Zero run, what did you rely on to kill Tesla?

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Text / Qingqiu

Source: BT Finance (ID: btcjv1)

The competition target of Leapmotor is not “Wei Xiaoli” but Tesla, but for Leapmotor, the low price tag is not so easy to tear off.

Leap Motor’s stock price plummeted by 20 billion yuan on the first day of its listing, which surprised the industry.

At the end of September, Leap Motor was very popular. First, on the 28th, it announced the official launch of its new flagship sedan, the Leapmo C01. Official sources said that the pre-sale orders had exceeded 100,000 vehicles. Then on the 30th, it successfully sprinted into the Hong Kong stock market IPO with the stock code “9863”. , has become the fourth stock of the new domestic car-making force after Wei Xiaoli.

However, the market reaction was unusually lukewarm. According to media reports, retail investors subscribed only 0.16 times, and finally set the offer price of HK$48, the lowest value of the offering range of HK$48-62. Although Leaprun has been listed at a discount, it still suffered a breakout, opening 14.58% lower, and the listed stock price It plummeted by more than 30%, and the lowest price was HK$22.95. The market value was once halved from HK$54.8 billion to HK$28.339 billion.

In contrast, Weilai’s market value is 215.6 billion Hong Kong dollars, its ideal market value is 195.8 billion Hong Kong dollars, and Xiaopeng’s is 74.98 billion Hong Kong dollars. Although the sales volume of Zero Run in the past two months has exceeded the three new car-making forces of “Wei Xiaoli”, its market value is But the gap is not small, and the “fourth stock” still has a long way to go to enter the first camp.

In this regard, Zhu Jiangming, chairman of Leapmotor, said that it is not a good time to go public at present, “The global situation is turbulent and it is in a downward channel, but the main reason for our choice is that we do not care about the current time period, this is a long-distance race. . We are more concerned with getting our market share as quickly as possible.”

Through Leaprun’s prospectus and interim financial report, we will find that Zhu Jiangming expresses the helpless truth in the last sentence-why must we get market share as soon as possible? Because the funds on the zero run account can’t wait, it must be funded as soon as possible so that ammunition, food and grass can go to the front.

Leapmotor once set the ambition of “surpassing Tesla within three years”. What exactly does Leapmotor rely on to kill Tesla?

Is it really “leading”?

According to the latest statistics from the Passenger Federation, from January to August 2022, Leapmotor delivered a total of 76,600 vehicles, ranking 11th in the country, up 222.8% year-on-year, second to Xiaopeng and ahead of Ideal and Weilai. Looking at August alone, Leapmotor delivered 12,500 vehicles, ranking ninth, not only entering the top ten, but also surpassing “Wei Xiaoli” in an all-round way.

In 2020, the annual sales volume of Leapmotor is only 8,050 units; in 2021, it will soar to 43,748 units, more than quadrupling; in the first eight months of 2022, the sales volume is already 1.75 times that of the whole year of 2021. According to Frost & Sullivan, in terms of delivery volume, Leapmotor has become the fastest-growing company among the new car manufacturers, and it can be called “the fifth largest in the world and the fourth largest in China.” .

The reason why Leapmotor can have such a high-speed sales growth is mainly due to the launch of the A00-class pure electric sedan T03, with a starting price of only 79,500 yuan. Zhao Tian, ​​an observer of the new energy vehicle industry, said that T03 is quite competitive among small electric vehicles under 100,000 yuan, with a battery life of up to 400 kilometers. It also has L2-level assisted driving and automatic parking technology. The popularity of the market has directly boosted the sales record of Leaprun, and it has also saved Leaprun from the crisis.

Leapmotor’s first car is not the T03, but a pure electric coupe S01, with a starting price of 129,900 yuan. However, due to its unclear positioning and vague features, it failed to elicit much response. In 2019, when Leapmotor S01 was launched, only about 1,000 units were delivered. As of June 30, 2022, Leapmotor S01 has delivered a total of 2,729 units.

In 2019, Leap Motor’s revenue was only 117 million yuan, which could not cover the cost of sales (229 million yuan), not to mention 358 million yuan in research and development expenses, with a gross loss rate of 95.7%. In 2020, with the popularity of T03, Leap Motor’s revenue has increased sixfold to 631 million yuan, which has allowed Leap Motor to find a place in the new energy vehicle market and gain a valuable respite.

However, leading in sales, does it mean that it is really leading?

In fact, in addition to the impressive sales figures, Leapmotor significantly lags behind Wei Xiaoli’s first camp in several important financial indicators.

In the first half of 2022, Weilai achieved revenue of 20.203 billion yuan, Xiaopeng revenue of 14.891 billion yuan, ideal revenue of 18.295 billion yuan, and zero-run revenue of only 5.082 billion yuan, an order of magnitude difference.

The comparison of gross profit margin is even more amazing. The three companies of Wei Xiaoli have achieved positive gross profit margins in 2020. In the first half of 2022, they were 6.9%, 5.78%, and 11.05% respectively. The gross profit margin of Leapmotor has been negative since 2019. Although it has halved to -26% in the first half of 2022 from -52.1% in the first half of 2021, it is still negative.

