The ideal loss expands by more than 1 times! The single technology of the model is insufficient, how to move forward under heavy assets?

Ideal ONE sample car du ge shoot

On the evening of February 25, Ideal Auto announced its unaudited financial results for the full year 2021. Keywords such as "total revenue increased by 185.6% year-on-year", "net loss of 321.5 million yuan", "90,491 vehicles delivered in the whole year", "gross profit margin of 20.6%" filled the "report card".

From the perspective of revenue and sales, the ideal car's 2021 is undoubtedly a bumper harvest, and the ideal ONE model alone has resisted the "cold wave" of the supply chain shortage in the whole industry, and the delivery volume has exceeded 10,000 units for many consecutive months. On this basis, Ideal Auto is ready to continue its efforts this year, launching a new car for the next generation of range extender platforms in the second quarter.

However, it should not be ignored that the ideal car, which is known for its high gross profit, still lost money, and the net loss increased by 111.9% from 151.7 million yuan in fiscal 2020, and the reason for the loss was related to the significant increase in R&D investment and management expenses, and was also affected by the expansion of sales networks and self-built factories.

Many people question that the ideal ONE of "opening and eating for three years" is somewhat difficult to support, even if a new car is launched, the range increase can never represent the future of electric vehicles, and the ideal car that is still building and expanding factories will eventually "stall" in the rush?

Losses more than doubled

Car manufacturing is recognized as a "burning money" business, but among the new forces of car manufacturing, the ideal car is considered to be the most profitable one, with a gross profit margin of more than 20% of bicycles, which makes many car companies hopeless.

According to the financial report, the total revenue of Ideal Automobile in the fourth quarter of 2021 was 10.62 billion yuan, an increase of 156.1% year-on-year; the net profit was 296 million yuan, an increase of 174.9% year-on-year. For the whole year of 2021, the company's total revenue was 27.01 billion yuan, an increase of 185.6% year-on-year, of which vehicle sales revenue in 2021 accounted for 96.7% of the total revenue for the whole year.

In the fourth quarter of 2021, Ideal Automobile's operating cash flow was RMB3.84 billion, an increase of 110.7% over the fourth quarter of 2020. For the whole year of 2021, Ideal Auto's operating cash flow reached 8.34 billion yuan, an increase of 165.6% over 2020.

For last year's performance, Ideal Auto founder Li Xiang should be very satisfied. He said: "We still achieved profitability in the fourth quarter under the premise of significantly increasing R&D investment and accelerating the expansion of our sales network, with operating cash flow of 3.8 billion yuan, which fully reflects the outstanding operating efficiency of Ideal Automobile." ”

However, despite the excellent financial data, due to the loss of the previous quarters, the net loss of Ideal Automobile in 2021 is still expanding, an increase of 111.9% over the previous year to 321.5 million yuan.

In this regard, Ideal Auto gave detailed data such as research and development expenses and management expenses in the financial report, revealing that it was because of the increase in these expenses that the loss was further expanded.

Last year, Ideal Automotive R&D expenses increased by 198.8% to MOP3.29 billion from MOP1.10 billion in 2020, and sales, general and administrative expenses increased by 212.1% from MOP1.12 billion in 2020 to MOP3.49 billion.

At the same time, the significant expansion of direct operations and service networks has also dragged down profits. By the end of 2021, Ideal Has 206 retail centers in 102 cities, almost 4 times the number at the end of 2020, and the number of after-sales maintenance centers and authorized sheet metal spray centers has increased to 278.

From research and development, channels, markets to the overall expansion of infrastructure, these require a lot of capital investment, and it is not difficult to understand the expansion of the loss of the ideal car.

A single model is difficult to support alone

From a business point of view, Ideal Auto delivered 35,221 vehicles in the fourth quarter of 2021 and 90,491 vehicles in the whole year of 2021, a record high.

Ideal delivered 12,268 units in January, up 128.1 percent from January 2021, and the company expects vehicle deliveries to reach 30,000 to 32,000 units in the first quarter of 2022.

Unlike other new car-making forces, ideal cars have delivered only one ideal ONE in the past 7 years since its establishment.

Ideal Auto repeatedly emphasized in the process of external publicity: "Ideal ONE has achieved the production of 100,000 units in only 708 days. "Ideal ONE set a record of 100,000 vehicles for the fastest single model of the new domestic car-making forces." "Ideal ONE innovative force car company has the highest monthly sales record for a single model." ......

However, as the saying goes: don't put your eggs in the same basket. Betting on a single model is bound to weaken the anti-risk ability of the ideal car, not to mention a model that has been eaten for 3 years.

In contrast, Weilai, Xiaopeng and Weima have long since gotten rid of the problem of walking on one leg. At present, Xiaopeng has three models on sale: P7, P5 and G3; NIO has four models on sale: ES6, ES8, ET7 and EC6; and WM Motors has EX5, EX6, W6 and other models on sale.

However, the ideal car aspect seems to have a different idea for this problem. On the third-quarter earnings call, company executives said, "We're going to choose to sell in large quantities with one model, rather than launching a lot of models soon, but with very small sales." At the same time, it was revealed that the first product on the X platform will be launched in 2022 and two other SUVs on the X platform in 2023. In addition, from 2023 onwards, it is planned to launch at least two high-voltage pure electric models per year.

