In 2021, the wave of car manufacturing has set off again, this time cross-border car manufacturing has become a hot topic in the city, before the founder of Xiaoniu Electric Vehicle Li Yinan came with the Niuchuang brand, and then there was Wen Wei, CEO of Tuanche, who boasted that Haikou "can build a car for 50 million US dollars".
It is foreseeable that with the resurgence of car-making fever, there will be more people with lofty ideals in the trillion-dollar new energy market who want to enter the market and share a piece of the pie. No, Like Foxconn, Luxshare Precision, which is also Apple's supply chain, has also begun to build cars. On the evening of February 11, Lixun Precision issued an announcement that its controlling shareholder, Lixun Limited, purchased 19.88% of the equity of Chery Holdings, 7.87% of the equity of Chery Holdings and 6.24% of the equity of Chery New Energy held by Qingdao Wudaokou for 10.054 billion yuan.
After Lixun took a stake, Qingdao Wudaokou, which previously held 46.77% of Chery Holdings, decreased to 26.89%, lower than the 27.68% shareholding ratio of Wuhu Construction Investment Co., Ltd. (wholly owned by Wuhu State-owned Assets Supervision and Administration Commission), which is the second largest shareholder, while Luxun Precision is the fourth shareholder.
It is worth mentioning that, on the basis of the agreement, Lixun Precision and Chery New Energy intend to jointly form a joint venture company, specializing in the research and development and manufacturing of new energy vehicles, of which Lixun Precision intends to subscribe 500 million yuan to hold 30% of the registered capital of the cooperative subsidiary, while Chery New Energy will subscribe 1.167 billion yuan and hold 70% of the equity of the registered capital.
Not only that, before the establishment of Luxshare Precision Industry (Wuhu) Co., Ltd., its legal representative is Li Jing, with a registered capital of 20 million yuan. The equity penetration chart shows that the company is 100% controlled by Xuancheng Lixun Precision Industry Co., Ltd., and its business scope includes auto parts and accessories manufacturing, auto parts wholesale, electronic product sales and so on. There is no doubt that with the investment in Chery Automobile and the establishment of a parts company, Luxshare Precision officially entered the car-making track.
For Luxun Precision's extravagant investment of tens of billions of dollars to build a car, I believe it is unexpected by many people. However, from the perspective of This action of Lixun Precision, Luxun Precision is serious about this car manufacturing, and directly invested in Chery New Energy Vehicle, compared with starting from scratch, Luxun Precision has taken a shortcut. Why did Luxun Precision, which has been based on OEM work, enter the bureau so high-profile this time, instead of seeking OEM work like Foxconn? Let me elaborate on this question.
Why does Luxshare Precision build a car?
For the reason why Luxun Precision has built cars by investing in Chery New Energy, I think it has a great relationship with its own state. Although like Foxconn as Apple's supplier, the strength of the two is not the same, and limited by the epidemic, electricity restrictions, supply chain core shortage, raw material price increases and other factors, the current operation of Luxshare Precision is not good.
According to the financial report, Luxun Precision's revenue in the first three quarters of 2021 was as high as 81 billion yuan, but its profit sources mainly relied on businesses such as Apple headphones and watches. Due to the deep binding with Apple, Luxshare Precision's anti-risk ability is not high. In 2020, as the largest customer of Luxshare Precision, Apple's orders accounted for 69% of Luxun Precision's revenue, which is higher than Goertek and Lens Technology, which are also Apple's leading suppliers.
You know, this is not alarmist, for example, the famous fruit chain representative company OFILM has not only plunged its stock price since it was excluded from the Apple industry chain in March 2021, but its revenue has also fallen directly from its previous profit to loss. According to the 2021 annual performance report released by OFILM, the net loss in 2021 is estimated to be between 1.9 billion and 2.7 billion yuan. There is no doubt that from the perspective of balanced operation, It is very necessary for Luxshare Precision to find other new revenue growth points.
Not only that, in order to meet Apple's production requirements, Luxshare Precision even borrowed money to invest in research and development and equipment updates. The data shows that since its listing, in addition to raising 9.6 billion yuan through bond issuance and private placement, Lixun Precision has also grown in scale of its borrowings, which is understood. As of the third quarter of 2021, Luxshare Precision currently has interest-bearing liabilities of up to 16.9 billion yuan in one year, and the company's asset-liability ratio is close to 60%, which is about 40% higher than when it first entered Apple's supply chain. It can be said that once apple supply chain is excluded, then the good situation accumulated by Luxshare Precision over the years will be destroyed. It can be said that whether it is to balance the risk or find more profit points, Luxshare Precision is very necessary to gradually get rid of the shackles of Apple, and car manufacturing is undoubtedly the hottest and best growth point at present.
In the past 2021, the operating income of the national automobile manufacturing industry was 8,670.62 billion yuan, an increase of 6.7% year-on-year, and the total profit was 530.57 billion yuan, an increase of 1.9% year-on-year. In addition, automobile production and sales exceeded 26 million units in 2021, ending a three-year decline since 2018. In terms of new energy, in the past 2021, the mainland new energy market has also ushered in a big outbreak. According to the data released by the Federation of Passenger Vehicles, the total wholesale volume of new energy passenger vehicles in 2021 reached 3.312 million units, an increase of 181.0% year-on-year, while the retail sales reached 2.989 million units, an increase of 169.1% year-on-year. In terms of penetration rate, the domestic retail penetration rate of new energy vehicles in 2021 will reach 14.8%, which is significantly higher than the 5.8% penetration rate in 2020. It can be said that in the context of the full outbreak of the new energy market, Lixun Precision has not taken the opportunity to share a piece of the pie by investing in Chery.
