GGV has something to say:
Since its establishment in 2000, GGV Jiyuan Capital has gone through 21 years of time with the logic of science and technology drive. Nowadays, the trend of hard technology has begun to rise, China has accelerated the pace of independent innovation, GGV has also seized the big opportunities in the fields of cutting-edge technology, enterprise services, consumption and other fields, paying great attention to the development of China's local emerging technology ecology, and investing in a number of top companies in the hard technology fields including semiconductors, new energy, AI+ medical, intelligent manufacturing, smart cities, etc., and has a far-reaching impact.
Sensitivity and accuracy to trend judgment, as well as a high return on investment, have earned GGV the trust of LPs. In the withdrawal of the project, GGV has also maintained good results, and the IRR (internal rate of return) of investment projects in China in the past 21 years has exceeded 50%. At present, the cumulative assets under management of GGV have reached US$9.2 billion (about 60 billion yuan).
This column is a special edition of GGV Investment Notes x Capture Super Tech Unicorn, which will present the growth stories behind a series of excellent technology companies invested in by GGV.
The following is the 103rd issue of GGV Investment Notes.
Author: Shio
Editor: Ying Zhang
The suspense about the electric vehicle market is disappearing
Whether we were optimistic about the electric vehicle market five or ten years ago or looked down, today, we are seeing more and more clearly a fact: the era drama that truly belongs to electric vehicles has officially opened the curtain.
According to Deloitte, a world-renowned consulting organization, the electric vehicle market will reach a critical tipping point in 2022 - as the production chain of electric vehicles gradually matures and the components required are further mass-produced, the cost of pure electric vehicles will be similar to that of fuel vehicles. At that time, the cost of owning a car will no longer be the first major obstacle for consumers to buy electric vehicles.
At the same time, regarding the endurance of electric vehicles, the convenience of charging, battery safety, the reliability of intelligent driving assistance, and various technical problems that were once considered to hinder the development of electric vehicles, are being overcome little by little.
Quantitative change brings qualitative change. Once the roadblock is broken by water droplets, what follows will be an exponentially expanding torrent.
It is estimated that by 2024, the share of the electric vehicle market in the entire automobile market will reach 10%. With a penetration rate of 10%, it has always been considered an important milestone in the industrial and technological fields. If we take the development process of personal computers, smartphones and other industries as a reference, whenever new technologies begin to impact traditional industries, their penetration rate reaches 10%, and they will begin to show rapid growth. In 2010, China's smartphone penetration rate was less than 10%. By 2019, the proportion had reached 95%.
The general trend of industrial change will always be revealed in the hot search-level industry news. At the end of 2020, the automobile market ushered in another wave of electric vehicle manufacturing. A number of Internet companies and technology product companies that did not have direct intersection with automobiles in the past have spoken out and officially announced their car-making plans to cooperate with traditional car manufacturers. Under the hustle and bustle, not everyone may be walking solidly, but the momentum of the torrent of the times is still emerging. And people who truly believe in the trend in their hearts are more likely to take advantage of the trend.
Turning the clock back in 2007, the first iPhone was released with flaws. At that time, the protagonist of our story today, He Xiaopeng, was still working on his first venture. Coincidentally, at that point in time, Nokia, which still dominated the mobile phone market, was one of his shareholders. Regarding the iPhone, he had personally heard the comments from Nokia people: it is a good product, but it will not bring a decent challenge to Nokia for the time being.
Later stories, we all know. History will always have the same rhyme. Today, He Xiaopeng is at the crossroads of the automotive industry and has firmly chosen to stand on the "side of the iPhone".
He said publicly in 2017: "The picture of the automotive industry is bound to change – although the process may be a little slower than that of the mobile phone industry." If the change in the mobile phone industry took a decade, it may take twenty years for the automotive industry to change. But in any case, the general trend of this change is unstoppable. ”
Entrepreneurs and investors often have to be ahead of the market and public opinion, and perceive the changes in the general trend of the times earlier. He Xiaopeng began to nurture his car-making business in 2014 and started his car-making career in 2017. And GGV, it has also been growing with He Xiaopeng and his Xiaopeng car since then.
