From knock-off old-man's electric vehicles to industrial giant

Chapter 48 Advanced Version of Old Man's Fun - Fun for Youth!
Yu Nian: "..."

Xu Yi made a joke, but then said:
"Previously, we had the advantage of a market gap, but the core is still user-centric thinking. We need to see things from the user's perspective and solve their real needs."

The first two models of our "old man's electric vehicle" addressed the transportation needs of the rural and township markets, gaining popularity through design and product quality.

"So now, look at it again: has the problem of accessing lower-tier markets in first- and second-tier cities been solved?"

According to dealer data, a significant portion of their cars are indeed sold to cities, but most of these are in peripheral cities, while very few are purchased in first-tier cities.

"Mr. Xu, do you mean we should promote the elderly-friendly vehicles more aggressively in cities?" an executive asked tentatively.

Xu Yi shook his head: "Wrong, we want to build a car that completely solves the travel needs of the urban lower-tier market! Now tell me, what is our internal slogan?"

One executive replied, "Don't fight battles you're not confident of winning?"

Xu Yi shook his head again: "We will build whatever the people need!"

Everyone: "..."

Wait—how come the slogan changed again in just a few minutes?
Fine, you're the boss, whatever you say is right!
"Actually, as you probably guessed, the first officially licensed model will still primarily target the lower-tier market, which means:"

The upgraded version of the "old man's electric vehicle"—the "Youth Electric Vehicle"!

Xu Yi opened the conference screen, which displayed a sketch that, judging from its outline, resembled a new car with a rounded and exquisite appearance.

The car is designed to be 3.7 meters long and 10 centimeters wider than the Starry Sky 01, which is 1.7 meters wide.

The appearance is still a line drawing, but upon closer inspection, you will find that the outline is somewhat similar to the Volkswagen Beetle, but the details are quite different, and most of them are clearly original designs.

Especially the design of the headlights on the front, how to describe it... they resemble a pair of half-open eyes, carrying a calm yet disdainful aura, which is quite unique.

...

"It's not impossible to vigorously promote our Star 01 and 02 models currently in production in cities; in fact, we might even achieve greater sales..."

However, in the long run, we need to consider that the elderly, as a product outside the law, are not permitted in civilized cities with sound laws and regulations.

Currently, only first-tier and some second-tier cities have very strict traffic regulations, so elderly people's electric vehicles can be sold in some peripheral cities where traffic regulations are vague or not so strictly regulated.

In the long run, however, it's a one-off deal, a baseless scheme.

Moreover, as time goes on, improved traffic regulations will eventually extend to smaller cities and towns, at which point this market will only shrink and become completely marginalized.

Xu Yi was not exaggerating.

Under normal circumstances, the gradual improvement of traffic regulations will only happen in the last few years.

"If the market for elderly-friendly vehicles in lower-tier cities is a big cake, then the 'mini new energy mobility scooter' market is definitely a blue ocean with a very large market share."

Because old-age electric vehicles without road permits cannot meet the needs of fragmented urban travel, as well as personal commuting and work, but 'mini vehicles' can.

Moreover, the price can't be too high. We want to make a 'mini commuter car' starting at around 30,000 yuan, with a high-end version around 40,000 yuan. Ideally, the range should be over 150 kilometers, and the configuration should be more complete than the Xingchen 02.

Xu Yi made a request.

Mini electric scooters priced between 30,000 and 40,000 yuan are still a blue ocean market, because at this stage, new energy vehicle manufacturing is still in its infancy, and those new forces are all aiming for the "sea of ​​stars".

They're focused on going high-end and developing intelligent driving systems; they have no interest in building small cars at this price point.

According to his research, there are only a handful of new energy mini models currently available on the market.

The following vehicles are eligible for vehicle registration: Zotye Cloud 100, Zhidou D1, and JAC iEV4.

The prices are mostly around 50,000 yuan, but the actual product performance is quite poor.

Not only does it have a range of only about 120km, but its top speed is also limited to 85km/h. Apart from being larger and having proper registration, it's not significantly better than ordinary low-speed electric vehicles on the market. And yet it's priced at 50,000 yuan, no wonder many consumers prefer to buy unlicensed low-speed electric vehicles.

In other words, in the price range of 30,000 to 40,000 yuan, although there are entry-level gasoline cars with 1.3L-1.5L engines such as the BYD F3 and Geely King Kong available, the new energy vehicle market is actually still largely untapped.

