Ideals have always been a symbol of hit products.
As the fastest new car company to achieve monthly sales of over 30,000, there is no doubt that accurate product definition is one of the key factors for its success. This not only builds a brand moat for Ideal, but also supports Ideal Auto to maintain its bottom line of value in the chaotic price war.
In the latest quarterly report, Ideal Auto showed its "resilience". The delivery volume in the first quarter maintained a strong growth trend, and it has achieved profitability for six consecutive quarters. In the new competitive landscape, Ideal Auto still leads the new energy market above 300,000 yuan.
However, it must be admitted that as the competition in new energy becomes increasingly fierce, the pressure on Ideal Auto is only increasing. It is facing not only price wars, but also changes after new brands enter the market, as well as some deliberate attacks from unknown sources.
Ideal did not sit still and wait for death. In addition to product definition capabilities, efficiency is another word engraved in the genes of the Ideal Auto brand. Just like the rapid response Ideal made in the face of crises in the past, including refocusing on range extension, adjusting the pricing system, and completing product iterations.
At the same time, we will polish our products and organization to drive the company to move steadily towards the next stage. "As Ideal Auto continues to grow in an ever-changing environment, we will actively embrace the challenges in the process, continue to focus on improving operational efficiency, and persist in creating more value for users," said Li Xiang.
The growth rate in the first quarter was significantly higher than the market, and the company has been profitable for six consecutive quarters.
The financial report for the first quarter of 2024 showed that Ideal Auto delivered a total of 80,400 vehicles, a year-on-year increase of 52.9%; during the same period, the market for new energy vehicles with a sales volume of more than 200,000 units increased by 24.9% year-on-year, and Ideal Auto's growth rate was much higher than the market.
In the new energy market with prices above 300,000 yuan, Ideal Auto's market share exceeds 30%.
The increase in delivery volume has driven revenue growth and also allowed Ideal Auto's quarterly revenue to hit a record high for the same period. According to the financial report, Ideal Auto's revenue in the first quarter was 25.6 billion yuan, a year-on-year increase of 36.4%; the adjusted net profit in the first quarter was 1.3 billion yuan (excluding equity incentives and other expenses). This means that since the fourth quarter of 2022, Ideal Auto has been profitable for six consecutive quarters, making it the only new force automaker in China to achieve continuous profitability.
Another data that hit a record high for the same period is Ideal's investment in research and development. Data shows that Ideal Auto's research and development expenses in the first quarter reached 3 billion yuan, a year-on-year increase of 64.6%, and the research and development expenses exceeded the net profit, reaching twice the adjusted net profit.
Based on this, Ideal Auto has made breakthrough progress in intelligent driving, assisted driving, and active and passive safety. Ideal Auto's self-developed Mind GPT has passed the national filing, making Ideal Auto the first automobile company in China to have a self-developed large model and successfully landed and obtained national certification. It is reported that the map-free intelligent driving NOA of Ideal Auto's AD Max 3.0 platform is currently undergoing a user public beta test of thousands of people, and is expected to be open to the whole country in the third quarter of this year.
Although Ideal Auto's sales in the first quarter fluctuated compared with the previous year, it is still worth looking forward to sales growth in the next few quarters. This confidence comes from the popularity of L6. It is reported that the cumulative orders of L6 during the first sales period exceeded 41,000, which led to a record high order volume for Ideal Auto's entire product line during the May Day holiday.
Looking ahead to the second quarter, Ideal Auto expects quarterly deliveries to increase by 21.3% to 27.1% year-on-year to 105,000 to 110,000 vehicles; revenue is expected to be between 29.9 billion yuan and 31.4 billion yuan, a year-on-year increase of 4.2% to 9.4%.
Maintaining a healthy gross profit margin of 20% and returning to operating efficiency
Despite the intensified competition in the new energy market, Ideal Auto, which leads the growth rate, is indeed facing some pressure. Overall, although it suffered operating losses, after the adjustment in March, Ideal Auto still maintained the healthy threshold of 20% gross profit margin.
Such remarkable performance is mainly due to the comprehensive upgrade of product strength. It is worth mentioning that Ideal Auto continues to focus on user value and launched the Ideal L6 to meet the travel needs of more young families, bringing the leading intelligent experience and extended-range four-wheel drive to the 200,000 yuan level model.
In addition, Ideal Auto has adopted different sales strategies for extended-range and high-voltage pure electric vehicles. Ideal MEGA has been operating from 0 to 1, with priority given to 17 core cities with strong high-end pure electric consumption. After deciding to focus on extended-range, Li Xiang also announced the postponement of the launch of pure electric products in a conference call. Li Xiang believes that a sufficient number of self-operated charging piles is a necessary condition for selling mid-to-high-end pure electric SUVs. First of all, the number of self-operated charging piles must reach that of Tesla China.
To this end, Ideal Auto is accelerating the construction of a charging network at a speed of "one station per day". On May 15, the 400th Ideal Supercharging Station was officially launched. Ideal Auto is firmly committed to the layout of supercharging stations and adheres to the layout strategy of giving equal importance to cities and highways. According to the plan, Ideal Auto aims to build more than 2,000 supercharging stations by the end of this year, and the number of charging piles will exceed 10,000, bringing a convenient charging experience to Ideal Auto owners and new energy vehicle users across the industry.
In April, Ideal Auto has launched a new round of matrix organizational upgrades. Li Xiang emphasized that the biggest change in the organizational 2.0 transformation is the establishment of a dedicated team for quality operations, focusing on high-quality decision-making and improving execution efficiency.
Many brokerages are optimistic about Ideal Auto's development in the second quarter. According to the updated valuation report on Ideal Auto released by Morgan Stanley on May 21, it clearly stated that they remain confident in Ideal Auto's orders and gross profit margins, and gave Ideal Auto's US stock target price of US$53 and Hong Kong stock target price of HK$205.
at last
The market predicts that the penetration rate of new energy vehicles is expected to exceed 50% this year. According to the innovator curve, the development of new energy vehicles has entered the late mass stage, which means that consumers will further concentrate on the top brands, and Ideal undoubtedly has a huge leading advantage. As of March 31, 2024, Ideal Auto has delivered a total of 713,000 vehicles, ranking first in delivery volume among China's new power car companies.
Not only that, Ideal Auto is also one of the automakers with the largest cash reserves. Its nearly 100 billion yuan in reserves will further support its long-term investment in research and development and create greater value for users.
Focusing on user value and returning to operational efficiency will become the law for Ideal Auto to cross cycles and embrace challenges, and it is also the key to its continued growth in the ever-changing market environment and its vision of becoming a global leading artificial intelligence company by 2030.
