Original link: https://www.latepost.com/news/dj_detail?id=1598
In 2022, relying on 50,000-150,000 models, Nezha Automobile, one of the new car-making companies that has been established for 8 years, became the champion of new car-making forces for the first time. It also launched a medium-to-large sedan Nezha S, starting at 200,000 yuan, hopes to enter new markets.
But by 2023, people will no longer discuss the ownership of the new power sales champion, and the term new power itself will also exit the scene. Electric vehicles have become more mainstream, and various brands have started a melee. The duo BYD, Tesla, sub-brands incubated by traditional cars, and joint venture car companies are all entering the battle. People who will buy electric vehicles are no longer a group of early adopters, but a larger general consumer.
In the first quarter of 2023, Nezha has delivered a total of 26,000 vehicles, ranking fifth in the sales list of new energy vehicles in the first quarter of this year. In the front are BYD, Tesla, GAC Aian, Ideal and Weilai, and in the back are brands such as Changan Deep Blue, Xiaopeng, Jikrypton, and Leapao.
Nezha happens to be in an intermediate position, and before and after it is an opponent with more resources or more famous than itself. As a company that has been established for 9 years without a star founder and Internet halo, it is not easy for Nezha to reach the middle of the poker table today, but it has no room to breathe or be complacent.
Its destiny is the epitome of a middle-level player in the market. One step up may break through, and one step back is the abyss.
Must follow up with price cuts
From the end of last year to the beginning of this year, Zhang Yong went around the stores of various brands. The most direct feeling is that this may be the bleakest quarter in the auto market in a decade or two.
The demand is weak, and there are not many people who buy cars. Tesla cut the price by 20,000 to 48,000 yuan on January 6, setting off a price war, which further caused consumers to fall into a wait-and-see situation and wait for other car companies to cut prices. Zhang Yong saw a large number of chargebacks from various brands, and price cuts were imperative.
Tesla’s price cut was expected, but the magnitude exceeded Zhang Yong’s expectations. Zhang Yong said that his first reaction was to follow up. After returning from the Spring Festival, Zhang Yong’s first job was to bring Nezha’s management to a meeting to discuss how much the price should be reduced and how to implement it.
Nezha’s price reduction was implemented quickly, and the range was in place in one step. “Those who drop prices late, or those who don’t cut prices in place, are more passive, because consumers are all waiting to see and wait for you to lower prices.” Zhang Yong said.
In order to implement the price reduction faster, the preferential policy of 5,000 yuan deposit worth 20,000 yuan was synchronized to all first-line stores on the second day of the meeting. After that, Zhang Yong ran to contact the supplier, hoping to share this part of the cost. Within two days, Nezha completed the decision and implementation of the price reduction.
Nezha has adopted a differentiated price reduction strategy at different price points. Among them, the high-end model, namely Nezha S, quickly followed up, with a total discount of up to 15,000 yuan. The cheaper Nezha U and V saw little price cuts in the early stages of the price war.
S has been officially delivered since November last year, and a total of 8,030 units were sold in the first five months of complete delivery. It currently accounts for about 20% of Nezha’s total sales. U and V are the main sales models that contribute more to Nezha’s sales. The price of U is around 130,000 yuan, and the price of V is around 80,000 yuan. This is the basic platform for Nezha to start. The two models supported the total sales of 150,000 last year, and sent Nezha to the position of champion of new forces.
Behind this price reduction choice is that Zhang Yong is relatively confident in the U and V basic markets, and he is more pressured on the newly entered mid-to-high-end market of more than 200,000 yuan.
In an interview with us in February this year, Zhang Yong said that in 2023, Nezha’s sales target is between 250,000 and 300,000. At the end of last year, Zhang Yong’s psychological target was still inclined to 300,000. However, the fierce competition from the end of the year to the beginning of the year made him focus on The lower limit of the target was adjusted to 250,000. Of these, 150,000 were for the U and V, the same as the combined sales of the two models last year.