Investing in Xiaopeng is also investing in "Xiaopeng"
Fu Jixun, global managing partner of GGV Jiyuan Capital and investor of Xiaopeng Automobile, has expressed on many occasions that investing in a company is largely investing in its founder. If people vote right, companies often vote right. This point was once again confirmed in Xiaopeng Automobile and He Xiaopeng.
He Xiaopeng is a serial entrepreneur and is a successful serial entrepreneur. He Xiaopeng founded UC Browser with Yu Yongfu and Liang Jie in 2004, which was the first in the industry until it was acquired by Alibaba. Subsequently, he began to found Xiaopeng Motors.
In this sense, He Xiaopeng has taken a road from software to hardware, and has also wandered between the two identities of investor and entrepreneur. He Xiaopeng initially participated in the construction of Xiaopeng Automobile, but also intervened as an investor, which also laid a solid foundation for the excellent performance of Xiaopeng Automobile in the capital market.
In the first wave of electric vehicles, only He Xiaopeng had no experience in car manufacturing, and was a pure crossover from the Internet field. However, as the global managing partner of GGV Capital, Fu Jixun still has great confidence in Xiaopeng Car.
The first to bear the brunt is the aforementioned serial entrepreneur aura of He Xiaopeng. Fu Jixun knew very well that building a car was too complicated and too difficult. If the core leader has no experience in managing thousands of people, or even tens of thousands of people, if his personal charm is not big enough, can not attract enough, good enough talents to gather around, to help him achieve his goals together, the road to car building will not go on. In Fu Jixun's view, He Xiaopeng has the energy to lead the car-making team.
Further, today's construction is not an ordinary car, but a smart car that adopts new energy and new design concepts, which is bound to mean iteration, means change, and means that leaders need to have the ability to lead the entire team across the times. And He Xiaopeng, who was born in UC, is the person who has done this. When He Xiaopeng and his partners founded UC Browser, China's Internet market was still in the PC era, and not many people were really optimistic about the development of the mobile Internet. He Xiaopeng had the courage to become a person who walked in front. He not only witnessed it with his own eyes, but also personally promoted the leap of China's Internet from PC to mobile terminal. So today, he said that he wants to drive change in the automotive industry, which is convincing.
In 2014, UC went under Alibaba. He Xiaopeng, 37, has achieved financial freedom. Rich and powerful, with an aura in his body and ambition in his chest, He Xiaopeng will certainly not choose to retire. He made an assessment of some of the "interesting big things" in his mind and chose to build a car.
However, this time, He Xiaopeng did not enter the entrepreneurial state as soon as he came up, but "launched" Xiaopeng Automobile as an investor.
In a later interview, he said that there were two main considerations at that time: "First, Internet people do hardware, especially to build cars, the leap is too large; second, the car is originally only their own interest, to turn interest into a career, it is likely to turn fun into torture." These concerns made Xiaopeng not directly in— until, in the delivery room where his son was born, he received a call from Fu Jixun.
In February 2017, He Xiaopeng had just held his son for a minute or two when the phone rang. This is not the first time the two sides have discussed the construction of a car. At that time, Fu Jixun did not know that on the other end of the phone, there was a baby who had just been born, and he did not know that what he said had a particularly strong penetrating effect on He Xiaopeng at this moment: "The competition on the car track has begun, if you don't rush in now, in a year or two, the window of this track may be closed." ”
While talking on the phone, while looking at the child who had just been born, He Xiaopeng suddenly had an idea: he should do some more sound and color things to show his son. He wants his son to grow up and see that he has a "father who cut through thorns", not a "retired father".
As a result, He Xiaopeng, who was already a winner, sat back at the card table and once again put himself in - due to the remoteness of the initial office, he simply moved to the vicinity of the new company, only to save more than an hour of round-trip driving every day, but also lost a lot of opportunities to spend time with his family. Old friend Lei Jun saw He Xiaopeng return to the state of an entrepreneur, and also half-jokingly asked him: "How, after sitting in business class for so many years, can you still sit in economy class?" Can you still live in 7 days and home? ”
The story of Xiaopeng and Xiaopeng Automobile officially began. This time, GGV not only played the role of an investor and invested in Xiaopeng Automobile, but also pushed behind Xiaopeng as a friend of the founder. Investing in a startup is essentially investing in the founder – for this credo, GGV has achieved a combination of knowledge and action.
