The Chinese market is still some distance away from being a mature automobile market, and that is precisely why it holds endless possibilities.
Five years ago, it was hard for us to imagine that luxury brands would actively come here to seek technical cooperation. It was even harder to foresee that a group of new Chinese companies that were established less than 10 years ago could squeeze foreign brands to such an embarrassing level.
As market competition intensifies, all parties are seeking breakthroughs, adjusting their course or finding like-minded "competitive teammates".
SAIC and Audi deepen cooperation to jointly develop smart electric vehicles
Event overview : On May 20, 2024, at the press conference titled "Audi and SAIC Enter a New Level of Cooperation by Sharing Harmony Together", SAIC Group and Audi jointly announced that following the signing of a memorandum of understanding on deepening strategic cooperation in July last year, the two parties formally signed a cooperation agreement to jointly develop a number of high-end smart electric vehicles for SAIC Audi and jointly develop the Advanced Digitized Platform.
Comment : Whether from the perspective of the balance between the product strength and brand strength of Audi North and Audi South, or from the perspective of SAIC Audi's own presence in the new energy field as a "young new luxury" brand, the importance of the ADP project to SAIC Audi is self-evident.
This is confirmed by the fact that Volkswagen executive Song Feiming was appointed as the CEO of the project. He has 25 years of work experience in the Volkswagen Group and is the general manager of Volkswagen's PPE high-end electric platform.
It is also worth mentioning that some professionals pointed out that it is rare to have a CEO position for product line and technology line projects. Large groups set up CEO positions at least at the scale of BU or BG. The intention of setting up a CEO for the ADP project is self-evident.
Let's look at the point that both parties mentioned in the cooperation: "bring out the best of each other". After the 520 press conference, this sentence has a more specific explanation.
According to the information released at the press conference, the new cars in the ADP project will be divided into upper and lower bodies. The former is more focused on the intelligent cockpit and the electrical and electronic fields, which will be jointly developed by SAIC and Audi; the latter is the chassis and driving quality, which are Audi's long-term strengths and will be mainly responsible for by Audi.
In terms of the vehicle body, SAIC's ZeroBeam technology will empower the intelligent architecture of the new car. Feifan and Zhiji models have already been equipped with relevant technologies. It should be noted that ZeroBeam's full-stack solution has four stages from 1.0 to 4.0. In the future, SAIC Audi's new cars in the ADP project will have SAIC's most advanced level in the field of digitalization.
Finally, let's look at the leading edge of the ADP architecture compared to the PPE platform. Public data shows that the electronic and electrical architecture of Audi's global electric vehicle platform PPE is the E3 1.2 electronic architecture. Under the architecture, five domain controllers, or five brains, are required according to the functional division of the vehicle. SAIC Zero-Bundle follows the principle of intensive development, and the future new car architecture will be unified by one brain. This means fewer wiring harnesses, more energy-saving, and higher upgrade efficiency.
In Audi, we have seen substantial progress in China's automobile industry from "technology import" to "technology export".
Nezha Auto and CATL Sign Cooperation Agreement
Event overview : On May 24, Nezha Auto and CATL signed a 10-year comprehensive strategic cooperation agreement in Shanghai. According to the agreement, the two parties will carry out comprehensive strategic cooperation from 2025 to 2034. Nezha Auto will choose CATL as its preferred partner for automotive power batteries, and CATL will provide Nezha Auto with market-competitive power battery products and services. At the same time, the two parties will further carry out in-depth cooperation in the fields of zero carbon, CIIC integrated intelligent chassis, battery replacement, V2G, battery recycling, and domestic and foreign market development.
Comment : From the dark horse in 2022 to the failure in 2023, Nezha Auto is undergoing an adjustment period after falling from a high point, and has been making frequent moves recently.
First, the organizational structure was adjusted, and then a senior media person was appointed to the important position of VP of Marketing Communications. CEO Zhang Yong also personally served as the general manager of the product department, demonstrating his desire to make active adjustments in order to return to the mainstream.