The range of 100,000 to 150,000 yuan for these two models is the advantage area of the Nezha team. Most of Nezha’s initial team came from BAIC New Energy and Chery New Energy. The parent company Hezhong New Energy was founded by Fang Yunzhou, the former deputy general manager of Chery New Energy. CEO Zhang Yong joined in 2018. Before coming to Nezha, he was the general manager of BAIC New Energy Sales, familiar with traditional channel construction and operation and commercial vehicle market. They no longer need to learn how to build a car that uses electricity from scratch, nor will they stumble on basic issues such as quality and safety.
Nezha Automobile relied more on the B-end market in the early days, which helped them run out of scale and lay down channels under the condition of insufficient brand awareness. Today, GAC Aian is still following this path, selling 270,000 vehicles last year.
In the next few years, Nezha began to reduce the proportion of operating vehicles, relying on the cost-effective strategy of “big cars for small cars” to hit the market. The small SUV Nezha V only sells for about 70,000 yuan, and the products in the same price range are mostly small A00-class Cars, the same SUV competitors often start selling at more than 100,000 yuan.
Zhang Yong concluded that Nezha’s low-cost ability mainly comes from three points. The first is to do things right, not to lose money, and to follow the trend without spending money. It is difficult for users to have a good perception of this at an earlier stage; the second is the ability to be platformized and generalized, and the third is that Nezha did not spend too much money on marketing and did not advertise on a large scale.
However, in this past dominant battlefield, the competition situation Nezha faces this year is not optimistic. The most powerful rival is BYD. The latter began to cut prices and increase equipment on a large scale this year. The new Qin Plus DM-i starts at 99,800 yuan, and the price of the DM-i hybrid system model is reduced to within 100,000 yuan for the first time. It will also release models with lower prices (Seagull, E2) to seize the entry-level pure electric market. In the first quarter, BYD sold 552,000 vehicles, nearly doubling year-on-year. About 70% of them are about 80,000 to 150,000 Qin, Yuan Plus and Dolphin models.
Zhang Yong said that his confidence lies in: “Qin is encroaching on the fuel vehicle market. Seagull (an A0-class sedan that BYD is about to launch) has an impact on V, but V will also be redesigned and replaced this year. I am not standing Then I’ll call you.”
U and V increments also come from going out to sea. Nezha’s latest organizational adjustment is to separate the overseas business department into a first-level organization, which is juxtaposed with the marketing company and trading company. Going overseas is one of the important paths for Nezha to achieve its sales target in 2023. At present, Nezha V is the second best-selling pure electric model in Thailand, second only to BYD Atto 3 (Yuan PLUS).
However, before the facelift of the V was launched, the sales of this Nezha’s main model were experiencing a sharp decline. V delivered more than 10,000 units for several months in a row last year, but dropped to 1,000 units in December, and around 5,000 units in February and March this year.
In March, U and V, which did not cut prices in the early stage of the price war, also launched a comprehensive discount of 16,000-25,000 yuan at the retail end, including cash discounts, insurance rights, etc.
The market above 200,000 yuan is the part where Zhang Yong feels more pressure. He hopes that Nezha will sell 100,000-150,000 vehicles in this range this year, so that the total sales volume will reach 250,000-300,000 vehicles.
His dreaded opponent is Tesla. After Tesla cut prices before the Spring Festival, some interested customers of the Nezha S pure electric version turned to Model 3.
In addition to Tesla, there are many competing products in the 200,000-range sedan market where the S is located. BYD Han, which sold 270,000 units last year, has launched a facelift for the pure electric version, and the DM-i version is about to change. The traditional manufacturer SAIC has also launched a topical product such as Feifan F7, plus NIO ET5, BYD Consumers have a lot of choices for models such as Seal, Xpeng P7 and facelifts that sell well.
Nezha’s countermeasure is to increase the sales of the extended-range S version, and start delivering versions with lower battery life, lowering the starting price. On March 16, Nezha S launched a “limited-time delivery price” discount of 179,800 yuan for its extended range and low configuration; in the pure electric version, the lowest battery life version of Nezha S previously delivered was the 715-kilometer battery life version, and it will start to deliver cheaper The 520-kilometer battery life version.
