draft to the final version, require a long time and financial investment; it is definitely not a simple artistic drawing.

Besides having excellent aesthetic sense, outstanding car designers absolutely need to have in-depth research and involvement in multiple disciplines such as aerodynamics, structural engineering, mechanics, and materials science. Not only must the individual be strong, but a strong team is also very important.

Excellent design can also benefit automakers, forcing them and their suppliers to engage in technological research and development and product upgrades.

Simply put, it's like the boss says something and asks you to create this thing. But the boss can't know everything, and some things might not be possible under the conditions at the time. So, to meet the boss's requirements, the designers need to come up with all sorts of solutions, thereby forcing technological breakthroughs.

A car model whose appearance is widely recognized can sell well in the market, and it's not just because it looks good.

The reason why domestic car companies initially imitated successful models on the market was largely because they hoped to avoid some detours due to insufficient technology. For example, when Yuechi A1 was first launched, it also imitated the interior of a popular SUV at the time.

The third major part is the research and development project group for core components, including chassis and vehicle system tuning, engine development, etc. This is led by the Weilai Research Institute, headed by Hu Zhengnan. A beautiful car is one aspect, but driving comfort and safety are equally important.

Hu Zhengnan and his initial employer, Longchuang Design, were deeply involved in the development of several best-selling models, including the BYD F3, so their capabilities are beyond question.

Back then, Tan Jincheng invested 5000 million yuan to acquire a 10% stake in Longchuang Design through private investment. He also generously gave Hu Zhengnan, who was in his early 30s at the time, 1000 million yuan. To this day, this is considered one of the most correct decisions Tan Jincheng ever made.

During his more than ten years at Weilai, Hu Zhengnan was deeply involved in the research and development of various Weilai models. Tan Jincheng chose to use the experienced Yu Liguo to mentor the newcomer, putting Yu Liguo in charge of external affairs, which also gave Hu Zhengnan better room for growth.

Only when he was able to stand on his own did Yu Liguo gradually enter a semi-retired state, handing over the Weilai Research Institute to Hu Zhengnan.

The fourth major area is the research and development of intelligent systems for new energy vehicles. The lineup in this area is also impressive, with Horizon Robotics, Meizu, other top talents recruited by Weilai, and support from Orange Group's artificial intelligence.

In addition, relying on the university resources in Ningbo, Luzhou, Beijing, and Jiangcheng, Weilai has established its own postdoctoral stations in Ningbo and other places. In terms of building a technology research and development team, Tan Jincheng believes that he has done enough over the years.

One specific statistic can illustrate the technological achievements of Weilai Auto in the fields of power batteries and complete vehicles: the number of patents.

In terms of power batteries, as of May 2020, Weilai possessed patents including invention patents, utility model patents, design patents, and invention authorizations, ranking third in China.

Ahead of him are BYD and Guoxuan High-Tech, while behind Jinxin is Ningde Times. Both Guoxuan and Ningde have close ties with Jinxin Times. This alliance allows Jinxin Times to maintain a high level of competitiveness.

In terms of complete vehicles, based on patents related to new energy vehicles, Weilai ranks fifth, after BYD, BAIC, Changan, and SAIC, and is also among the top tier in China.

Including foreign brands, Weilai has been able to enter the TOP20 in many rankings, and even the TOP10 in some, which is also in the first tier.

In addition to these, Weilai has another major advantage: its establishment time is much shorter than that of traditional car companies. In terms of valid patents, Weilai has the most. These patents can also bring Weilai good revenue through licensing, or in exchange for the patents it wants.

All types of patents have a statutory protection period. For example, in my country, the protection period for invention patents is 20 years, while the protection period for utility model and design patents is currently 10 years, starting from the date of application.

Therefore, many exterior designs look almost identical to those of certain car models, but in reality, they do not infringe on any rights and there are no problems in using them.

Some cunning companies will take advantage of the time difference to reapply for the other party's expired patents.

