In 2021, there will still be a loss of more than 10,000 per car sold, how far is the ideal car from real profitability?

When will the new car-making forces turn a profit?

On February 25, the 2021 annual results were announced, and the average operating loss of ideal automobile-W (02015.HK) in 2021 is still more than 10,000 yuan per car sold. The product has better endurance, the advantages of electric vehicle driving experience, the direct operation network is fully rolled out, and the operating loss of ideal automobile in 2021 still reaches 1.02 billion yuan.

"Operating loss increased by 52.0% from $669 million for the year ended December 31, 2020 to $1.02 billion for the year ended December 31, 2021." The total delivery volume of the ideal ONE in 2021 reached 90,491 units, which shows that the ideal ONE is selling a loss of more than 10,000 yuan. The ideal ONE unit price is 338,000 yuan.

In the context of the new force of pure electric vehicle companies still losing a large area and the gross profit margin is lower, the new products that the ideal will continue to launch in the future include pure electric models, will this further increase the loss of the ideal car?

Annual loss attributable to shareholders was $838 million

In 2021, the "comprehensive loss attributable to the common shareholders of Ideal Automobile" still reached 838 million yuan, and this was still in the case of a year-on-year increase in wealth management income of nearly 500 million yuan.

After the announcement of results on the afternoon of February 25, the US stock of Ideal Automobile rose by 1.94% on the evening of the same day; the Hong Kong stock before the announcement of results rose by 4.78% on the 25th, closing at HK$109.5, compared with the issue price of HK$118 per share more than half a year ago, the Hong Kong stock of Ideal Auto was still in a state of breaking.

"Net interest income and investment income increased by 190.5% from $255 million in 2020 to $740 million as of 2021, mainly due to the significant expansion of our investment in wealth management products." The net proceeds from ideal cars' initial public offering in Hong Kong in August 2021 were HK$13.27 billion, after the company was listed on the NASDAQ in the United States in July 2020, issuing 95 million shares priced at US$11.5 per share, raising nearly US$1.1 billion.

Ideal Auto said that the total delivery volume of Ideal ONE in 2021 still reached 90,491 units, an increase of 177.4% year-on-year, and the total revenue was 27.01 billion yuan, an increase of 185.6% year-on-year. Gross profit increased by 271.9% from $1.55 billion in 2020 to $5.76 billion in 2021. Gross margin increased from 16.4% in 2020 to 21.3% in 2021, primarily due to improved cost containment in supply chain management and increasing deliveries since the launch of the Ideal ONE in May 2021, resulting in an increase in the average selling price of the product.

"On May 25, 2021, we unveiled the Ideal ONE 2021 with The Navigation Assisted Driving System (NOA) as standard, which has undergone comprehensive upgrades, including an increase in NEDC range to 1,080 km, optimised travel comfort and a smarter cockpit. Through the launch of the 2021 Ideal ONE, it has provided users with high-end configurations, priced at 338,000 yuan. In November 2021, ideal ONE became the first Chinese brand to deliver more than 10,000 models in a single month with a starting price of more than 300,000 yuan. The company said.

The company also said that "in 2021, the company will significantly expand its direct operations and service network, and the number of retail centers at the end of the year will be almost 4 times that of the end of last year." We plan to further expand our sales network in 2022 to meet the growth of user demand and occupy the growing market share of new energy vehicles. As of December 31, 2021, the Company had 206 retail centers in 102 cities and 278 aftermarket repair centers and ideal automotive authorized sheet metal spray centers in 204 cities. ”

In this regard, a fund manager in Shenzhen told the first financial reporter that these new forces adopt a direct store model, which is different from the situation of traditional fuel vehicles, and the gross profit margin is not good to be directly compared with traditional fuel vehicles, but the ideal gross profit margin is basically higher than that of other new car-making forces.

"Direct operation and service network is an indispensable part of the company's online and offline integrated closed-loop platform, which can provide users with a high-quality car purchase experience consistent with our values and brand image, and also allow us to gain deep consumer insights in the process of continuously improving products and services." Ideal car representation.

In 2021, ideal car R&D expenses increased by 198.8% from $1.10 billion in 2020 to $3.29 billion, mainly due to the increase in employee salaries due to the increase in R&D personnel and the increase in related expenses due to the increase in R&D activities for new models.