Anchor intelligent, down-to-earth car building
Xiaopeng Motors, obviously, is an affinity name. But that doesn't mean the entrepreneur behind the name doesn't have the ambition to conquer the market, and it doesn't mean that the automotive products it labels aren't good at showing their edges.
In October 2017, Xiaopeng Automobile obtained the product announcement of the Ministry of Industry and Information Technology and achieved mass production - in the first wave of new Internet car manufacturing forces, Xiaopeng was the first company to achieve this goal;
In January 2018, Xiaopeng Automobile G3 was launched in the world at ces international electronics exhibition in the United States;
On December 12, 2018, Xiaopeng Automobile officially released the Xiaopeng G3;
On April 27, 2020, Xiaopeng Automobile released the Xiaopeng P7;
On August 27, 2020, Xiaopeng Motors was listed on the New York Stock Exchange and landed on the US stock market at a price of $15 beyond the original offering range, with a valuation of $10.8 billion.
On July 7, 2021, The "first share of smart electric vehicles" of Hong Kong stocks, Xiaopeng Motors, was officially listed on the main board of the Hong Kong Stock Exchange, becoming the first new car-making force to land on the Hong Kong Stock Exchange, and the first Chinese stock to complete a "dual major listing" on the New York Stock Exchange and the Hong Kong Stock Exchange in three years.
In 2022, Xiaopeng Automobile became the first new car-making force to be included in the Hong Kong Stock Connect.
Since its inception, Xiaopeng Automobile has been the head player of the new domestic car-making forces. Xiaopeng, who is in the first camp, has also gradually established his own differentiated development strategy. Looking around at the entire new car-making forces, WEILAI focuses on the positioning of high-end products and establishes brand segmentation by providing quality services. The ideal car refers to the fuel vehicle, highlights the advantages of electric energy, and focuses on mileage anxiety. And what is the strategic direction that Xiaopeng chose? He Xiaopeng clearly gave the answer: "Intelligence is the core of Xiaopeng Automobile." ”
Whenever electric vehicles were mentioned a few years ago, most people would first focus on three points: power, endurance and charging performance. However, as the industrial supply chain becomes more mature, the issues that were once the most concerned will become more and more non-problematic.
Among the similar positioning products of different brands, the convergence of the basic performance of the car will become more and more obvious, and the slight advantage in performance parameters can no longer become a product highlight. Only by truly understanding China's travel scenes and truly understanding the psychological needs of consumers can we find the favored function points and launch eye-catching products - and this is also the direction of Xiaopeng Automobile's efforts in intelligence.
In the new forces of car manufacturing, Xiaopeng has never been stingy about investment in technology research and development. In 2020, its R&D investment reached 1.726 billion yuan, accounting for 29.53% of the revenue, significantly higher than the general proportion of the industry. In the second quarter of 2021, Xiaopeng Automobile's research and development expenses continued to increase, an increase of 170% year-on-year. As of the end of the second quarter of 2021, Xiaopeng's R&D team has exceeded 3,000 people, an increase of about 50% over the beginning of the year. Most of the team is for talents in autonomous driving software and hardware, big data applications, and map intelligence technology. In the second half of 2021, Xiaopeng continued to invest in research and development, and the research and development expenses in the third quarter alone reached 1.264 billion yuan.
Such a degree of investment also makes Xiaopeng Automobile's products live up to the core label of "intelligence".
For example, Xiaopeng's outstanding intelligent parking technology. People who have not personally experienced smart cars may say: "Smart parking seems to have been a function that existed many years ago, and it is not new, right?" ”
But many people may not know that in the past, many cars that claimed to be equipped with intelligent parking functions could only park in less than 20% of the scenes. Of the 10 parking missions, only 1 or 2 were successful. This makes smart parking impractical for most users, and even becomes a gimmick in advertising.
As of 2021, Xiaopeng Automobile's intelligent parking scene coverage rate will reach 85%. On this basis, Xiaopeng is also equipped with a parking lot memory parking function - just manually "teaching" once, the car can "learn" to park to the target parking space of the driving route, from then on can be intelligent parking for the owner. It is worth mentioning that this is also the world's first mass-produced autonomous parking system that does not rely on parking lot modifications.
