On March 28th, three months after the launch of Xiaomi's car, the official prices were finally revealed. The standard version of the Xiaomi SU7 is priced at 215,900 yuan, the Xiaomi SU7 Pro at 245,900 yuan, and the Xiaomi SU7 Max at 299,000 yuan. The "arduous" pricing strategy of Xiaomi's car is closely related to the changes in the new energy vehicle market. Since the beginning of 2024, the price war among domestic new energy vehicles has intensified to a new level.

On March 21st, Lei Jun, the founder of Xiaomi Group, posted on Weibo that the Xiaomi Car Delivery Center in Wuhan's Optics Valley is ready, and the delivery centers and sales stores in 29 cities across the country started receiving visitors on the 25th. As the pioneering work of Xiaomi's car, Lei Jun has repeatedly emphasized the care put into the SU7 and clarified his car-making philosophy: "There are no shortcuts in a century-long race, starting from the core technology at the foundation; with ten times the investment, we are committed to making a good car."

Xiaomi is not the only company aiming to make a good car; new energy vehicles are simply too popular.

01

Everyone is making cars

Recently, Yu Chengdong, CEO of Huawei's Terminal BG and Chairman of the Intelligent Automotive Solution BU, said that in the first three months of this year, Huawei's Smart Selection Car business has turned from loss to profit, and the Car BU is on the verge of turning a profit, expecting to achieve profitability after April.

Due to various factors such as supply chain sanctions, the cost of Huawei's technical solutions is currently high. The Huawei solution still faces certain challenges in models priced below 300,000 yuan, and it can only be used and profited from models priced above 300,000 yuan. However, cars priced above 300,000 yuan require brand support. Yu Chengdong stated, "By helping the main factory to sell high-end products well through the Smart Selection Car, Huawei's Car BU can achieve a commercial closed loop, obtain good revenue and profits, and turn from loss to profit. Continuous losses mean the business cannot be sustained, which is also the goal for this year."

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In the past two months, Huawei has been signing cooperation agreements with car companies "too numerous to count."On March 15th, GAC Motor, LanTu Automobile, Zero Run Automobile, and Kaiyi Automobile officially joined the Huawei Hongmeng ecosystem, initiating the development of native Hongmeng applications. On the same day, Great Wall Motor announced that it would be the first automaker to launch the Huawei HiCar 4.0 in-car extension system. Previously, Huawei announced cooperation with Dongfeng LanTu and Mengshi brands in the HI model, and later GAC Toyota approached them to develop an in-car entertainment system. Huawei's Smart Car Business Unit (BU) Chairman, Yu Chengdong, also revealed that Changan's Deep Blue Automobile would soon join the HI alliance.

The success of Huawei's "showroom" smart car, "Wenjie," coupled with the State-owned Assets Supervision and Administration Commission's (SASAC) assessment of the core capabilities of the "national team of car companies," has led to a flurry of cooperation offers from various automotive players, thus expanding Huawei's alliance. Yu Chengdong chose to seize the momentum and expand the scale of the Smart Selection cars. According to the plan, the "four realms" of Smart Selection cars will be completed within these two years. After "Wenjie" and "Zhijie," the "Xiangjie S9" pure electric sedan in collaboration with BAIC and the "AoJie" in collaboration with JAC will be launched in April this year and next year, respectively.

The luxury blueprint of Hongmeng Smart Driving is gradually taking shape, which will be key for Huawei's automotive business to achieve a closed-loop business model downstream.

As the platform that connects the past and the future, the automotive BU platform packages Huawei's "black technology" in the automotive field and exports Huawei's "touchstone into gold" intelligent capabilities to Smart Selection cars and external cooperative car companies. Huawei's automotive map has spread out like a huge net, and is inserting flags in the transformation of smart cars through three types of cooperation pipelines, from shallow to deep, in multiple directions. In November last year, Huawei also specifically established the automotive BU as a new platform company and rarely opened up equity cooperation, inviting car companies to cooperate and take shares to achieve deep binding.

