The author | Bai Qian
Edit | Tsukimi
Source | New Entropy (ID: baoliaohui)
In his 2022 New Year's speech, Li Shufu, chairman of Geely Holding Group, talked about the technological revolution: "We don't want to be subverted by the world, we must go ahead of the layout... Closely focusing on the electrification and intelligent transformation of the automobile industry, we will strengthen the scientific and technological ecosystem and create a sustainable competitiveness of enterprises. ”
However, from the perspective of the electrification process, the official announcement shows that in December 2021, Geely Automobile's new energy and electrification model sales were 0.72 million units, accounting for only 4.66% of the total sales. In 2018, Li Shufu once made a bold statement that after two years, new energy vehicles would account for 90% of Geely's total sales.
In contrast, in the industry, according to the data of the Association of Automobiles, in the first 11 months of 2021, Geely Automobile's new energy sales were 64,500 vehicles, ranking only 12th among domestic new energy manufacturers, not only lagging behind Xiaopeng, Weilai and Ideal, but also lagging behind Great Wall Motors and Changan Automobile in the three independent top three. From the year-on-year growth rate of new energy vehicle sales, Geely Automobile was 164.8%, while Changan Automobile, which also had sales of 60,000 gears, was as high as 386.9%.
In this industry upheaval, Geely is becoming a laggard. Although the layout of new energy vehicles is earlier, the radical transformation strategy and bloated brand matrix limit Geely's pace. Although a series of news of accelerated external cooperation since entering 2021 have shown Geely's positive willingness to transform, as Geely's high hopes for Extreme Kr 001 have been drowned out by negative comments, Geely's transformation prospects have once again become confused.
PART.01 Geely has no way back
Li Shufu's nickname is "car maniac", in any personal biography of Li Shufu, readers can glimpse a fanatical and fearless warrior image from Li Shufu's personal entrepreneurial history - from the mobile photo studio to start a business, in turn to the waste fixer to extract pure silver, the Arctic Flower Refrigerator Factory produces OEM refrigerators, produces aluminum-plastic board building materials, goes south to Hainan to speculate in buildings, and finally chooses to build its own car. Since 1997, Geely Automobile has seized the market opportunity of China's increasing automobile penetration rate and taken the lead in the competition of state-owned enterprises.
From beginning to end, Li Shufu has maintained a radical, unsparing transformation thinking, compared to Liu Chuanzhi's management style of "stable" word, Li Shufu is more willing to pay high transformation costs in order to get rid of the Red Sea market with market saturation and low competition threshold, and chase the blue ocean with higher technical thresholds.
When transforming from the production of motorcycles to cars, Li Shufu's famous quote was: "It is not difficult, is the car not a motorcycle plus two wheels, two sofas?" When told that the difference between a car and a motorcycle is by no means more than two wheels, Li Shufu replied: "Of course I know that the steering wheel is also different." ”
In 2010, with Geely's $1.8 billion acquisition of Volvo, this radical style reached the peak of Li Shufu's personality. The reason for the acquisition given by Li Shufu is the "mixed-race advantage", that is, mixed-race children have a greater survival advantage than intermarriage between close relatives. Facts have proved that the acquisition of Volvo has enabled Geely to grab the mid-to-high-end market in the era of fuel vehicles in a "financial and technical exchange" approach, and opened the door for Volvo to enter the Chinese market.
However, in the era of new energy, Li Shufu's style of playing has repeatedly encountered bottlenecks.
At Geely's internal meeting, Li Shufu used a 10,000-word sharing letter to attribute the failure of the "Blue Geely Action" plan to the immaturity of historical conditions and the failure to form external strategic conditions, which seeks geely to achieve new energy vehicles accounting for more than 90% of overall sales in 2020. However, from the perspective of actual results, as of November 2021, the proportion of new energy in Geely's automobile sales is still only 11.89%.
On the other hand, Geely's "intermarriage" action is entering an unprecedented period of high. Starting from 2021, Geely has cooperated with Baidu, Foxconn, Tencent, FF, Lifan, Renault and other companies, and on December 29, Geely's separate split of Kr announced that it will cooperate with Google's Waymo to build its driverless taxi cars and put them into commercial operation in the United States.