Even BYD, which has fully committed to the new energy vehicle manufacturing sector, is currently focusing its main efforts on mainstream models priced between 100,000 and 200,000 yuan, such as the e6, Qin EV, and Tang DM.

Large automakers didn't take notice, and small automakers were hesitant to produce cars that not only lacked product competitiveness but also worried about not being able to recoup their costs, so they adopted pricing strategies that left relatively high profit margins.

The high price can only force consumers in the market who have a need to either take a step back and buy an unlicensed elderly person's car, or grit their teeth and buy a car costing 70,000 to 80,000 yuan.

Wang Jingming was startled and suddenly realized: "In other words... we'll first surround the countryside with electric vehicles for the elderly, then build a road-legal model to conquer the cities, and once traffic regulations are gradually improved, we'll be the leader in the entry-level car market!"

The idea is very simple.

However, in the early stages of this new energy vehicle manufacturing boom, not many people tried it.

The main reason is that the trial and error cost of building a car is often too high.

If their first electric vehicle for the elderly hadn't been so successful, giving them so much confidence, they wouldn't have been so determined.

Two years later, some car models succeeded in this area through trial and error, and were suddenly noticed by some major automakers—

It turns out that manufacturing entry-level models can be quite profitable, and can quickly create a large enough customer base, greatly increasing the brand's expansion.

They all rushed in to fry fish!
Xu Yi: "That's right. Although there are many entry-level gasoline cars on the market priced at 30,000 to 40,000 yuan, they are actually not in the same competitive category as the new energy vehicle sector. What do you think is the biggest advantage of the new energy vehicle sector?"

Wang Jingming thought for a moment: "The most significant cost should be the usage cost. People who can afford to buy a car for 30,000 to 40,000 yuan, if they drive an average of 10,000 kilometers a year, will spend about 3,000 to 5,000 yuan a year on fuel and maintenance. If we calculate based on six years of use, it is already close to the price of a car."

However, new energy electric vehicles are different. As long as they are within the coverage area of ​​charging stations or can be charged slowly using a home power strip, the annual charging cost is only a few hundred yuan. Maintenance only requires replacing the air conditioning filter and wiper blades. In total, the annual vehicle expenses will not exceed seven hundred yuan.

Moreover, the government is currently providing substantial subsidies. New energy vehicles with a pure electric range exceeding 120 kilometers are exempt from purchase tax, vehicle and vessel tax, and can receive an additional government subsidy of 20,000 yuan per vehicle. In first-tier cities like Shanghai and Shenzhen, they can also enjoy priority access to free license plates.

To know.

Those first two years were definitely the period with the most generous government subsidies.

As long as a vehicle is listed in the new energy vehicle catalog and meets the relevant requirements, it can enjoy all the subsidies.

For cars priced at 200,000 yuan with a CLTC range of over 300 kilometers, not only are they exempt from license plates and taxes, but the national subsidy alone can reach 40,000 yuan. With the addition of some local subsidies and purchase tax exemption policies, the on-the-road price of a car priced at 200,000 yuan can be reduced to 140,000 yuan.

As a result, many car companies have used subsidies to manufacture cars and fraudulently obtained large amounts of cash.

Many people wonder, given that the national subsidies were reduced a few years later and the material costs of the whole vehicle, including the price of battery raw materials, also decreased, why would a small and exquisite "mini car" only sell for 30,000 to 40,000 yuan? In 2016, when the national subsidies were so strong, why would it still sell for 50,000 yuan?
The biggest reason is that in the early stages of industrial development, the high R&D costs and supply chain costs simply cannot be reduced.

High-energy-density and automotive-grade lithium battery packs, high-voltage electric drive systems that meet national standards, and the development of chassis architecture for pure electric platforms... These massive R&D costs need to be spread across each vehicle.

Even setting aside R&D costs, the supply chain of the new energy industry is not perfect at this stage.

New energy vehicle components and accessories involving high-voltage systems often need to be developed separately by the factory.

Based on this calculation, the parts for the entire vehicle will inevitably be much more expensive than the mature gasoline vehicle parts currently on the market.

Because there were no wheels, they had to make their own in the early stages.

To reduce these costs, we can only wait for the supply chain to mature, or for automakers to use their financial resources to conduct in-house research and development and vigorously integrate the relevant supply chain.

Government subsidies act as a catalyst to accelerate this process.

……

(End of this chapter)