02

Development "Victim"

If the pressure of Huawei making cars is due to the large brand and high attention, the reasons for the collapse of many car companies are more realistic.

Higer

On February 28th, the news of Higer Automobile founder Ding Lei's visit to Changan Automobile's Chongqing headquarters and his meeting with Changan Automobile Chairman Zhu Huarong quickly spread. There are rumors that Changan Automobile is interested in acquiring shares of Higer Automobile. Zhu Huarong responded, "We are discussing, but it's still early to reach an agreement." This is because Higer Automobile is already on the brink of life and death. This brand, known as the "luxury pure electric car ceiling," fell into a suspension of work and production storm at the beginning of the Dragon Year. On February 18th, the first day of work in the Dragon Year, Higer Automobile spread the news of a 6-month suspension of work and production. Subsequently, news of the closure of some Higer Automobile stores nationwide, the dismissal of outsourced employees, and formal employees embarking on the road to rights protection spread.

On the evening of February 22nd, Higer Automobile publicly responded that in the face of heavy internal and external pressures and challenges, Higer Automobile has made significant adjustments to its daily operations since February 19th and is currently taking various measures to alleviate difficulties.Ding Lei believes that the reason why Gaohe has come to this point is greatly related to the fact that "using old business strategies cannot compete with the internet-based car manufacturing model," and the contradiction has erupted at this particular time. Other emerging car manufacturing brands have already established "star" self-developed systems and distinctive product matrices. The high-end technology that Ding Lei pursues is the standard for defining luxury in the era of fuel vehicles. However, in the era of electric vehicles, this model is no longer an important indicator to measure the luxury of a car model. For example, the 0-100 km/h acceleration data, which was limited by the performance of internal combustion engines, has become a standard configuration for most electric sports cars/sedans with 5 seconds or even 3 seconds after the addition of electric motors with low-speed high-torque characteristics.

WM Motor

As one of the earliest new forces to enter the car manufacturing industry, established in 2015, WM Motor used to be known as the "New Force Four Little Dragons" along with NIO, XPeng, and Li Auto. Since its establishment, WM Motor has completed a total of 12 rounds of financing, with a total announced financing scale reaching 41 billion yuan.

However, from 2019 to 2021, WM Motor suffered a total loss of about 17.7 billion yuan. By 2022, WM Motor frequently reported news of salary cuts, production suspensions, arrears of rent for the headquarters building, and a large number of dealers withdrawing from the network. Eventually, the Third Intermediate People's Court of Shanghai heard the bankruptcy reorganization application of WM Motor.

Singulato

As the leader of Singulato Motors, Shen Haiyin compares the company's development model to the "Xiaomi model." He emphasizes that high cost-performance ratio, establishing close relationships with users, and obtaining continuous profits through services are the core of this model. Under this model, Singulato Motors is committed to bringing high-quality cars to consumers at affordable prices, creating a Tesla that belongs to China.

Shen Haiyin believes that with the continuous improvement of consumers' pursuit of technology and life quality, smart cars will become an indispensable part of their lives. He envisions a future where smart cars can perceive the world like humans and grow continuously, with data playing a crucial role in this process.

In August 2020, Singulato Motors ranked 108th on the "Suzhou High-tech Zone · 2020 Hurun Global Unicorn List" with a market value of 20 billion yuan. On July 10, 2023, Singulato Motors was applied for bankruptcy liquidation. Since its establishment, compared with other new forces in car manufacturing, Singulato Motors has not attracted much attention, and its products have not been particularly eye-catching, belonging to the "average" category, and it has not yet produced mass-market vehicles; the founder has been relatively low-key, and financing has not been continuously infused, so it is not surprising that Singulato Motors has no hope for development and is applied for bankruptcy liquidation.