On December 31, 2021, the Ministry of Finance, the Ministry of Industry and Information Technology, the Ministry of Science and Technology and the Development and Reform Commission issued a notice showing that the subsidy standard for new energy vehicles in 2022 will decline by 30% in 2021. This means that the new elimination effect of the new energy vehicle track is landing, and long-tail players are facing the situation of accelerated elimination.
Compared with competitors, Geely's layout of new energy vehicles is earlier. As early as 2010, in an interview with Xinhua News Agency, Li Shufu said that one of the reasons for the acquisition of Volvo was that the latter had a decade + 10 billion US dollars of new energy technology accumulation.
From the perspective of automatic driving technology, when it was acquired by Geely, Volvo has laid out unmanned research and development projects, but has not yet entered mass production; from the perspective of technical routes, Geely released four major power technology routes of pure electricity, hybrid, hydrogen fuel cell, and methanol energy in 2018, but the pure electric brand is weak, and new energy sales still rely on the "left hand to right hand" of the holding brand Cao Cao Travel, in contrast, Great Wall Euler's sales volume in the first 11 months of 2021 reached 114,000, far exceeding Geely's total sales of new energy vehicles in the same period Geely's new energy brand building.
PART.02 fell into the brand entropy increase
At the 2002 China AutoMotive Summit Dialogue Forum, Li Shufu predicted that "Ford will go bankrupt in the next 10 to 20 years." At that time, Ford was facing many problems such as brand bloating and market saturation, and Geely, which was sitting firmly in the blue ocean market and starting with a low-end model, did not have this concern.
Times have passed, and in the era of new energy, Geely has been countered by the entropy increase crisis.
In the passenger car market, there is no right or wrong between the single-brand strategy and the multi-brand strategy itself, but only the product of the game between the minds of enterprises and consumers. Single-brand is conducive to enhancing consumers' brand awareness, forming a traffic matrix effect, and launching new products with lower marketing costs; while the multi-brand strategy is conducive to covering the market with different positioning of high, medium, high and low, getting rid of the market stereotype of the original brand, and opening up a larger space.
As early as the era of fuel vehicles, Geely cultivated a huge brand matrix by acquiring mature brands + incubating new brands. Under the wave of consumption upgrading since 2008, Geely has quickly released new brands such as Global Eagle, Emgrand, and Shanghai Yinglun to attack the mid-to-high-end market, but the market has not worked well, and in 2014, it announced the failure of expansion in the way of Geely brand upgrade.
In the new energy vehicle track, Geely is eager to eat all the market share of all technical routes, so it continues and amplifies the brand matrix play in the era of fuel vehicles. Today, geely's new energy vehicle brands and cumbersome product systems have reached the point where consumers are dazzled.
For example, Geely released a series of traditional fuel vehicle brands such as Emgrand from 2015 to electrify the transformation model; in 2017, the PoleStar brand with Tesla as the benchmark was split from Volvo, in the same year, Geely and Volvo jointly established a high-end market brand Lynk & Co, and released the first new energy hybrid SUV Lynk & Co 01 in 2018; in 2019, Geely New Energy split from the Geely system into an independent sub-brand, while Geely released the geometry of new energy brands; in 2021, Geely was incubated through the group, The establishment of joint ventures and other forms of new energy brands such as Maple Leaf Automobile, Smart, and Extreme Krypton, trying to cover the low-end and high-end new energy vehicle markets.
For Geely Automobile, which lacks the accumulation of new energy technology, the multi-brand strategy means a significant financial burden. Since 2017, Geely Automobile's goodwill and intangible assets have grown rapidly, reaching 18.653 billion yuan in 2020, compared with only 6.469 billion yuan in 2016, of which a considerable part comes from the capitalization of R&D investment.
