This is the excellent era of Nezha, with a single monthly sales volume of more than 10,000 and the best capital situation; this is also the era of Nezha's worries, intelligence has just been exerted, it is difficult to enter first-tier cities, and the competition in the new car market is fierce
Photo/Visual China
Text | Caijing reporter Wang Jingyi Guo Yu
Edit | Shi Zhiliang
Sales increased by nearly four times, heavy investors entered, and Nezha Automobile became a dark horse for the new car-making forces in the near future.
This is not a widely bullish company. Different from other new car-making forces, Nezha Automobile has entered the market with entry-level and popular models, and its products are difficult to trace in the north, Shanghai, Guangzhou, and Shenzhen. The founding team is also not good at financing, the scale of financing is small, and the road to listing has encountered obstacles.
"Everyone thinks that you, from people and funds, to past experience, to the shareholders behind it, none of them are enough to show signs of success, and the card face is not good enough." Daniel Zhang, co-founder and president of Nezha Automobile, admitted to the Caijing reporter that external doubts have never stopped.
However, with the 100,000 yuan electric vehicle strategy and "rural encirclement of the city", Nezha Automobile achieved a single monthly sales of more than 10,000 at the end of 2021, with annual sales of 69,674 vehicles, ranking fourth among the new car-making forces behind Xiaopeng Automobile (NYSE:XPEV), Weilai Automobile (NYSE:NIO), and Ideal Automobile (NASDAQ: LI).
Gong Min, head of research at UBS China's automotive industry, told caijing that the sales of new car-making forces have risen and fallen, who has been high before, not necessarily after it has been high, which is a relative process of winning and losing, depending on the product cycle, but also depending on their grasp of market opportunities, full of dynamic changes.
The weaknesses of this dark horse are also obvious: the late development of intelligence, the difficulty of entering first-tier cities, and the fierce competition in the new car market... In order to win the next competition, Nezha needs to make up the lesson with force.
The sales volume in a single month exceeds 10,000, but it is difficult to trace the north, Shanghai, Guangzhou, and Shenzhen
In the second half of 2021, the sales ranking of Nezha Automobile frequently appeared in the top three of the new car-making forces, and the continuous sales in November and December 2021 exceeded 10,000 in a single month, with a total of 69,674 vehicles delivered throughout the year, an increase of 362% year-on-year.
On January 8, 2022, Nezha Automobile ushered in the off-line of the 100,000th mass production car and joined the first camp of new car-making forces.
Why has sales increased so much? "First of all, thanks to the general trend, China's new energy automobile industry is developing very well, and we are following the trend." The second is that you have to seize the opportunity when it comes. Our V and U products are after two or three years of polishing, research and development, in the right time quickly introduced to the market, we put the channels and services in place a year or two in advance. Daniel Zhang told Caijing reporters.
According to the model, the V car series with a price of 60,000 yuan to 100,000 yuan will be delivered in 2021, and the U car series with a price of 100,000 yuan to 160,000 yuan will be delivered 20,028 units, and the first model N01 priced from 59,800 yuan has been discontinued.
Value for money is the main selling point of Nezha. Taking the newly released U Pro as an example, the endurance is 400 km, 500 km and 610 km, and the price is from 104,800 yuan to 162,800 yuan. "This is a compact SUV model with a wheelbase of 2770 mm, with large space, low price, good price performance, and the cheapest SUV in its class." The clerk of the Nezha Automobile Shanghai Gala Mall direct store told the Caijing reporter.
The same monthly sales are over 10,000, but the price of Nezha's car is lower among the new forces, the price of the main model is less than 100,000 yuan, and the average price of Weilai Automobile is 440,000 yuan.
"Compared with WEILAI, our target market is several times larger than it, so although Nezha is on par with it in terms of monthly sales, I think it is doing better than me." Only when I exceed its sales of two or three times as much, I think we are just as good. For our company, the monthly sales of more than 10,000 are far from enough to celebrate. Daniel Zhang confessed.