However, in this way, the starting price of Nezha S has come to a price segment very close to that of the high-end version of Nezha U, and the goal of increasing the brand and unit price is discounted in front of reality. Tesla still has room to cut prices in the future. This leading car company that doesn’t care about maintaining a brand premium puts pressure on mid-market players like Nezha.
A new model with a slanted sword
Whether it is using U and V to stabilize the basic disk, or using S to sprint upwards, the three models that Nezha has delivered are in the most competitive price segment and a market segment with many similar competing products.
In order to achieve the growth target of 100,000-150,000 vehicles other than U and V, an important move of Nezha this year is to enter a very niche market: the two-door electric sports car.
On April 4th, Nezha held a meeting for this new car at Beijing 798. If you block the car logo, you will not believe that this is a model launched by Nezha. It has a low profile and a streamlined body. It is named Nezha GT (Grand Tourer, a luxury SUV) and is expected to sell for 20. 10,000-300,000 yuan.
Nezha GT
Zhang Yong is the product definer of Nezha. He explained why he made a two-door sports car in this way: first, the young consumer group is rising, and they have personalized consumption needs; second, Nezha hopes to improve the brand image through this model, and this sports car will be Nezha’s first car exported to Europe .
There was a lot of controversy within Nezha at the beginning of making a sports car. A person from Nezha said that at first there were hesitant voices in the company, thinking that it would be better to make a sports car for the next one? “So far, I haven’t failed, so they just trust me. So what if I fail? You have to allow me to fail once. It costs 1 billion yuan to make this car, (failure) will not hurt my muscles and bones .” Zhang Yong convinced the management in this way.
Zhang Yong said that after the prototype car was made, three or four of the dozen or so 40- or 50-year-old executives in Nezha offered to use the Nezha GT as the second car for the family. “Everyone has a sports car dream.” “.
The real question is whether Nezha has enough brand power to make a sports car. Sports cars are big toys, and consumer demand for brands is much stronger than for family cars. The most famous GT models come from ultra-luxury brands such as Ferrari, Bentley, and Maserati.
Globally, there are BBA, Maserati and Bentley that have launched two-door sports cars so far, all of which are luxury brands with a price of more than 400,000 yuan. Nezha’s brand and sports car form, plus a price of less than 300,000 yuan, is a combination of slanting swords.
Nezha once invited some media and car owners to experience this new car. After the test drive, everyone thought that this car might be worth 300,000-400,000 yuan, but when they knew it was Nezha’s car, they silently lowered their price expectations. Tens of thousands.
Entering the niche market means that the competition is not so fierce. On March 10, Nezha GT debuted. Zhang Yong said in the circle of friends: “You roll up, I will go another way!” It sold 5,000 units and became a hit in this segment.
The niche is also doomed that the ceiling will not be too high. The global annual sales of coupes is around 500,000 units, while China only accounts for 20,000 units. In a similar price range, 800,000 luxury cars above 400,000 yuan were sold in China last year, and coupes accounted for only 2%. If Nezha GT can really sell 5,000 units a month in the future, it will triple the size of the Chinese two-door sports car market by itself.
Zhang Yong made a bold, unpredictable decision to find benchmarking precedents. This may open up a new breakthrough for Nezha, and it may be a consumption of this company with few resources.
invisible changes
In addition to the formation of models and products, Nezha has carried out more organizational and internal capacity building since the second half of last year.
Zhang Yong is not a typical founder of a new force. In 2018, he was invited by Fang Yunzhou, the founder of Hezhong New Energy (Nezha’s parent company), to join Nezha as CEO. At that time, Hezhong had been established for 4 years.
This is not an entrepreneurial story that investors like. Professional managers will always be questioned that they are not deeply bound to the company. After several rounds of financing, the outside world is also worried that the proportion of shares held by Nezha’s management is too low, and the motivation for struggle is insufficient.
This situation has changed with the share reform. In February of this year, Nezha completed the change of enterprise type, from a limited liability company to a joint stock company (foreign investment, unlisted), in preparation for listing. Zhang Yong said that the current core management shares add up to be the company’s largest shareholder.
When thinking about the 2023 strategy at the end of last year, Zhang Yong summed up the idea of ”high-quality development”, which includes four capabilities: creating explosive models, low-cost operations, quality management and supply chain management. In the stage of market change, not only must go fast, but also go more steadily.