However, although Zhou Hongyi, an investor of Nezha, has mastered the traffic code, he has not brought Nezha much publicity. He pointed out the problem of Nezha incisively - the product is good but it does not know how to make users feel good, and in this regard, it should learn from Lei Jun.
In response, Nezha CEO Zhang Yong said: "It's not shameful to accept criticism and learn marketing from Lei Jun!"
However, Zhang Yong only learned the surface of Lei Jun's learning, but not the essence. For example, although he also imitated Lei Jun to deliver cars to users in person, in the subsequent interview, he crossed his legs and said "I can also deliver cars to users in person", but Lei Jun's attitude has always been humble. Regardless of his true inner thoughts, the difference in personality is immediately apparent.
This cooperation has strengthened the bond between Nezha Auto and the industry's leading players, giving it more confidence and a higher chance of success in gaining a foothold in the market.
In fact, Nezha Auto and CATL have been in a customer and supplier relationship as early as three years ago. However, this time the cooperation is no longer limited to the battery field, but cooperation at the industrial chain level such as chassis, battery replacement, power supply, battery recycling, and comprehensive carbon reduction.
It can be seen that although Nezha Auto itself lacks distinctive characteristics and labels, it is a player that is difficult to give up the huge new energy market.
Ideal Auto's profits plummet
Event overview : In the first quarter of 2024, Ideal sold 28,000 more vehicles than the same period last year; total revenue reached 25.6 billion yuan, a year-on-year increase of 36.4%, but a month-on-month decrease of 38.6%; in terms of net profit, it fell from 930 million yuan in the same period last year to 590 million yuan, a year-on-year decrease of 36.7% and a month-on-month decrease of 89.7%; free cash flow turned negative at -5.1 billion yuan, compared with 6.7 billion yuan in the same period last year.
Comment : Simply put, Ideal Auto mistook the trend for its strength and after expanding with confidence, it fell into the pit of self-confidence.
In 2023, Ideal sold 376,000 vehicles throughout the year and exceeded the 100 billion yuan revenue mark for the first time. Its net profit also achieved annual profit for the first time, reaching 11.81 billion yuan.
Ideal, which was in high spirits at the time, set a super high sales guidance of 800,000 vehicles this year, and placed the heavy burden of sales on pure electric products. According to the original plan, in addition to the Ideal MEGA and Ideal L6 that had been launched in the first half of the year, there would be three pure electric SUVs, M7, M8, and M9, in the second half of the year. However, with the failure of Ideal MEGA, the release of these three pure electric SUVs has been postponed to next year.
In the past two months, Ideal Auto's share price has fallen from more than HK$180 to HK$79, and its market value has evaporated by more than HK$220 billion.
As He Xiaopeng, chairman of Xpeng Motors, said, "Don't overthink yourself when things are going well." This self-reflection quote is most appropriate for Li Xiang now.
Originally, Ideal Auto, which had made a lot of money in the extended-range market and reached its maximum self-confidence, was ready to prove itself again in the pure electric field. In 2023, Ideal Auto recruited 6,726 people, and the number of employees expanded by 63%. This number was planned based on the monthly sales of 6,000 MEGA vehicles. The reality is that the monthly sales of MEGA were only a little over 1,000 units in April.
After the failure, Ideal Auto finally realized that it was not the chosen one, but just a "pig" that flew on the wind. Therefore, the things that competitors had experienced, such as price cuts, lowering annual targets, personnel optimization, and structural adjustments, were also repeated in Ideal.
Now, Ideal faces a choice. Should it follow the "first principles" of doing business, abandon pure electric vehicles, focus on extended-range vehicles, and return to high profitability? Or should it prove itself, go all-in on pure electric vehicles, and after adjustments in the second half of the year, impact the pure electric market again in 2025?