The price of Nezha's cars is not high, the market is relatively sinking, and it is difficult to trace the north, Shanghai, Guangzhou, and Shenzhen. Zhou Jiang, vice president of Nezha Automobile and president of the trading company, told the "Finance" reporter that among the current users, Chengdu, Hangzhou, Wuhan and other new first-tier cities account for the highest proportion, about 31%; followed by second-tier cities such as Wuxi and Hefei, accounting for 22%; third-tier and fourth-tier cities account for a total of 31%, and first-tier cities account for 13%.
How much of the strong sales volume is actually sold to private users is a question that the industry often questions Nezha Automobile, after all, Nezha openly proposed at the beginning of its establishment that it was mainly for the public market.
Zhou Jiang said that due to product positioning and product strength, the first product N01 is more oriented to the low-line market, as well as some public user demand, and the actual delivery volume is not too high. Nezha Automobile has experienced a strategic shift in 2019, and the current V and U car series can meet the individual user needs of 60,000-100,000 yuan and 100,000-150,000 yuan, and about 64% of users from first-tier, new first-tier and second-tier cities will be accounted for in 2021.
The public market has always been a good business that cannot be abandoned. The three local government industrial funds of Tongxiang in Zhejiang, Yichun in Jiangxi, and Nanning in Guangxi have all invested huge amounts in Nezha, and the local government and enterprises have shown great support for "locally produced cars", from the purchase of official cars to the group purchase of enterprises and institutions, and the real money and silver.
In 2021, Nezha released customized models for the official car market and the online car market. For example, Nezha U launched a super online booking version, making adjustments in terms of comfort and entertainment of rear passengers. In May 2021, Nezha U Pro added four new customized models, and the three-electric system enjoys a longer warranty of 500,000 kilometers for five years, specifically for the official car market.
According to the "Announcement on the Bidding of the 2020-2022 Designated Purchase of Official Vehicles in Beijing Municipal Administrative Institutions" issued by the Beijing Municipal Government Procurement Center, all models of Nezha Automobile were shortlisted for the procurement catalog. In recent years, with the east wind of official cars tilting toward domestic cars and new energy vehicles, Nezha Automobile has been recognized by many local governments and won the bid in at least 22 government procurement projects in more than ten provinces and the State Administration of Taxation.
Due to the low price of bicycles, Nezha Automobile's income ability is not strong. 360 Security Technology Co., Ltd. (601360. SH) disclosed financial data when it invested in Nezha Automobile, and its revenue in the first half of 2021 was 1.632 billion yuan, with a loss of 693 million yuan - the revenue increased significantly compared with 1.297 billion yuan in the whole of 2020, but there was a big gap compared with the 16.432 billion yuan in the same period of the first half of the year of WEILai Automobile.
"We build cars for Volkswagen, which means that we can't sell high-priced cars, and if they are good and cheap, the gross profit margin will be lower, but the gross profit margin is also positive." Daniel Zhang said, "As long as the company can operate benignly, the gross profit margin continues to improve, the loss is gradually narrowed, and the profit can be achieved in two or three years, I think this is very good." First put the scale up, first let the people recognize your products and brands, I think this is the most important. ”
Valuation is unknown, but financing is sufficient
Unlike the founders of Weilai, Xiaopeng and Ideal Automobile, who have an Internet entrepreneurial background and bring their own traffic and resources, Nezha's founding team is from a traditional car company and is not good at financial skills.
"At the beginning of its establishment, we didn't have much experience in capital operation, and we only wanted to do a good job in the car and do a good job in the enterprise, so we didn't build a VIE structure from the beginning." Daniel Zhang previously revealed to the "Finance" reporter. The VIE structure is a must for startups to go overseas, and WEILAI, Ideal, and Xiaopeng will take the lead in listing in the United States in 2020.
Nezha Automobile has publicly stated that it plans to list on the science and technology innovation board in early 2021 and grab the first share of new energy vehicles on the science and technology innovation board. However, with the stricter review of the listing of the Science and Technology Innovation Board, this listing plan has also disappeared. Recently, there have been rumors that Nezha is considering going public in Hong Kong, but Daniel Zhang did not comment on this.