Ideal Auto said that the company's net profit in the fourth quarter of 2021 was 295 million yuan, compared with a net profit of 107 million yuan in the fourth quarter of 2020 and a net loss of 21.5 million yuan in the third quarter of 2021. Li Xiang, founder, chairman and CEO of Ideal Auto, said: "Under the premise of significantly increasing R&D investment and accelerating the expansion of its sales network, the company still achieved profitability in the fourth quarter, with operating cash flow of 3.8 billion yuan."

Plans to launch pure electric models, will it increase losses?

Ideal ONE's hybrid system uses a 1.2T three-cylinder engine, but this engine is not involved in the drive of the vehicle, it is responsible for charging the battery. Relying on this extended range power product, the gross profit margin level is higher than that of other new forces, but the ideal is still considering the launch of pure electric models.

The company plans to launch its second model in the second quarter. This is a full-size luxury program electric SUV equipped with the next-generation program electric power system and new smart cockpit and intelligent driving technology, which will further enhance the driving experience of home users. We will continue to develop all-electric models that can support ultra-fast charging, providing users with a superior experience in terms of charging time. The company said.

In this regard, the above-mentioned Shenzhen fund manager told the first financial reporter that it is not easy to say whether the extended range technical route is a "transition". In fact, the ideal battery is not large, pure electric endurance is only about 180 kilometers, accounting for the cost of the vehicle is actually not as large as pure electric products. The ideal gross profit margin has been higher than other new car-making forces, if the introduction of pure electric models, it is estimated that it will have a negative impact on the overall comprehensive gross profit margin, and even cause increased losses, "may mainly be the need to enrich the product line."

Wu Liuyan, an analyst at Kaiyuan Securities, said that ideal cars focus on home users for 5-6 people in the large-sized luxury SUV market, and take the technical route of extending the range transition under the shortage of domestic charging facilities. In 2020, the sales share of the ideal in China's new energy SUV market was 9.7%, and it was further increased to 11.3% in 2021; at present, the company still only has one ideal ONE model, and with the gradual improvement of the follow-up product matrix, the new models are steadily increased, which is expected to further increase the market share.

"The augmented electric vehicle is a transitional product between traditional fuel vehicles and pure electric vehicles, which solves the problem of mileage anxiety of pure electric vehicles; and compared with plug-in hybrid vehicles that are also in the transitional form, it has the same high-quality driving experience as pure electric vehicles." Wu Liuyan believes that following the concept of "design-oriented cost" and appropriately reducing personalized configuration based on the needs of home users, the ideal gross profit margin in the third quarter of 2021 will reach 21%, which is higher than that of Xiaopeng and Weilai.

"In January 2022, we delivered 12,268 Ideal ONEs, an increase of 128.1% over January 2021. As of January 31, 2022, we have 220 retail centers covering 105 cities, and operate 276 aftermarket repair centers and ideal automotive authorized sheet metal spray centers in 204 cities. Ideal Car said.

Ideal expects vehicle deliveries to be between 30,000 and 32,000 units in the first quarter of 2022, up 138.5% to 154.4% from the first quarter of 2021. Revenue totaled $8.84 billion to $9.43 billion, up 147.2% to 163.7% from the first quarter of 2021.

Ideal Auto announced at the same time on February 25 that the company's chief technology officer Wang Kai resigned due to personal reasons, and Ma Donghui, chief engineer of Ideal Automobile, will be responsible for the research and development of the company's intelligent car related technologies.

On February 24, Hin Wanda (300207. SZ) announced that the company's subsidiary, Sunwoda Electric Vehicle Battery Co., Ltd. (hereinafter referred to as "Sunwoda Battery Company"), has received a total capital increase of 2.43 billion yuan from 19 companies and institutions, and the total equity ratio of Sunwoda Battery Company corresponding to this capital increase is 19.5495%. After the completion of the capital increase, the registered capital of Sunwoda Battery Company will increase from about 5.0887 billion yuan to 6.3252 billion yuan. It is worth noting that in this capital increase, Jiangsu Chehejia Automobile Co., Ltd. invested 400 million yuan to lead the investment, the company is an ideal automobile related enterprise, the legal representative is the co-founder of ideal automobile Shen Yanan.