However, it seems that the patent period for design patents may be extended to 15 years. This is information that Wei Lai learned when he had been dealing with the patent office for a long time.

For a long time, Weilai has put a lot of effort into capital operation and marketing. The biggest boast it made at its press conferences was probably that the ES6 and ES8 were the best SUV models under 100 million yuan back then.

Tan Jincheng is indeed good at marketing and has made many boasts, but he is quite restrained with Wei Lai. He fully understands that cars are related to consumer safety, and he knows that making boasts too much can easily lead to accidents.

Overall, what Weilai presents to consumers is that its cars sell well, its battery performance is stable, its safety is higher than its competitors, its exterior and interior design meet consumer needs, its after-sales service is good, and its marketing capabilities are also impressive.

Even the IP evolution driven by Tan Jincheng's personal image is part of Weilai's corporate image positioning, but all of this is inseparable from the support of the behind-the-scenes technical team.

"People may have forgotten that when Weilai was first established, our goal was the new energy vehicle market. Therefore, we have been very generous in the research and development of the most core related technologies. This year will be the third consecutive year that Weilai has invested over 10 billion yuan in research and development."

"Therefore, there is no need for you to question our technological breakthroughs, whether it is in the three-electric technology or the optimization of the production process."

Tan Jincheng's positive response dispelled the doubts of many reporters on site, and also acknowledged that Wei Lai had ushered in its first major technological breakthrough.

The three-electric technologies, including integrated die casting and process optimization, are the result of more than ten years of technological accumulation by Weilai and are one of Weilai's core competitive advantages. In addition, Weilai has also made significant breakthroughs in the fields of fuel vehicles and hybrid vehicles.

In the realm of gasoline-powered vehicles, being able to develop one's own engine is something to be proud of. While it may not be exceptionally outstanding, it's perfectly adequate for use in range-extended electric vehicles. The engine independently developed by Wei is at least somewhat stronger than that of Dong'an Power.

In terms of hybrid technology, Weilai is currently mainly developing range-extended electric vehicles, which are also a type of hybrid technology. As for other hybrid models, they are mainly developed by Yuechi Automobile.

In addition to the technological breakthroughs of Weilai Auto, Yuechi Auto is also accelerating the research and development of new energy vehicles. Compared with Weilai, Yuechi Auto's research and development in hybrid vehicles is actually about launching new models based on existing models.

The Yuechi series, led by the still-selling Yuechi A1, is expanding beyond gasoline vehicles by introducing plug-in hybrid and even pure electric models, further developing the potential of the Yuechi series.

In addition, a pure electric version of the pickup truck is also in the works. This thing still has a certain market overseas. The domestic market for pickup trucks is just so-so. Although the restrictions have been relaxed, the demand is limited.

More importantly, we need to develop overseas markets. According to the latest research, the demand for pickup trucks in places like Australia is quite good. We are already developing models that are suitable for local terrain and vehicle size.

By June, Tan Jincheng was attending more public events. Since his first appearance in Luzhou, he had visited other industrial parks, including Jiangcheng. Since April, the disruption to the domestic industrial chain caused by this special event had been largely brought under control, and any sporadic clusters of GR (likely referring to illegal gatherings) were quickly contained.

However, the international situation remains quite serious. The United States, Italy, and the United Kingdom in Europe are like a bunch of clowns, taking turns to perform, and they are currently the most severely affected regions.

The impact on car manufacturers is also significant. Take Lotus for example: although the Heysel plant has resumed operations, its efficiency is far lower than that in China, but much more efficient than that of local companies.

Currently, the Heysel factory is operating under the same policies as in China, with a low operating rate. The main focus is on the optimization of the all-electric supercar Evija by the R&D department, which is also planned to produce the all-electric Evija at the Heysel factory.

However, given the current progress, even the Heysel factory cannot guarantee when it will be able to start mass production. The inefficient Dai Ying government is truly ridiculous.

"It's fortunate that we had ordered a lot of China-Europe freight trains beforehand, and we also don't have much business in the United States, otherwise the impact would have been too great."