The road to listing has not yet passed, and Nezha Automobile, which lacks hematopoietic ability, must continue to raise funds. In 2021, 360 and Ningde Times (300750. SZ) announced an investment in Nezha, the former is an Internet security giant, the latter is a new energy vehicle battery leader, the entry of the two major shareholders has given the market a lot more trust in Nezha.
On April 27, 2021, Nezha Automobile announced the D round of financing information, and 360 led the investment. On October 18, 360 announced that it intends to invest 2.9 billion yuan, and after the completion of this investment, it will hold a total of 16.5940% of the equity, becoming the second largest shareholder after the management team.
Nezha's valuation has more than sixfold in the last year or so. According to the 360 announcement, before the Series B financing in February 2020, the valuation was RMB3.5 billion and the post-investment valuation was RMB7.013 billion; before the D1 round of financing in October 2021, the valuation was 22 billion yuan, and the post-investment valuation was not disclosed.
According to incomplete statistics, since its establishment in 2014, Nezha has experienced 8 rounds of public financing, with a financing amount of more than 13 billion yuan - the industry's recognized car-making threshold is 20 billion, and recently the founder of a new car-making force told the "Finance" reporter that to become a competitive and sustainable new car-making enterprise, at least 40 billion yuan of capital reserves are needed.
"We operate the enterprise in a pragmatic attitude, maybe there are three or four billion people, can do ten things, we have ten billion, can only focus on one thing, then focus on technology research and development and user services, the implementation of the value of equal rights in science and technology." Zhou Jiang said bluntly.
Before finding Zhou Hongyi, the founder of 360, Daniel Zhang contacted many investors, but investors had different opinions on Nezha's mass market positioning, on the one hand, they disliked the weak product and thin foundation, on the other hand, they also believed that Nezha lacked Internet genes. "Only Zhou Hongyi especially agrees with our positioning." Daniel Zhang said.
Zhou Hongyi replied to the reason for choosing Nezha Automobile: "Weilai, Xiaopeng and Ideal are all listed, so my choice space is very small. Nezha Automobile is more like an entrepreneurial team, traditional car factories may not need me, and I am more willing to choose a startup. ”
Another important investor is the CATL era. On November 8, 2021, Nezha announced that CATL will participate in the D2 round of financing and fully open strategic cooperation in the fields of technology research and development and supply chain assurance.
Cataline Times is the leader of the new energy automobile battery industry with a market share of more than half. According to data from the China Automotive Power Battery Industry Innovation Alliance, China's power battery loading volume in 2021 will total 154.5GWh, an increase of 142.8% year-on-year. Among them, the installed capacity of The Ningde era is 80.51GWh, and the market share is 52.1%.
In addition to the two star shareholders, Nezha Automobile has always been deeply bound to the three local governments of Tongxiang, Zhejiang, Yichun, Jiangxi and Nanning, Guangxi.
Daniel Zhang revealed that before the C round of financing in 2020, the equity of local industrial funds accounted for more than 60%; the team accounted for more than 20%; the remaining less than 20% was Tsinghua and social capital. After the introduction of a number of new shareholders in 2021, the equity of the local government industry fund was diluted, and the specific proportion is unknown.
At the same time, Nezha Automobile was awarded a credit line of 5 billion yuan by China CITIC Bank in March 2021, and a comprehensive credit line of 2 billion yuan from the head office of Bank of Shanghai again nine months later, mainly for the research and development of intelligent technologies such as intelligent cockpit and intelligent driving of Nezha Automobile.
"It's supposed to be the best time for our money." Daniel Zhang said.
"Countryside surrounds the city"
It is not difficult to find out from Nezha's models and sales that a "rural encirclement of the city" is gradually becoming clear: the price of the models launched is gradually rising; the target market is infiltrating from third- and fourth-tier cities to first- and second-tier cities; the share of B-end sales mainly based on official cars and online ride-hailing cars has declined, and the C-end personal purchase rate has risen.
