What swallowed the performance of Mavericks Electric?

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Author | Scar

Source: Alpha Works Research Institute

Introduction: The product no longer follows the “extreme cost performance”, which may be one of the reasons for the decline in sales of Mavericks, which created the high-end electric car track.

Performance plummeted across the board

In the fierce competition of traditional two-wheeled electric vehicle brands, Niu Electric (NIU.O) once stood out with high-end innovation, and even opened up the track of high-end electric vehicles, which has been in the limelight for a while.

But in recent years, the Mavericks, who have been in trouble with growth, have been far from the moment of glory.

In the second quarter of this year, Mavericks Electric’s revenue was 828 million yuan, a year-on-year decrease of 12.4%; its net profit was 14.4 million yuan, a year-on-year decrease of 84%. Since then, the company’s single-quarter net profit has declined year-on-year for three consecutive quarters.

To put it directly, the main reason for the decline in performance is the sharp decline in sales.

According to the sales data for the second quarter of 2022, Mavericks sold a total of 208,900 electric vehicles, a year-on-year decrease of 17.4%. In the Chinese market of Mavericks’ “base camp”, Mavericks Electric achieved sales of 180,300 units, down 26.7% from the same period last year.

At the same time, Mavericks Electric has also recently lowered its full-year sales target for 2022 to 1 million to 1.2 million units, which is a drop of 500,000 units compared to the company’s forecast at the end of 2021.

Affected by this, the stock price of Mavericks Electric dropped to US$4.5 at intraday in September, and then fell to US$3.95 on October 3, setting a new low after listing.

It is even more important to note that the current performance was achieved under the fact that Mavericks electric products still have a gross profit margin of more than 20% and vigorous marketing and promotion.

The financial report shows that from 2019 to the second quarter of 2022, the gross profit margin of Maverick Electric was 23.4%, 22.9%, 21.9% and 20.3%, respectively, with a significant downward trend; and in the second quarter of 2022, Maverick Electric’s net profit margin was 1.74 %.

For comparison, in the same period in 2022, the gross profit margin of its competitors Yadea Holdings (1585.HK) and Emma Technology (603529.SH) was only about 15%; but Yadea Holdings’ net profit margin was 6.44%, Emma Technology’s net margin was even higher at 7.29%.

Mavericks has achieved a net profit margin that is weaker than that of its competitors with a higher gross profit margin.

What is eating up the profits of Mavericks Electric?

Part of the reason is that Mavericks has invested heavily in marketing and promotion. The financial report shows that in the second quarter of 2022, the sales and marketing expenses of Mavericks Electric were 92.53 million yuan. If compared with the total gross profit of 168 million yuan in the current period, the sales expenses of Mavericks Electric swallowed about half of the current gross profit.

At the same time as revenue and net profit declined, Maverick Electric’s superior product belt, the high-end area, faced the strong entry of Yadi, Emma, ​​Xinri (603787.SH) and other brands, as well as No. 9 Company (689009.SH) A sudden emergence. The market competition for high-end products has intensified.

Behind the decline in product power: top suppliers are replaced

In the announcement, Mavericks attributed the decline in performance to the decline in consumption in first-tier cities caused by the epidemic. Some market analysts believe that there are also reasons for the lack of offline network layout of Mavericks in low-tier cities.

However, Jihao Electric, which is also under the pressure of the epidemic and aiming at the high-end market, also has fewer offline outlets, but has handed over different transcripts.

The 2022 semi-annual report of No. 9 Company shows that its smart electric two-wheeler business has a revenue of 930 million yuan, an increase of 81% year-on-year, and achieved sales of 307,000 vehicles during the reporting period, surpassing Mavericks Electric.

In this way, there may be other reasons behind the decline in Mavericks Electric’s performance.

One guess is that the product strength and cost performance of Mavericks Electric have changed.

The changes in Maverick’s product strength are concentrated in the following aspects:

First, the competitiveness in the field of ultra-high-end products is behind competitors.

From the evaluation results of Master Lu’s laboratory, we can see that on the comprehensive score ranking list of all models in history, the top ten are occupied by the models of No. 9 company, and there are no Mavericks products.

Although ultra-high-end products may not contribute enough sales and profits, their driving effect on brand recognition cannot be underestimated.

Taking Tesla (TSLA.O) as an example, the model X series, which has many selling points, is more intended to attract attention and anchor the status of the rivers and lakes, but the ones that really “take volume” and contribute a lot of profits are relatively low. The model 3 and model Y series at the end.

Second, the technical advantages of Mavericks Electric are no longer scarce.

With the advancement of technology and changes in consumer preferences, competitors such as No. 9 Electric, Yadi, and Emma have also begun to develop smart electric vehicles. The characteristic technologies that Mavericks used to be proud of, such as App control, satellite positioning anti-theft technology and NFC unlocking technology, have become common configurations of mid-to-high-end models of mainstream brands.

Internet analyst Zhang Shule believes: “Compared with the traditional electric two-wheeler companies that have undergone intelligent transformation, Mavericks, which started playing smart cards and occupied a certain time window, has lost its own dividend period. It does not form the advantages of intelligent technical barriers and appearance design, and there is no moat in the field of electric vehicles.”

Third, the product quality caused a high rate of complaints.

Black cat complaints show that as of October 8, 2022, the cumulative number of complaints about Mavericks was 1,889. Roughly compared with the sales volume, referring to the peers, the complaint rate of Maverick Electric is obviously high.

Taking the black cat complaint platform as an example, complaints against Mavericks mainly focus on false battery life, battery quality, and motor quality.

Among them, central control failures and battery problems accounted for the largest proportion of complaints, which generally reflected problems such as inability to locate the vehicle, central control reporting failure, double-jump automatic flashing, battery virtual mark, unable to charge, and some functions could not be used.