When Wei Lai signed contracts for multiple China-Europe freight trains last year, most of his peers thought he was just playing a political game of speculation. At that time, the China-Europe freight train could only be considered a supplement to sea freight, with freight costs several times higher, and it had no advantages whatsoever.

However, after this year, the impact on maritime transport is not only due to the surge in freight costs, but also to the impact on transport capacity. Thanks to the supplement of the China-Europe Railway Express, the impact on import and export is relatively small.

Weilai Auto has little business in North America and is not greatly affected, but Flash Technology is more significantly affected. North America is the largest export market for two-wheeled electric vehicles, followed by Europe.

Throughout 2019, driven by the strictest new standards in history, the electric vehicle industry concentrated on leading companies. Benefiting from favorable policies, Flashcar sold more than 600 million two-wheeled electric vehicles, a year-on-year increase of 20%, accounting for 16.7% of the global market share.

Exports from North America have been significantly impacted, while those from Europe have been less affected due to the China-Europe Railway Express. In addition, with the surge in domestic sales, this year is still a year to look forward to.

Since mid-March, after Flashcart fully returned to normal, it urgently added 12 production lines in the Ningbo Industrial Park to cope with the upcoming surge in production capacity. Other leading companies did the same.

Increased production and expanded recruitment are common occurrences among leading two-wheeled electric vehicle companies, such as Flash, Yadi, Aima, Xinri, and Luyuan, which are fiercely competing with emerging players like Ninebot and Niu.

"The 618 sales figures are pretty good."

After the Jinshidai technology launch event, Tan Jincheng returned to Ningbo, just as the 618 shopping festival was ending. Zhang Xupeng came to him, seeking to negotiate the acquisition of Leichi.

"Yes, we expect sales to exceed one million in June, and this year our sales should be aiming for the ten million level."

Due to the involvement of significant capital matters, Zhang Xupeng has recently become involved in the daily operations of Flashpoint Technology. The impressive achievement of breaking one million monthly sales is something they never dared to imagine, even when they realized the sales increase at the end of the year.

Now, with this month's expectations, sales have exceeded one million for three consecutive months, and the annual target has been raised to a staggering ten million.

"On the export front, although it has been significantly affected, the overall demand is still considerable. We can overcome some difficulties and still get the goods out. The China-Europe freight train you ordered last year has performed well and has taken up most of our transport capacity."

"The demand for one person, one car has been activated."

Tan Jincheng, who was holding the sales data of Flash, was also quite happy. At the beginning of the year, he had somewhat overlooked Flash and, to be honest, he did not realize that it would grow on such a large scale.

The two-wheeled electric vehicle industry, which has been developing for decades, already has a staggering number of vehicles in use. Moreover, in reality, most two-wheeled electric vehicles have a very long lifespan.

Especially for companies like Flash Motors, which have good quality control and are willing to use high-quality materials, an electric scooter can last for many years, except for battery replacements.

"One person, one car? That's a good idea."

As a result, people tend to choose independent travel to avoid cross-regional travel caused by public transportation. In addition, the surge in food delivery teams is probably the main reason. As for the exit, the situation is actually similar.

As European countries gradually resumed operations in May, governments encouraged cycling, and several countries even launched subsidy programs, which also boosted Flash's export share to the European market.

"E-commerce platforms are performing quite well, but this kind of thing still needs to rely more on offline channels."

It's not just the automotive industry; the two-wheeled electric vehicle industry also has emerging players. Companies like Niu Technologies, Ninebot, Hello Bike, and Jihe are all considered new forces in the two-wheeled electric vehicle industry.

Among them, Niu Technologies, founded in September 2014, has developed the best. Niu went public on Nasdaq in October 2018. During Niu's financing process...

The Series A funding round was led by Sequoia Capital and other institutions, with ByteDance also investing and holding a certain percentage of shares.

