The ideal “second half”

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Written | Edited by Leng Zelin | Wang Pan

Source: Photon Travel

In the second quarter, Ideal finally released the company’s second model, the L9, after a two-year period of bicycle explosions. In the expectation of Li Xiang, CEO of Ideal Motors, the car will be officially delivered in August, and the delivery volume will exceed 10,000 in September.

On the other hand, some media recently exposed spy photos of the ideal L8. The appearance almost retains the family style similar to the L9. It is also equipped with a lidar on the top of the head. It is positioned as a medium and large SUV. The overall size is one size smaller than that of the L9. It will replace the position of the existing ideal ONE.

According to the product strategy of benchmarking Apple proposed by Li Xiang before, L9, L8 and the possible L7 can be understood as iPhone Pro, iPhone, iPhone mini, and it is unlikely that pure electric products will continue this line of thinking. . The latter two power modes are combined, and gradually cover the entire new energy market of 200,000-500,000 yuan with a price range of 100,000 yuan.

The previous ideal has always relied on an ideal ONE to support sales. Not only does it not lose to Weilai and Xiaopeng, which have multiple products in parallel, but also ranks among the top of the new car-making forces all year round, leading a wave of program extension.

According to the product rhythm disclosed by Ideal, there will be three more models on the market next year, which will also be a great year for Ideal Cars. Since L9, Ideal is no longer “going alone”, and the way the outside world observes Ideal Cars may also require certain changes occur.

At the beginning of this year, Li Xiang released a “small essay” on social platforms, thinking that although the “three fools of building a car” have different ideas, they all completed the 0-1 verification period in 2021, and they have eaten it in their respective market segments. 3% market share. At the stage from 1 to 10, the core business action is to carry out “batch” production of the advantages established in the past, the accumulated experience and the verified business model.

Therefore, as the last financial report before “batch copying”, in the case of the surge in upstream raw materials and intensified market competition this year, it may also better reflect the feasibility of its business model and the level of the ceiling.

“Pain” before ideal scale

On the whole, due to the impact of the Shanghai epidemic in April, Li Auto’s financial data in the second quarter ushered in a comprehensive month-on-month decline.

In the second quarter, the sales revenue of Ideal Vehicles was 8.48 billion yuan, a year-on-year increase of 73% and a month-on-month decrease of 8.9%; the total revenue was 8.73 billion yuan, a year-on-year increase of 73.3% and a month-on-month decrease of 8.7%; the gross profit was 1.88 billion yuan, an increase of 97.1% year-on-year and a month-on-month decrease. 13.2%.

It is worth noting that the net loss of Lili Auto in this quarter has created a new high in a single quarter after listing, reaching 641 million yuan, a significant increase of 172.2% year-on-year. This figure was only 10.9 million yuan in the first quarter. For the whole year of last year, Li Auto’s net loss was only 321.5 million yuan (Q4 net profit in 2021 was 296 million yuan).

Among them, the operating loss of Ideal Auto in the second quarter also hit a new high, reaching 978.5 million yuan, an increase of 82.6% year-on-year and a month-on-month increase of 136.9%.

The reason for the substantial increase in losses is that, on the one hand, Li Auto has a smaller loss base compared to other new forces, and the decrease in deliveries has led to a decrease in sales and gross profit; on the other hand, with the growth of the number of models and offline sales network , resulting in an increase in operating expenses.

In the second quarter, Li Auto’s R&D expenses were 1.53 billion yuan, an increase of 134.4% year-on-year and 11.5% month-on-month; sales, general and administrative expenses were 1.33 billion yuan, an increase of 58.6% year-on-year and 10.2% month-on-month.

Fortunately, in the second quarter, the gross profit margin of Ideal Auto did not decline as sharply as Weilai and Xiaopeng in the first quarter. The gross profit margin of vehicles in this quarter remained stable at 21.2%, and the overall gross profit margin was 21.5%.

Due to the ideal partial inventory offset in the first quarter, although the price of power batteries increased, the overall performance of the financial data was not obvious. In the second quarter, as orders were delivered one after another, even if Ideal raised prices in April, it still did not offset the impact of rising costs, so the gross profit margin of vehicles fell for the first time.

However, as the delivery of the L9 drives up the average selling price and the battery cost continues to decrease, it is expected that the ideal gross profit margin will be greatly improved.

Rational view of ideal’s financial data this quarter fell, mainly due to external environmental factors and internal changes. In addition, ideal cash and cash equivalents, restricted cash, time deposits and short-term investment balances are also relatively sufficient, reaching 53.65 billion yuan.

However, in the delivery guidance for the third quarter, in the absence of a clear negative signal from the outside world, Ideal gave a more conservative figure of about 27,000-29,000 vehicles.

In other words, in the absence of the impact of the epidemic and the delivery of new cars, the ideal third-quarter delivery volume can only be basically the same as the second quarter.

The delivery volume of Lili Auto in July was 10,422 vehicles. After deducting this part, the average delivery volume of the remaining two months was about 8,289-10,289. Among them, according to the second-quarter conference call of Ideal, it is expected that more than 10,000 L9s will be delivered in September, which means that the proportion left to Ideal ONE is almost negligible.

Li Li officially admitted that the number of Li Li ONE orders is currently slowing down, and the reason given is that some Li Li ONE potential customers have converted to L9.

However, unlike Xiaopeng’s introduction of preferential policies some time ago, we believe that this also belongs to the “labor pains” before the ideal scale.

In fact, the delivery volume of the Ideal ONE also dropped sharply in May last year, mainly due to the news of the launch of the new Ideal ONE, which caused some car owners to wait and see. Due to the lack of timely synchronization of news and the inability to upgrade the old models, some car owners who bought the old models were very dissatisfied at that time, and they questioned the ideal of “clearing inventory”.