In addition, Geely's new energy brand layout also has the following problems:
1. Instead of completing the cutting between the fuel vehicle brand and the new energy brand, we want to retain the advantages of the fuel vehicle brand and seamlessly transition to the new energy market. For example, Emgrand is a sub-brand of Geely in the era of fuel vehicles, and took the lead in opening the prelude to Geely's entry into new energy in the form of oil to electricity, and its brand power was gradually consumed in the chaotic layout of fuel, pure electricity, hybrid electricity and other models, failing to form a clear consumer perception.
2. Geely's new energy layout is too aggressive, and it lacks clear top-level planning. For example, Geely has tried to sort out new energy brands many times, but in the context of poor new energy sales, Geely has had to incubate new brands many times and strip off existing brands at the same time to avoid internal friction of different brands in the same system. The independence of the Extreme Kr brand from the Geely system is the epitome of the dilemma of the Geely new energy brand "left and right fighting". In contrast, rivals such as Great Wall Motors have achieved surpassing Geely in the new energy competition with high-quality strategies.
PART.03 Is extreme krypton a lifesaver?
In the early era of personal entrepreneurship, Li Shufu's most eye-catching feature is undoubtedly the courage of self-revolution. In the market exploration across multiple industries, Li Shufu can always grasp the areas with the most market prospects and competitive thresholds, and concentrate resources.
Geely Motors seems to have lost that capability. From entering automobile production in 1997 to releasing the 4.0 comprehensive architecture system in 2020, Geely has experienced many transformations of corporate strategies, but has increasingly fallen into the dilemma of "ship difficulty turning around".
Since the beginning of the new energy market in 2015, Geely has fallen into the resource competition for the chaos of new and old brands, and the product pattern with fuel models as the core has not only not improved, but has regressed after 2019.
Obviously, Geely hopes that the Extreme Krypton brand released in 2021 can enter the mid-to-high-end new energy market, and Li Shufu's appointment as chairman shows the group's ardent hopes for the new brand. The pole in the name Krypton represents extreme performance and ultimate user experience, and the English name ZEEKER stands for ZERO's starting from scratch. Official data shows that in November this year, the number of krypton 001 deliveries reached 2012.
However, from the user feedback, extreme krypton seems to be far from the pursuit of extreme user experience.
Prior to this, consumers expected Geely to come up with a solid new energy high-end model, and after the listing of The Krypton 001, it has been exposed to many problems such as disguised price increases, configuration shrinkage, unauthorized motor changes, delivery delays and so on. Some consumers said that the setting adjustment of Extreme Kr 001 is complicated, the Bluetooth key is easy to disappear, and the after-sales service personnel have no understanding of the Extreme Kr APP. In other words, Krypton 001 is a semi-finished product that has not yet been polished and matured.
From the perspective of the research and development process, JiKr 001 represents Geely's car manufacturing level in the era of 4.0 comprehensive architecture system, although the Ji Kr brand has been independent of the Geely system, but its development still relies on Volvo to assist Geely to develop the SEA Haohan intelligent architecture, and the architecture will be used for Geely and Baidu cooperation brand, smart brand product production.
Obviously, the decline in reputation of Extreme Kr 001 has hit the results of Geely's 4.0 transformation and also affected the market confidence of subsequent brands. In 2019, Geely Automobile once praised the new energy brand geometry, claiming that geometric cars will "redefine the evolution direction of the new energy world of automobiles". However, only one year later, the sales of geometric cars plummeted, and the kryptonian cars that have slipped in reputation this time may repeat the mistakes of geometric cars.
At present, there is not much time left for Geely's new energy brand.
Externally, the new car-making forces have achieved a rapid increase in delivery volume with the boutique brand strategy, and their overall market value level has surpassed that of traditional independent car companies; internally, Geely has experienced the interruption of the listing plan of the science and technology innovation board and the premature death of the merger with Volvo, at the same time, with the release of the modular architecture, Geely's products are entering a blood-changing period of alternating between the old and the new, which makes geely automobile's net profit plummet from 12.5 billion yuan in 2018 to 5.5 billion yuan in 2020. Whether or not we can seize the brand opportunities in the middle and high end of new energy will determine the position of Geely Automobile in the new era.