"Everyone wants to go from high to low, but Nezha Car does not have this condition, time is not allowed, funds are not allowed, so I must be from low to high." Daniel Zhang believes that in the track of smart electric vehicles, consumers' perception of the brand has not yet formed, and there are still opportunities to go from low to high.
Nezha has a bottom-up playing style: the first is product line expansion, different products play different target markets, gradually upward, the whole is still for the ordinary people to build intelligent electric vehicles; the second is channel expansion, from 170 cities to 250 cities in 2022; the third is internationalization, Thailand and the ASEAN market is the first step.
"I don't think there is a lot of change and regularity between the generations of Nezha Automobile's products." Gui Lingfeng, director of Kearney Management Consulting Greater China, expressed doubts to the Caijing reporter, "The chassis and key components of Nezha U and Nezha N01 have not seen obvious self-developed technology investment, and perhaps a large proportion of them are ready-made solutions from suppliers." The Nezha S, which will be launched this year, makes me even more confused, because Daniel Zhang has said that it will not make more than 200,000 cars, but the current public product performance parameters may be difficult to achieve this price range. ”
Nezha's style of play was not formed on the first day of its establishment - from the product, strategy, and even brand name, Nezha has changed several times.
In 2017, Nezha Automobile's United New Energy was approved as a national new energy vehicle license, completed in the same year as the factory in Tongxiang, Zhejiang Province, and launched the first model Nezha N01 a year later, mainly for the public market.
The N01 was listed in a hurry. Gui Lingfeng told the "Finance" reporter that the traditional main engine factory from the construction of the factory, SOP mass production to the final delivery, generally take four or five years, Nezha less than three years to achieve.
"Our first product is Nezha N01, which accounts for more than 50% of the B-end market and more than 40% of the C-end market. Because the product force is indeed not enough, it will be more difficult to play the C-end market, and the owners are mainly in the third, fourth, and fifth-tier cities, focusing on small-town youth. For this decision, Daniel Zhang explained, "I am worried that N01 will affect the brand image, so in mainstream cities, basically do not let go of the sale, do not let go of the channel." ”
At an internal communication meeting in March 2019, everyone once considered abandoning the "Nezha" brand, believing that the Nezha N01 that had been launched was too low-end and ready to name the second product "Hezhong", so Hezhong U made a public appearance at the 2019 Shanghai Auto Show.
A movie changed Nezha's strategy. In the summer of 2019, "The Devil Boy of Nezha" was screened, and this fourth-grossing film in the history of Chinese films brought fire to the big IP of Nezha, and Hezhong U was immediately renamed Nezha U. In September 2019, Hezhong New Energy sorted out the brand structure and replaced the brand LOGO of Nezha Automobile.
At the channel level, "the north, Shanghai, Guangzhou, and Shenzhen can't see Nezha in 2019, and we haven't heard of it, and in 2019, we will go to Nezha U and start to build channels for first- and second-tier cities." In 2020, we decided to do direct sales stores in first- and second-tier cities. Zhou Jiang introduced.
By the end of 2021, Nezha Automobile has 331 offline channels, including 70 directly operated stores and 261 city partner franchise stores. Among them, 57 new directly operated stores and 125 city partner franchise stores will be added in 2021.
Belated intelligence, and a brand waiting to be launched
More than 10,000 vehicles in six months, and more than 20,000 vehicles in a year. For the electric coupe Nezha S, which will be listed in the fourth quarter of 2022, Daniel Zhang have high hopes.
Nezha S is the first model built based on the self-developed Shanhai platform, with two versions of range extender and pure electricity, with a range of up to 1100 kilometers and an acceleration of 3.9 seconds per 100 kilometers. Equipped with 200T high computing power, Huawei's MDC computing platform, 2 lidar, 5 millimeter wave radar, 12 ultrasonic radars, and 13 cameras can realize automatic parking, high-speed and urban road pilot assistance, and realize L4 level intelligent driving in specific areas.