Recently, the news that the L8 model will replace the ideal ONE has also been widely circulated on the Internet. Li Xiang himself also confirmed the existence of the L8 model in the conference call, and revealed that the release of the L8 model will be earlier than everyone expected, and the release to delivery will be faster. L9 is faster.

To some extent, the default attitude of the ideal official is also to deliberately avoid “repeating the same mistakes”. After all, this year, the brand of Huawei and Celis has emerged. In the short term, the traffic and some intelligent capabilities brought by Huawei are ideal and difficult to achieve. Beyond, even if the M7 has not been officially delivered, it will invisibly bring some pressure to the ideal.

This also means that if the preferential policy does not work, some of the “inventory” of Ideal ONE may only be carried by the ideal honestly.

Ideal Answers and Unanswered

Li Xiang has repeatedly stated that Lixiang Auto’s car-building ideas will still focus on home users. It can also be understood as scene-based car building

From Ideal ONE to L9, Ideal is constantly enriching various usage scenarios based on the premise of family car purchase. For example, the triple screen meets the entertainment needs of the co-driver, and the comfort of the rear seat considers the long-distance ride of the elderly and children, even if it is nicknamed the ideal electric vehicle. The “color TV, refrigerator, and large sofa” of the three major parts of the car still have their usage scenarios.

On the surface, the ideal scenario-based car manufacturing is only for home users, and may limit the further expansion of the brand user group.

Xiaopeng Motors CEO He Xiaopeng also asked after the listing of L9: “In the fierce competition, the global market, the non-fast-moving goods industry, and the 2C non-protection field, which good product depends on precise positioning and can gain advantages in the medium or long term? Barriers.”

But in fact, the family car scene is a major factor affecting Chinese consumers’ car purchase. The data given by Li Xiang himself is that as high as 89% of the purchase groups of more than 200,000 yuan are home users.

Strictly speaking, this sentence should be expressed as 89% of consumers in the purchase group of more than 200,000 yuan will consider the family car scene.

It is generally believed that the early mid-to-high-end new energy market is dominated by increased purchases, and the purpose of consumers’ increased purchases is to make up for some car use scenarios (such as limited numbers) that are lacking in oil vehicles, or to be an early adopter; the ideal positioning from the beginning It seems to be more inclined to buy-in or first-time buyers, and the latter value a complete car scene.

Due to the existence of extended program/high-voltage fast charging, the listed and planned models of Lili are not exclusively for use by a single member of the family. Therefore, with the continuous expansion of the new energy market and the decline of the fuel vehicle market, the proportion of replacement and first-time purchasers will definitely be greater than that of additional purchasers, which is also the underlying logic of the ideal explosion.

However, the ideal past has proved its ability to explode, but the overall scale is still difficult to build too much in terms of cost compared with the models in the era of fuel vehicles or the “scale + high common rate of parts” of Tesla Model 3/Y The advantages. If you just focus on meeting individual needs without considering the R&D investment and cost, then there is a high probability that few people can afford the built car.

Therefore, in order to control the rising cost and reduce the cost performance during the “stacking” process, Ideal has made adjustments in its business model. Except for the sporadic personalized configuration, the rest of the system is standard.

For example, traditional car companies have optional kits worth tens of thousands of yuan. They are not simply seeking huge profits, but more because the low amount of optional installations raises the cost of sharing. When ideally all configurations are implemented as standard, the overall cost-effectiveness will be reduced. It is much higher than the optional models of the same level.

From the perspective of the continuation of the L9, the ideal follow-up models will also continue to adopt the standard business model of the whole series to amplify its advantages.

In the first quarter conference call, Li Xiang once briefly sorted out the company’s mid-term product sequence, that is, the range extension and pure electric “walking on both feet” mentioned above.

But such a product strategy still has a visible “defect”, that is, who will lead the dual product line of range extension and pure electricity? If in the same price range, the ideal is still relying on program extension to support sales, it is not difficult to see that with the rapid increase in the penetration rate of new energy, the license plate advantage of new energy vehicles will gradually weaken.

When will the city’s traffic capacity and financial subsidy pressure reach a critical point? This is an ideal question that has not been answered. There is still a certain buffer space for pure electric, but the “advance amount” will definitely be used in the extended-range models first. Beijing, Shanghai and other first-tier cities have begun to exclude the extended-range from “new energy”.

If more than half of the products are affected by the general environment, then the competitiveness of the ideal in the same price range will also be greatly reduced.

The benefits brought by scale increase geometrically, and so should the pressures and difficulties it brings. In the rapid expansion of NIO and Xiaopeng in the early days, we have all seen similar scenarios: either the drastic changes in core personnel, or the deformation of actions caused by the blockage of information at the management and executive layers. It’s a decline in word of mouth, a delay in products, or even a slowdown in sales.

In addition, the scenario-based car manufacturing based on Chinese families will also have a certain impact on the competitiveness of models going overseas. At present, both NIO and Xiaopeng regard the European market as the next driving force for sales growth. NIO will even launch a separate brand for Europe, and the ideal overseas plan is still “waiting and seeing” for the time being.

Ideal car’s insight into product demand and efficient management capabilities have been fully expressed through Ideal ONE, and it is also through this model that it has been favored by investors such as Meituan Wang Xing and Mingshi Capital Huang Mingming. .

Ideal has a smallpox version that allows investors to imagine infinitely, but there are also urgent problems that need to be faced at the moment. To stand out in the sandwich between new forces and traditional car companies, Li Xiang still needs to continue to give better answers.

(Disclaimer: This article only represents the author’s point of view and does not represent the position of

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