Entering more links in the supply chain is one of the manifestations of this idea. Nezha established Haozhi Technology Electric Drive Co., Ltd. in December last year to make some core technologies by himself, including electric drive system, range extension system, thermal management system and domain control system. At the same time, Zhang Yong also understands that the links that Nezha can enter are limited, and he must selectively focus on the key links: “Now vertical integration is dead, but you can’t just be an assembler.”
After the listing and delivery of S, Zhang Yong himself has a better understanding of the balance between guaranteed supply and low-cost operation. S is the first time in Zhang Yong’s career to make a mid-to-high-end passenger car. He said that in the past six months or so, the core problem is supply. The biggest pitfall he has stepped on is that he did not arrange the second supply in advance.
S has delayed the delivery time, and the monthly delivery volume has not exceeded 3,000 units so far. Zhang Yong said that this is not because of insufficient orders, but because of failure to deliver: “If the supply is better, Nezha S may have 5,000 units delivered in the first month, and the whole volume will be completely different.”
At present, Nezha is already doing some work for suppliers, such as going upstream to grab goods together. According to the number of orders in hand for Nezha S, the monthly sales target of Nezha S in the second quarter is 5,000 to 6,000 units.
In terms of channels, in order to cooperate with the launch of mid-to-high-end new cars, Nezha officially began to divide the network this year. The mid-to-high-end models S and GT based on the Shanhai platform will be sold separately from entry-level models such as U and V to improve the brand image and avoid channel conflicts.
At present, Nezha has about 500 stores across the country, of which city partners account for 70% and direct sales account for 30%. This year, Nezha plans to expand the total number of stores to 600-700 after the network division, of which about 300 are stores selling mid-to-high-end vehicles of the Shanhai platform.
Channels are another source of Zhang Yong’s confidence in sales. He said that last year Nezha deliberately slowed down the expansion of channels because there were too few models for dealers to sell. This year is Nezha’s “big product year”. models, there are at least four new models, Nezha will also accelerate channel expansion accordingly.
Autonomous driving is still Nezha’s shortcoming. Nezha currently does not have a partner-level intelligent executive. Nezha is looking for this candidate. Zhang Yong hopes that he can not only do the job at hand, but also have an insight into the market and technology trends. forward-looking insights. In the entry-level market that Nezha focused on in the past, consumers paid more attention to space, battery life, and quality, and did not urgently need intelligence. But when Nezha sells the car for more than 200,000 yuan, the target consumers will have more requirements for intelligence.
Urban NOA is another variable. It can provide point-to-point assisted driving in urban areas, automatically complete operations such as starting and stopping, changing lanes, and overtaking, and the driver only needs to take over in extreme situations. In an interview, Zhang Yong said that the urban NOA made him feel that the development of autonomous driving is faster than he expected, and there may be a breakthrough within two or three years.
This year is the first year of urban NOA on a large scale. Xiaopeng has launched the city NGP (Navigation Guided Pilot, intelligent navigation assisted driving) function in Guangzhou and Shenzhen from the end of last year to the beginning of this year. The polar fox Alpha HI version supported by Huawei has opened similar functions in Shanghai, Guangzhou, and Shenzhen. According to Caixin, Tesla may start FSD (Full-Selfdriving) testing in China this year.
Nezha’s intelligent team has expanded from more than 700 people last year to about 1,000 now. The goal is to implement self-developed assisted driving within two or three years. In Zhang Yong’s view, the team is now able to fight, and the planning and execution within two or three years are no problem, but he thinks less about things after five years. “I think this is also right. We must ensure that we can survive.” Zhang Yong said: “I can sing any song on any mountain. I can only look three steps forward at most, but I can’t look ten steps ahead. I don’t have the ability and resources.”
Entering more markets, establishing nearly doubled channels, deepening more supply chain links, and expanding intelligent capabilities, Nezha, which is not profitable at all, now needs to do more new construction at the same time. Where the resources come from is a question.