No obvious technical labels

Not only is the model single, but the "core technology" is also the point where the ideal car has been controversial. The industry generally believes that the ideal ONE, as the first model of the ideal car, has no technology to speak of, and pursues the "take-ism".

For example, the 1.2T three-cylinder engine equipped by the ideal ONE originated from Changan's Dong'an Power, which has always had quality complaints, and now mainstream models including Changan Automobile rarely use The Dongan engine; the frequency converter and controller system are jointly developed by Liszt and Delphi; the battery and battery technology are supplied by Ningde Times, the largest battery supplier in China.

In contrast, Xiaopeng and Weilai, Xiaopeng has the industry-leading Xmart OS system and XPILOT software, and Weilai adheres to the self-research of Sandian technology. Li Bin, the founder of Weilai, once said that only self-research can ensure that Weilai will not fall behind in the competition.

Looking at the range-up route taken by the ideal car, although it is very intimate to avoid the problem of mileage anxiety for users, it has not been truly recognized by the electric vehicle market. Compared with pure electric vehicles, the cost of the extended range power system is lower, and it is criticized as a transition before the arrival of pure electric vehicles.

In Li Xiang's view, the application of range extender technology in large SUVs and MPVs has the advantage of 5 to 10 years. Therefore, in the planning, a full-size SUV launched by Ideal Automobile this year will continue to use the extended range powertrain. So, after 5 to 10 years, is there still a market for range-extending technology, and can Li xiang ensure that he can catch up in the field of pure electric vehicles?

It is worth mentioning that in February last year, Shanghai issued a policy on new energy models, namely the "Shanghai Municipal Implementation Measures for Encouraging the Purchase and Use of New Energy Vehicles". As mentioned in the Measures, from 1 January 2023, whether individuals or units purchase plug-in hybrid models and extended range models, special license quotas will no longer be issued.

That is to say, from New Year's Day 2023, the purchase of plug-in hybrid models and extended range models will no longer enjoy the shanghai free special license. This is an ideal car for positioning the mid-to-high-end, or a blow.

What is more worrying is that ideal cars announced in the financial report that the company's chief technology officer (CTO) Wang Kai resigned for personal reasons, after he was mainly responsible for the research and development and mass production of smart car-related technologies, including electronic and electrical architecture, intelligent cockpit, automatic driving, platform development and Li OS real-time operating system.

Heavy assets under the weight of the load forward

The shortage of production capacity is also one of the problems currently facing the ideal car. In August 2021, Shen Yanan, co-founder and president of Ideal Automobile, said that due to the problem of production capacity, ideal automobile production capacity could not keep up with market demand.

It is understood that as of now, Ideal Automobile has two production bases: one is a production plant located in Changzhou, Jiangsu Province. The factory is an ideal automobile self-built factory, with a design annual production capacity of 100,000 vehicles, covering four workshops of stamping, welding, painting and assembly.

One is the Beijing green intelligent manufacturing base that is being transformed. The plant, formerly the first plant of Beijing Hyundai, was shut down in April 2019 due to sluggish sales. Relying on this plant, Ideal Automobile plans to invest a total of 6 billion yuan to build it into a new plant that integrates the production and manufacture of complete vehicles and parts, and plans to put it into operation in 2023 after rectification.

In this financial report, the third factory of the ideal automobile that has been speculated by the outside world for a long time has also surfaced. Ideal Auto revealed that in December last year, the company and the Chongqing Municipal Government signed a strategic cooperation framework agreement to build a Chongqing manufacturing base in Liangjiang New Area.

On January 27, Ideal Automobile won the industrial land for transportation equipment manufacturing in Liangjiang New Area of Chongqing For 430.69 million yuan. The land area of the industrial land is 1.1334 million square meters, the land use is Class II industrial land, and the industrial category of the conditions of use is transportation equipment manufacturing, and the transfer period is 50 years.

As early as December 2018, Ideal Automobile acquired Chongqing Lifan Automobile Co., Ltd. for 650 million yuan, thus obtaining the new energy vehicle production qualification. In that year, Ideal Automobile also signed a contract with Chongqing Liangjiang New Area, planning to invest 11 billion yuan to build a smart car manufacturing base with an annual production capacity of 400,000 vehicles, but this project failed to land in the end, which can be said to be a continuation of the frontier.

In February this year, Li wanted to set up a flag: in 2025, Ideal Car will occupy 20% of the market share of domestic electric vehicles, with sales reaching 1.6 million, becoming China's first intelligent electric vehicle company.

To achieve this goal, it is first necessary to expand production capacity to this order of magnitude. However, unlike THEO's foundry model, Ideal Auto is an "asset-heavy faction" in the industry, insisting on building its own factory, so it is crucial to have the ability to absorb heavy assets. If the above goals cannot be achieved, how should the ideal car face the pressure of cost and capacity digestion?

Author | Moons

Edit | Wan Jiali

Source | Consulting Finance (teccj6)

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