The main reason is that Leapmotor’s main products are cheap models. The T03, which sells for about 80,000 yuan, is the most sold model. In the first half of this year, 33,058 T03s were delivered, accounting for 63.6% of the total sales. Therefore, although the sales volume is high, it is difficult to cover the cost of revenue because the unit price is too low.

Everyone sells one and loses one. Ideally, one loses 11,000 yuan. Xiaopeng loses 64,000 yuan for selling one. Although Weilai sells one for 90,000 yuan, the unit price of the product is more than 300,000 yuan. On the other hand, Leap Motor lost 72,000 yuan on selling one car, and almost lost the entire car.

In addition, the cash flow of Leapao is also not optimistic. In 2019, the cash and cash equivalents on Leapmotor’s account was 206 million yuan, and in 2020, there will be only 100 million yuan left. In 2021, Leaprun completed two major rounds of financing, the B round and the Pre-IPO. The financing amount was 4.3 billion yuan and 4.5 billion yuan respectively, and the registered capital increased to 789 million yuan. After these two funds are in place, cash and cash equivalents will only be available. Filled to 4.338 billion yuan.

However, in the first half of 2022, Leapao’s operating loss was already 2.493 billion yuan, almost close to the operating loss for the whole year of 2021 (2.886 billion yuan). At this time, the cash and cash equivalents on the account were 3.098 billion yuan. If there is no new The financing comes in, and this money may be difficult to maintain for a year. Therefore, the listing has become imminent.

Research and development of gold-containing geometry?

Leaprun said that 40% of the proceeds from the IPO will be invested in research and development. In the external publicity, Leapmotor has always emphasized that it is “the only new car-making force in China that has the capability of self-research in all areas”. If we look at the world, it is the only two other than Tesla that truly has the ability to self-research and develop smart cars. A closed-loop new energy vehicle that integrates self-production, sales and service with a complete industrial chain.

According to the prospectus, Leapmotor’s algorithms, hardware and software, electronic and electrical architecture, body, and electric drive system are all self-developed and self-developed. The chassis and automotive electronics are self-developed and outsourced. Only the interior and exterior trims and batteries belong to Third Party Procurement.

So, what is the gold content of Zero Run’s global self-research capability?

From the perspective of R&D investment, the intensity is not as great as people think. In 2019, 2020, 2021, and the first half of 2022, the R&D expenditures of Leaprun were 358 million yuan, 289 million yuan, 740 million yuan, and 526 million yuan, totaling 1.913 billion yuan, and the proportion of total revenue was 306.4%, 45.8%, 23.6%, 10.4%, showing a downward trend year by year.

In contrast, Wei Xiaoli’s R&D investment in just one quarter exceeded or approached the R&D investment of more than three years of zero-running. Taking the second quarter of 2022 as an example, Weilai invested 2.149 billion yuan in research and development, ideally invested 1.53 billion yuan, and Xiaopeng invested 1.265 billion yuan.

It is worth mentioning that, in the past three years, Leapmotor has developed four models, which are equally distributed to each model, and the development cost is only about 500 million yuan.

In this regard, the outside world was constantly questioned, and Zhu Jiangming had to respond positively, saying that “this is a reasonable cost range under efficient planning”, and the investment level is comparable to that of traditional car companies, and emphasized that “global self-research is not empty talk”. Among the 10,000 cars, the battery packs, electric drive assemblies, lights, controllers and sensors of the smart cockpit are all self-developed and manufactured.

In terms of team size, Zero Run is also inferior. As of June 30, 2022, the Leaprun R&D team had 1,869 people, while Ideal had 4,078 people and Xiaopeng had 5,554 people.

Speaking of this, I have to mention the background of Zhu Jiangming, the founder of Leaprun. Before entering the automotive industry, he was one of the main founders of security giant Dahua, and an IT tycoon with a technical background.

Zhu Jiangming once said that with Dahua’s technology accumulation in the field of electronic technology, Leaprun has saved a lot of research and development expenses in the electronic part. However, many people in the industry do not accept this explanation. They say that security and automobiles are two completely different industries. Even if there is some interoperability in the electronic technology part, they account for a small amount, which is difficult to affect the development and manufacturing of the entire vehicle.

It is reported that Dahua and Leapmotor have jointly created an intelligent driving chip, Lingxin 01, with a 28nm manufacturing process and a computing power of 8.4Tops. As a result, Leapmotor has become the only company among the new domestic forces that has self-developed AI self-driving chips. However, compared with the third-party products used by other car companies, the performance of Lingxin 01 is not very good: Horizon Journey 5 chip, 16nm process, computing power 128Tops; Tesla HW3.0 autopilot chip, 14nm manufacturing process, computing power It is 144Tops; the NVIDIA Orin chip used by Weilai has a computing power of 1016Tops.

Leapmotor also created its own CTC technology without a battery pack, which integrates the battery and the chassis. It is said that it can increase the battery cell space by 14.5%, thereby increasing the cruising range. However, Zhao Tian said that at present, the advantages of CTC technology are not large. Although the battery energy density has been improved, the battery life is barely comparable to BYD Han EV’s non-module blade battery technology, and the integration means that the maintenance cost will be higher. , once a problem occurs, the battery pack cannot be removed directly, but the entire chassis of the car must be removed.