It is understood that Nezha actually completed a round of financing of 4 billion yuan earlier this year, but it has not been announced to the public. “We didn’t publicize the financing.” Zhang Yong explained, “And the money raised is not much. Wei Xiaoli has 30 to 40 billion yuan in cash.”
when is it safe
At the beginning of this year, Fang Yunzhou and Zhang Yong, the founders of Nezha Automobile, jointly delivered a New Year speech. At the end of the article, they concluded that “2023-2025 will definitely be a difficult challenge, and it will also be a battle of life and death for Nezha Automobile.”
According to statistics from the China Automobile Dealers Association, entering 2023, the inventory warning index of Chinese auto dealers has been above the boom-bust line for three consecutive months, and is in the recession zone. In 2023, the growth rate of the new energy market will slow down, but the decline will be more obvious for the players behind, and the leading manufacturers will still grow. For example, in the first quarter of this year, BYD’s sales increased by 92.8% year-on-year, and Tesla also increased by 44.3% year-on-year. become more concentrated. At the same time, the price war is still going on, and car companies in the middle reaches of the market such as Nezha that are still losing money do not have the ability to continue to cut prices.
Quantity is the first issue Nezha has to consider, followed by profit. Nezha did not experience a “blood crash” like Xiaopeng, with a year-on-year decline of 40%. But no matter whether it is in the 150,000 price range that Zhang Yong feels relieved, or the 200,000 mid-to-high-end range that he is waiting for, Nezha will face a lot of pressure to reach the sales target.
The possible way out is the change of the overall market. Zhang Yong estimates that demand may gradually pick up after the second quarter. The wait-and-see mentality brought about by the current price war has suppressed some real demand for car purchases, but these consumers will eventually make a choice. Nezha still has to find a way to get through these few months.
The second is Nezha’s differentiated route, that is, the performance of Nezha’s new car GT this year. There is no market benchmark for the 200,000-300,000-yuan two-door electric sports car, and sales are unpredictable. Whether Zhang Yong’s market sensitivity that has been in charge of sales for many years can be effective again will become a variable for Nezha’s sales this year.
The more long-term variable is whether the long-term construction that Nezha has begun to do can be transformed into competitiveness and transmitted to sales before the market becomes more concentrated and a group of companies are eliminated. This includes self-developed and self-produced core components such as motors and drive systems, increased investment in intelligence, and deeper cooperation with leading suppliers.
In January this year, Nezha announced that it would become the first car company to adopt the CTC (Cell to Chassis, battery-chassis integration) technology of the Ningde era. Last year, CATL participated in Nezha’s D round of financing. CTC can integrate the battery on the chassis to increase the battery capacity while maintaining or even expanding the interior space of the car, so that consumers can buy longer and more spacious cars. Battery life and space are the basis for choosing a car that Chinese car buyers care most about.
Nezha S’s most expensive lidar version with the strongest autopilot capability is a cooperation with Huawei. Both the autopilot chip and lidar come from Huawei. At the China Electric Vehicle Hundreds Meeting in early April, Yu Chengdong of Huawei said that “new forces like Li Xiang and Li Bin” would not choose Huawei, but those who would choose Huawei. They are generally traditional car companies, but those who are “afraid of losing their souls” do not. Will choose Huawei.
Nezha does not have too much burden in choosing suppliers. By cooperating with leading suppliers, Nezha can enhance battery and intelligence capabilities faster and lighter, increasing its chances of surviving the brutal knockout.
Nezha lost the position of the new force’s sales champion in the first quarter of this year. Zhang Yong now feels that the short-term ranking is meaningless until it sells 300,000 to 500,000 vehicles. According to his calculations, when the annual sales target of 250,000 units is achieved, Nezha can achieve operating profit, that is, profit after deducting long-term R&D investment; the overall profit will be possible when the annual sales target of 500,000 units is reached in 2025, at least after this A line is basically safe.
Zhang Yong has seen the cruelty of the market, and he also thinks that Nezha is not as miserable as many people think: “Everyone either doesn’t pay attention to us, or they underestimate us. Let’s wait and see after this year’s battle.”
This article is transferred from: https://www.latepost.com/news/dj_detail?id=1598
This site is only for collection, and the copyright belongs to the original author.