Not only that, before the establishment of Luxshare Precision Industry (Wuhu) Co., Ltd., its legal representative is Li Jing, with a registered capital of 20 million yuan. The equity penetration chart shows that the company is 100% controlled by Xuancheng Lixun Precision Industry Co., Ltd., and its business scope includes auto parts and accessories manufacturing, auto parts wholesale, electronic product sales and so on. There is no doubt that after investing in Chery Automobile and establishing a parts company, Luxshare Precision officially entered the car-making track.
Why Chery?
For Luxshare Precision to enter the car, I believe that with Foxconn's pearl jade in front, it should not be too surprising, but the choice of Chery is unexpected by many people. In fact, for the cooperation between Luxshare Precision and Chery, in my opinion, it is more like the support between difficult brothers and brothers.
Although some media have exposed that Chery has been looking for a partner in the field of technology manufacturing since last year, hoping to seek help in software development and solve the problem of overcapacity, and even has Foxconn, the opponent of Luxun Precision, on the list of cooperation with it, but from the perspective of Foxconn's car manufacturing direction, it does not want to go to the front of the stage from behind the scenes, but still clings to its old business - OEM.
Why? As early as the 2020 Hon Hai Science and Technology Day event, Foxconn officially announced its entry into the field of electric vehicles, and even released the MIH EV software and hardware open platform, which is crucial for car manufacturing. According to the introduction, the platform can span multiple levels, support front-drive, rear-drive and all-wheel drive models, and can provide a rich powertrain. It is worth mentioning that the MIH open platform is also defined as an open platform for electric vehicle software and hardware, which will allow automakers to design large components of electric vehicles on the platform. Previously, Foxconn had said that a number of automakers had negotiated cooperation and about 3 million cars would be produced using its platform, but two years later, Foxconn's new car was still not seen, which showed that Foxconn was still wavering about whether to finally build a car itself.
Luxshare Precision is different, it is more urgent to enter the game to build cars than Foxconn. And if you still take the OEM route, whether it is time, capital or technology, today's Luxun Precision, it does not have sufficient conditions. It can be said that compared with Foxconn, the weaker Luxshare Precision is more suitable for Chery, and the main and vice-relationship between the two can be seen from the proportion of shares in the joint venture company.
In addition, with Chery New Energy's own state, it is also very necessary to introduce partners like Luxshare Precision who have money and certain technology. As we all know, it takes money to build cars, especially to build new energy vehicles, and Chery New Energy, which was founded in 2010, has only carried out 3 rounds of financing so far. Although none of them have publicly disclosed the amount, from the current operating conditions it presents, it should not be too much. Moreover, its most recent financing occurred in January 2019, which means that Chery New Energy has not received new financing for almost 3 years.
Chery New Energy, which is short of money, has also set its sights on listing. As early as 2016, Chery New Energy planned to "backdoor" conch profile listing, but chery New Energy at that time finally missed the opportunity to land on the capital market because it did not obtain new energy vehicle production qualifications. Entering 2019, Chery Automobile executives also said that Chery New Energy will land on the science and technology innovation board at the end of that year, but the plan has no following. In fact, car companies such as WM, Zero Run Automobile, geely and other car companies have all folded the science and technology innovation board due to insufficient technology content, and chery new energy has failed to log on the science and technology innovation board.
Not only that, although Chery New Energy saw that Wuling Hongguang Mini EV continued to sell well last year, it also couldn't help but be lonely and launched QQ ice cream, and the current sales are relatively objective, but from the perspective of Wuling Macro Mini EV not making money, the QQ ice cream launched by Chery New Energy may also have a similar situation.
In general, although Chery intends to develop into high-end new energy, the current state of Chery New Energy, which is difficult to finance, is that it is difficult for a woman to cook without rice. It can be said that the emergence of Lixun Precision is like a heavenly rainfall for Chery, which is currently short of money and technology, and the injection of nearly 10 billion yuan of funds is also a charcoal in the snow for Chery, which is currently unable to make ends meet.
For the future direction of Chery New Energy and Luxshare Precision jointly manufacturing cars, I believe many people are curious. Although the new car of their cooperation has not yet been exposed, from the current public information between the two sides, it is still possible to explore the direction of their future car manufacturing.
There is no doubt that Chery New Energy, which still has shortcomings in the intelligent cockpit and automatic driving, needs the assistance of Luxshare Precision, although Luxshare Precision does not have much research and development in these aspects, but with the rise of smart cars, electric vehicles are even known as "four-wheeled mobile phones", as an important role of "fruit chain", Luxun Precision has been working for Apple and related research and development experience over the years.
At present, after Lixun Precision's entry into Chery, the future is more to provide Chery with Internet thinking and empower its newly launched new cars, while Chery New Energy is responsible for research and development, production, one main outside, one main inside. As for when the first new car they cooperate will be launched on the market, it depends on whether Chery New Energy can quickly integrate the relevant technologies of Luxshare Precision.
Summary: In the era when cross-border car manufacturing has long been no news, Luxshare Precision's investment in Chery New Energy's entry into the car manufacturing field is somewhat unexpected, but it will not cause heated discussion, but from the perspective of Lixun Precision's tens of billions of actions, this time Luxshare Precision Car Manufacturing is real.
In addition, unlike Foxconn, which has been seeking OEM car manufacturing, this time Luxun Precision Car is obviously thinking of desperate bets, and has the idea of becoming a ren if it is not successful. As for what kind of results Luxun Precision can finally achieve in this time, it depends on whether Chery New Energy is powerful this time. After all, Chery is not short of riot operations.