Another company, Ninebot, also holds a stake in ByteDance's Big Data engine, which was led by Lei Jun. Once you have a network of connections in the capital market, coupled with your own strength, you will never lack investment opportunities.

However, Ninebot entered the two-wheeled electric vehicle industry relatively late, only officially starting last year, but its efforts are still very evident.

"Several emerging forces have much stronger online sales power than us, which we cannot match, so we should stick to our own advantages."

Traditional two-wheeled electric vehicle companies have an advantage in offline channels, with dealerships everywhere, which are like living advertisements. As of 2019, FlashTech had 2155 dealers of all sizes, and the number of sales outlets increased from 9000 in 2018 to 1.2.

The advantage of high coverage is something that emerging brands like Niu and Ninebot cannot match. However, emerging brands also have their advantages, namely, they have a wide audience among young people.

"Indeed, they are very popular among young people and their marketing is very good. They have taught us a lesson."

The entry of investment companies has brought about significant changes to the two-wheeled electric vehicle industry. The first change is in the models themselves. Apart from Flash Motors, which initially paid attention to design aesthetics, other traditional car companies don't really care about this aspect.

However, with the changes in the market, the major leading companies are paying more and more attention to design, and two-wheeled electric vehicles are looking more and more beautiful. In addition, in terms of marketing, although it is not as exaggerated as the mobile phone industry or the automobile industry, it is indeed becoming more and more interesting.

"Alright, tell me what you have to say today."

The explosive growth of FlashDrive has relieved a lot of pressure on Tan Jincheng. Since last year, a series of major moves in response to this incident, such as increasing inventory and acquiring Inco Medical and National Technology, have greatly depleted his cash flow and that of his company.

So far this year, even though it's only been less than six months, the expenses have been quite staggering, especially for the Weilai Group. In February alone, they barely had any income, yet they still had to spend a huge amount of money.

In the first quarter, Weilai's revenue was only 287.1 billion yuan, but its net profit was only 5.41 million yuan, which seriously affected Weilai's cash reserves. Shanchi's situation was not much better in the first quarter.

Now that FlashCheer has not only recovered quickly but also seen a significant increase in performance, this is undoubtedly a very positive development.

"Haha, I just wanted to show you our valuation of Leichi and our acquisition plan."

Flashpoint's interest in acquiring Leichi stems from its overseas market channels, the potential to enrich its business, and the land in the Beicang District. Since the idea of ​​acquiring Leichi arose, Flashpoint has held multiple internal discussions and concluded that the acquisition is feasible.

Leichi's peak period was from 2016 to 2018. At that time, the market for elderly electric vehicles grew in an almost unbridled way. As the first company in China to formalize its elderly electric vehicle business, Leichi thrived in the complete industrial chain system of the Yangtze River Delta.

However, this growth came to an abrupt halt after the government began to regulate the elderly entertainment market in 2018. Like its peers, Leichi also had to seek transformation while continuing to maintain its elderly entertainment business.

Leiding Auto is transforming itself into a legitimate manufacturer of genuine new energy vehicles, a path that Leichi clearly cannot follow. Its transformation involves exporting and expanding into utility vehicles such as golf carts.

"Although Reading's transformation into new energy was unsuccessful, it is indeed possible to make a valuation comparison. But have you communicated with the district or the management of Leichi?"

With a valuation of 40 billion yuan, the acquisition will be conducted through a combination of cash and share issuance, with the listed company FlashTech responsible for the acquisition. This seems like a good plan, as it can indirectly inject Leichi's assets into the listed company system, thereby enriching FlashTech's business structure and boosting its stock price.

A valuation of 40 billion yuan is really not expensive, and it even seems a bit like taking advantage of someone else's misfortune or profiting from someone else's misfortune. Although they are sister companies, they each have their own plans, and Flash's behavior is understandable.

But the question is whether the Beicang District, or rather Leichi's management, will agree to this? It should be noted that although the Beicang District does not participate in the operation of Leichi, it still wields considerable influence.

(End of this chapter)