From the market feedback, Leapmotor has repeatedly exposed quality problems – abnormal chassis noise, black screen of the main control screen, faulty electric door buttons, unexplained cracking of the front windshield, power system failure, vacuum booster pump failure , The vehicle stopped for no reason, etc., and the car rolled over many times, and the owner has repeatedly defended his rights.

In terms of software, Leaprun was also revealed that its APP (V1.20.30) involved “mandatory, frequent, and excessive requests for permissions by APP”, and according to the released “App Notice on Infringement of User Rights and Interests (5th batch in 2022, 25th in total)” Approval)”, the rectification was not completed as required.

In this regard, Zhao Tian said that it is often difficult for new car-making forces to have the time, capital and ability to do “global self-research”. Whether the “global self-research” mentioned by Leapmotor is a marketing method or a real technology, more needs to be done. Take time to check.

Is it feasible to kill Tesla?

At the Leaprun 2.0 strategy conference in 2021, Zhu Jiangming made a bold statement that Leaprun’s competitive goal is not “Wei Xiaoli”, but Tesla, and proposed “to surpass Tesla in the field of intelligent driving within three years, In 2023, it will enter the TOP3 of the new car-making forces and sell 800,000 vehicles in 2025.”

Leapmotor once spent 1 billion yuan to build the Jinhua factory, but as a result, it did not obtain the qualification for automobile production. As a last resort, the Jinhua factory was only responsible for the manufacture of core components, and the whole vehicle was outsourced by the Hangzhou Changjiang Passenger Car OEM. It was not until 2021 that the company obtained the vehicle manufacturing qualification for the Jinhua factory through acquisition. It is understood that the vehicle production capacity of the Jinhua plant is about 200,000 vehicles. It is reported that in 2022, the company purchased another 540,000 square meters of land in Qiantang, Hangzhou. The two sites together are likely to achieve a production capacity of 800,000 vehicles, but whether the sales can match it depends on the product.

According to the data from the China Passenger Transport Association, more than 80% of my country’s new energy market is currently contributed by vehicles below 300,000 yuan, and the share in 2021 will be 84.2%.

If it is further subdivided, it can be seen from the prospectus of Leapmotor that in 2021, the new energy vehicles priced in the range of 150,000-300,000 yuan will account for 36.2% of the total sales. It is expected that the market segment in this price range will become China’s new energy vehicles in 2022. It is the largest and fastest growing market in the market, with an annual growth rate of 59.6%. It is estimated that in 2026, the total market share of this segment will reach 49.1%, becoming the main driving force for the growth of China’s new energy vehicle market.

In this regard, Zero Run is also targeting this market segment. Following the S01 and T03, Leapmotor will launch its third product, the C11, in 2021. The subsidized price range of this five-seat SUV is 159,800-199,800 yuan. Leaprun also stated that it plans to launch the C11 program extension version in the second half of 2022 to meet more consumer demand and thus expand the market space.

But for ZeroRun, the low-cost label is not so easy to tear off.

In the first six months of 2022, Leapmotor delivered a total of 18,915 C11 units, while the pillar product T03 delivered 33,058 units in the same period. The sales volume of Xiaopeng P5, which is in the same price range as C11, reached 23,334 units in the first half of 2022. vehicle. In contrast, C11 has not been able to break out the same market energy as T03.

Despite this, Leapmotor still wants to make a breakthrough and will launch a fourth model in May 2022, the intelligent pure electric medium and large-sized sedan C01. The price after subsidy is between 193,800 and 286,800 yuan, further moving towards the mid-end mainstream. The market closes.

It is reported that the C01 will become the first new energy vehicle in the world to use CTC technology in mass-produced models. It is advertised that the cruising range on a single charge can reach up to 717 kilometers, making it the model with the longest cruising range in the same price range in the Chinese electric vehicle market. one.

Leapmotor said that the pre-sale of C01 has been opened for 4 hours, and the number of orders has reached 20,764. On September 21, the number of pre-sale orders has exceeded 100,000. However, since there is no need to pay for reservations, the actual conversion rate of pre-sale orders is also questionable.

Zhao Tian said that today’s new energy vehicle market has entered the era of 2.0, and it no longer relies on concepts and visions to win the market. Both traditional car companies and new car manufacturers have entered the game and have established a good track. The competition is becoming more and more intense. Fighting is the real product power and brand power.

“At present, only one low-end product, T03, has gained a certain market share, but the mid-end representative products C11 and C01 are not convincing enough, and the brand value has not been recognized.” Zhao Tian said: “Leap Run is going from bottom to top, Tesla is going from top to bottom, a challenge of dimensional upgrade and a blow of dimensional reduction are not the same thing. Leap Run wants to kill Tesla, and it has this ambition. Okay, but it can easily become a joke.”

Leaprun rushed to the market in order to survive, but whether it can truly achieve the lead of Chinese brands, I believe time and the market will give the answer.

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