Evergrande Auto

Has not gone bankrupt, but is barely hanging on. According to the corporate information platform, Evergrande Evergrande New Energy Automobile (Shanghai) Co., Ltd. has added three enforcement records, with a total execution target of more than 98 million yuan, involving construction contract dispute cases, etc., one of which also includes the company's shareholder Evergrande New Energy Automobile Investment Holding Group Co., Ltd. as the enforcer, and the execution court is the Songjiang District People's Court of Shanghai. Risk information shows that Evergrande Evergrande New Energy Automobile (Shanghai) Co., Ltd. currently has more than 50 enforcement records, with a total amount of enforcement exceeding 1 billion yuan. In addition, the company also has multiple restrictions on consumption orders, dishonest enforcer (deadbeat) and final case information.Evergrande's Hengchi New Energy Automobile Company has added multiple records of being an executed party and significant enforcement targets, highlighting the immense challenges it faces in financial and legal risk management. This not only reflects the company's current operational difficulties but also casts a shadow over external expectations for its future development.

03

Elimination Rounds Continue

The elimination rounds in China's new energy vehicle market are still ongoing. Companies like Hozon are not the first to fall, and certainly not the last.

Losing external financing channels is a trigger for these brands to fall into crisis. The inability to form a scaled product layout and to counter price wars with sales volume is the fundamental reason for their loss of survival space.

Taking WM Motor as an example, data released by WM Motor shows that from 2019 to 2021, the delivery figures were 12,900 units, 21,900 units, and 44,000 units, respectively. However, by 2022, WM Motor's sales showed a significant downward trend. Data from the Passenger Car Market Information Joint Committee indicates that in 2022, WM Motor's cumulative sales were 29,400 units, a year-on-year decrease of 33.3%. By 2023, WM Motor no longer published sales figures. According to data released by the Joint Committee on March 17, WM Motor's sales in February of this year (new car compulsory insurance purchase numbers) were 278 units, a staggering year-on-year drop of 91.6%.

When sales are difficult to boost, and the automotive industry's price wars are fierce, companies like WM Motor, Hengchi, or any other automakers are bound to face a crisis of survival.

Nowadays, the relationships within the automotive supply chain are being reshaped, transitioning from the traditional vertical hierarchy to a professional division of labor in a networked structure. Original equipment manufacturers (OEMs) are no longer focusing solely on Tier 1 suppliers; they are paying more attention to components. We believe that strong coupling is an inevitable path in the new era, and the automotive supply chain will shift from a vertical chain-like ecological structure to a networked ecological relationship, that is, a symbiotic relationship, with multiple enterprises such as whole vehicles, Tier 0.5, Tier 1, Tier 2, Tier 3, etc., cooperating to achieve systematic cost control and drive supply chain transformation. The future of automotive intelligence will rely on the progress of underlying products such as chips, algorithms, and software, and multi-party cooperation has gradually become the norm throughout the entire automotive industry's ecosystem. Secondary and tertiary component suppliers will play a significant role in the entire industry chain, upstream and downstream.

The core relationships in the automotive supply chain are undergoing significant changes: whole vehicles and component enterprises will form new industrial organizational relationships, with multiple relationships coexisting. In situations where component enterprises completely dominate, the closed self-research and self-production model of whole vehicle enterprises is a double-edged sword. Under such conditions, a strong supply chain capability becomes the key to determining the life and death of the enterprise, and whole vehicle enterprises may engage in full-stack self-research and build their core supply chain.

The automotive supply chain also reflects new characteristics of being shorter, internalized, networked, and interactive: Shortening is manifested in the fewer components and shorter value chains of electric vehicles, leading to a more concentrated distribution of added value in the automotive industry; Networking is shown in the transition to electric vehicles, which will change existing production models and rely more on networks, leading to a reorganization of the global automotive value chain. Internalization is reflected in not only the automotive industry but also in the fact that more asset-light, relationship-intensive, and knowledge-intensive enterprises will dominate the global industry chains of technology-intensive industries, with core technology research and development activities becoming increasingly internalized.Enterprises in the future that produce new energy vehicles must have strong industrial chain capabilities to be profitable.

As the growth rate of electric vehicle sales slows down, the new energy vehicle market has become a fiercely competitive "red ocean." In this context, how to maintain a firm foothold is a critical issue that every enterprise engaged in energy vehicles should understand clearly.