"If a family's car purchase budget is only 200,000 yuan, but they want to enjoy the intelligent experience of three or four hundred thousand price cars, we will meet this part of the user." Through research and development, lean production and operation, we provide users with products with good quality and low price. Zhou Jiang said.
Although Nezha S has not yet announced the price, but combined with the software and hardware configuration that has been disclosed, Gui Lingfeng believes that in the context of the industry's internal volume, to achieve a truly competitive intelligent coupe standard, it is difficult to omit hardware such as radar chips corresponding to automatic driving and smart cockpits, and Nezha S will rely on Huawei's intelligent computing platform, the cost of bicycles is low, and it is necessary to have a very strong cost control ability.
Nezha S takes intelligence as the core selling point, but Nezha is late in the field of intelligence.
In July 2021, seven years after its establishment, Nezha Automobile announced the development of autonomous driving functions. In November, Nezha Automobile released a full-stack self-developed intelligent and safe car platform - "Shanhai Platform".
Daniel Zhang frankly said that in terms of intelligent technology, compared with other new car-making forces, it is indeed a little late, but late also has the advantage of late, "standing on the shoulders of others, some detours can not go."
Dai Dali, chief technology officer of Nezha Automobile, told Caijing that Nezha mainly focuses on software, including algorithms, perception integration, middleware, data platforms, big data platforms, etc., and works with strategic partners and users to build an electric intelligent car ecology.
At present, Nezha's autonomous driving and intelligent cockpit teams add up to more than 600 people, and it is hoped that more than 1,000 people will be expected by 2022. Zhou Jiang introduced that Nezha launched the "100 billion people plan" in 2021, that is, recruiting 1,000 talents in intelligent technology and investing 10 billion yuan in research and development funds, which can probably flatten the gap this year or the year after.
"The Shanhai platform is not out of thin air, and we have accumulated our knowledge of electric vehicles and intelligence, including predicting the future direction of technology." Dai Dali said that the Shanhai platform has the characteristics of high intelligence, high security, high scalability and environmental friendliness. 360 and Nezha are taking science and technology equality as the direction, allowing users to enjoy the intelligent driving experience brought by cutting-edge technology in six aspects: driving performance, riding space, human-computer interaction, use cost, service quality and intelligent safety.
Nezha S also carries the high hopes of Nezha automobile "rural encirclement of the city". Daniel Zhang said that entering the city is not a simple geographical sense of entering the city, but to enter the mentality of the mainstream consumer population in the core city, to enter the core camp of the intelligent track, and Nezha S will also enter the European market after listing.
However, best-selling models such as xiaopeng P7, BYDhan EV, Tesla Model 3, and Weilai ET5 are all potential competitors of Nezha S. The hardware configuration of Nezha S is in line with the level of intelligence at this price point, and even exceeds some models. But what cannot be ignored is that the price and brand advantages are not obvious enough.
In the low-end market, Nezha Automobile has achieved a stage victory by relying on price and cost performance, but when it comes to the competition range of 200,000 yuan, the brand also affects the decision to buy a car. Research institute J.D. Power report shows that consumers are gradually shifting from directly focusing on models to focusing on brands first and then determining models, and have locked in the intention to buy brands at the early stage of purchase.
How to take the road of the brand is one of the keys for Nezha Automobile to relieve internal and external troubles. "For us, polishing the product well and enriching the product line is the most important and correct thing." In the eyes of Daniel Zhang, brand marketing is important, but the cultural concepts of young consumers have changed, and there are new opportunities for new brands.
Gong Min believes that when the market competition is very fierce, it is never clear who will continue to become the leader. There are so many players in the market, everyone has a rise, there are also times when they face development bottlenecks, it is an extremely dynamic process, to find out who will eventually run out, it becomes more difficult.
"Come on, Mr. Zhang, if you fail, I won't be able to buy my Nezha U Pro if I break the accessories in the future." Some car owners sighed.