On March 21, 2022, Maverick Electric announced that due to the sharp rise in raw materials such as upstream lithium batteries, Maverick Electric will raise the retail guide price of all lithium battery products on April 1, 2022, by an amount of 200 yuan- ranging from 1000 yuan.

At the same time as the price increase, the product performance has not been improved simultaneously (only the product price increase, not the upgrade). Also, top suppliers such as Bosch Motor and Panasonic Batteries have been replaced.

Taking the motor as an example, the core product N1S (which has been removed from the market) that once established Maverick Electric’s status in the rivers and lakes, also put the Bosch motor in a prominent position in the product promotion at that time: the motor of Maverick Electric N1s adopts German BOSCH The custom brushless permanent magnet motor adopts a new magnetic steel design, optimizes the winding method and winding density of the internal copper wire, the energy efficiency ratio is increased to 92%, the motor power is 1200 watts, and the FOC controller is used to cooperate.

As a typical representative of high-end motors, Bosch motors have a prominent position in the arena and are generally only used in the highest-end products.

However, judging from the current motors of Mavericks mainstream products, Mavericks’ motor suppliers have been replaced by the following suppliers:

1. NIU custom motor: representative models include UQis urban version, etc.;

2. Jinyuxing Motor: Representative models include M1 series, G6 series, etc.

If it is said that in the field of affordable “volume” products such as UQis urban version, M1 series, G6 series, etc., Bosch motors, which are the top suppliers, are replaced, there are still cost considerations.

But in high-end and mainstream products, Mavericks also gave up Bosch motor products, such as the Mavericks electric MQi2s top version priced at 8499 yuan, the newly launched flagship straddle product SQI, etc.

The same example is also reflected in Maverick’s battery, electronic control and other fields.

Take battery suppliers as an example. Now, domestic suppliers such as Far East Battery have replaced Panasonic as the main supplier of Mavericks batteries.

In May 2022, Jiangsu Xiaoniu Electric Technology Co., Ltd. and Far East Co., Ltd. (600869.SH) signed a 122 million yuan lithium battery purchase contract.

According to the long-term purchase contract signed by the two parties in January 2021, Maverick Electric will purchase no less than 150 million 18650 ternary lithium batteries from Jiangxi Far East Battery, a wholly-owned subsidiary of Far East Co., Ltd., from 2021 to 2023. The order amount will exceed 900 million yuan.

In Mavericks’ high-end flagship product N1S, Panasonic 18650 lithium battery is used, which is also an important factor for N1S to achieve a cruising range of up to 80 kilometers (official data) and its cruising range is widely praised.

The cruising range data is the result of the joint work of multiple core accessories including motors, batteries, and electronic controls. After a large number of top suppliers such as Bosch Motor and Panasonic Batteries were replaced, it is unknown whether Mavericks had any quality complaints in this regard.

Competitors are replicating the path of the Mavericks’ rise

When Mavericks was just “born”, it was a blockbuster under the stacking of Bosch Motor, Panasonic Tesla’s same battery, ultra-high-end electronic control, etc., causing countless “tap water”. For a while, the Mavericks N1s can even be compared with the Apple mobile phone and become a fashion icon.

At that time, the price of Mavericks products was not cheap. It can even be said that Mavericks Electric has created the track of high-end electric vehicles.

The reason for being able to open a new track is because the Mavericks have achieved the cheapest under the same conditions (same hardware configuration and matching software), and it is not an exaggeration to say that it is the ultimate cost-effective.

Similarly, when Mavericks’ product strength and cost-effectiveness have changed, No. 9 Electric is replicating Mavericks’ original rise.

On August 29, 2022, No. 9 Company announced that the cumulative actual sales and shipments of smart electric two-wheelers in China exceeded 1 million. In the fiercely competitive field of electric two-wheelers, No. 9 company has occupied a place in the market for just over 2 years.

In the 618 sales battle in 2022, the No. 9 electric intelligent electric vehicle mechanic MMAX series won the TOP 1 position on the Jingdong electric vehicle trading list.

The mechanic MMAX is a high-end flagship that is positioned as a “super-running configuration”, with a price of 9,000 yuan, which is expensive in terms of pricing alone.

But just like Maverick’s original products, under the stacking of materials such as 21700 cells, mole control E180 controller, Jimas custom tires, ABS anti-lock braking system, TCS traction control system, etc., the price of 9000+ , the price is very attractive.

The mechanic MMAX is not the highest-end product of No. 9 Electric. Among the high-end products such as the No. 9 electric E125, which are more expensive (which has exceeded 10,000 yuan), Bosch Motor as a top supplier is impressively listed.

Competitive strategy re-verified: both high-end and extreme cost performance

In the high-end electric vehicle market, the cost-effective competition strategy is gradually reviving. But the difference is that this strategy used to appear more in low-end products. What can hit the market now is high-end products + high cost performance, or it can be called the ultimate cost performance.

Achieving the highest cost performance in the high-quality and high-price range is becoming a shortcut for high-end products to enter the ranks of explosive products.

The birth of Mavericks is the ultimate cost-effectiveness based on the stacking of Bosch motors and Panasonic batteries. The rise of No. 9 Electric is also based on the ultimate price-performance ratio under the blessing of the Mole-controlled E180 controller, Jimas custom tires, various intelligent systems, etc.

Under the wave of intelligence, the speed of product iteration has been continuously improved, and competitors have entered the high-end market one after another. If there is no other well-received product like N1S, Mavericks may face greater growth difficulties.

Whether or not the double drop in revenue and profit can be contained depends on whether Mavericks can return to its original aspiration and settle down to polish the product patiently. After all, the foundation of the brand is still there, and the foundation of the user is still there.

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