For example, the "automatic follow function" of Xiaopeng Automobile is also a favorite of users. Whenever the driver encounters traffic jams, turn on the automatic follow, you can get your hands off the steering wheel, feet off the brakes and electric doors, so that the car automatically follows the traffic in front. For users who often encounter traffic jams in urban life, this feature is undoubtedly quite practical.
At the same time, a set of sufficiently intelligent in-car human-computer interaction system also makes the traditional cockpit a "smart cockpit". Most of the in-car operations no longer require manual, but can be used to make the system perform instructions in a voice manner, even including the delicate operation of "adjusting the direction of the air conditioner blowing".
Users also do not need to deliberately enter the state of "speaking to the machine", but can interact with their most natural way of speaking. For example, in asking the system "How is the weather today?" Later, when the system begins to narrate the weather conditions of the day, the user can completely "interrupt" it and ask "What about tomorrow?" ”。 For example, when the main driver interacts with the system by voice, the passenger sitting in the co-pilot does not need to deliberately remain quiet. Because Xiaopeng's voice system has the function of "two-tone area locking", it can "only listen to the master's words". In addition, Xiaopeng has also done a good enough job in the in-car APP ecology and video content presentation.
These intelligent performances have made Xiaopeng Automobile distinguish itself from traditional functional cars and tend to be more intelligent cars in people's minds. In addition, several products launched by Xiaopeng Automobile are very fashionable and futuristic in terms of design, and more young potential user groups pay special attention to this "beautiful and smart guy".
However, there is one thing that He Xiaopeng knows very well in his heart: whether it is a new force in car manufacturing or an Internet car, the most fundamental thing is to build a car. No matter how much intelligent innovation you have, you can really build the car well, which is the premise of everything. He Xiaopeng is very clear that from internet people to car builders, he needs to complete a leap in his way of thinking.
In the past, when doing Internet products, I basically didn't need to affect people outside the company to do something by myself. From design to research and development, a software does not need the cooperation of supply chain, manufacturing end, and logistics channels, so it is easier to check and fill in the gaps, update and iterate. At that time, I wanted to make a change to the product, as long as I mobilized a small team to make quick adjustments and immediate trial and error, the cost to be paid was basically a controllable labor cost.
However, once you enter the hardware field of car building, you often have to face the situation of pulling the whole body. Even if you just want to improve a door handle, you need to re-open the mold for this handle, at least five million dollars, and it takes eight or nine months. Because, the adjustment of this handle is likely to require the cooperation of the entire upstream and downstream industrial chains, and pay both tangible and intangible costs together to achieve.
Faced with the huge cost of trial and error, He Xiaopeng needs to constantly find a balance between ideal and reality. Xiaopeng Motors once designed a cool driver's seat that is both intelligent and comfortable. But colleagues in the supply chain told He Xiaopeng that if he wanted to configure this seat, he would need to hoist it from the roof of the car, which was too expensive. In desperation, I can only think of another way.
Building cars, He Xiaopeng, who came from the Internet, is full of awe for the hardware industry. There is a phrase that he repeatedly mentions in the public sphere and within the company: "Win in the pattern, lose in the details." He constantly reminded himself to use the most cautious attitude to realize the most amazing ideas.
Still not quit, continue to accompany
The core revenue of Xiaopeng Automobile originates from automobile sales, and the products sold mainly include Xiaopeng G3 and Xiaopeng P7. Over the years, its main business income has accounted for more than 95%. The total number of deliveries in 2021 reached 98,155 units, 3.6 times that of 2020 and an increase of 263% year-on-year.
Since its listing, Xiaopeng Automobile's revenue has grown rapidly: 5.84 billion yuan in 2020, an increase of 151.8% over 2019; and in 2021, the revenue of Q1, Q2 and Q3 alone will reach 2.95 billion yuan, 3.761 billion yuan and 5.72 billion yuan respectively, and it is expected that the revenue in the fourth quarter will reach 7.1 billion to 7.5 billion yuan. Xiaopeng Automobile, which uses technology to drive product upgrading, can be expected in the future.
And it is precisely because of the continuous optimism about the future of Xiaopeng, although Xiaopeng Automobile has been successfully listed and the market value is in good condition, GGV still maintains the state of all in, accompanying Xiaopeng to continue to grow. GGV believes that the moment that truly belongs to Xiaopeng Motors is still far in the future.