Text/Yang Song Jiang Yuyue Editor/Jiang Yuyue
The four new forces of domestic car manufacturing may be born.
On the evening of March 17, Zero Run Technology submitted a prospectus to the Hong Kong Stock Exchange. Post-60s founder Zhu Jiangming is a science and technology man who founded the world-class security giant Dahua Shares. At the age of 50, he chose to start from scratch and vowed to realize his "trillion dream" in the new energy vehicle industry.
In 2015, Tesla entered China for only two years, and Ideal, Weilai and Xiaopeng were founded only one year ago. The fiery new energy vehicle track ushered in zhu Jiangming, a "security" technician.
He walked firmly. Just like the first start-up 30 years ago, Zhu Jiangming, who came from a technical background, believes that down-to-earth research and development is king. Two years after its establishment, Zero Run has become an outstanding student of the "global self-development" track, and three cars have been delivered since 2019.
In 2021, the revenue of zero-running cars exceeded 3.1 billion yuan, an increase of nearly 400% year-on-year. However, the loss margin is also widening. In 2021, the loss exceeded 2.8 billion yuan, and the total loss in three years was nearly 4.5 billion yuan.
It is difficult to solve the profit dilemma in the short term, following the "Wei Xiaoli", Zhu Jiangming turned his attention to the capital market and ran to Hong Kong with zero.
"Layman" builds a car, full stack self-research
Zhu Jiangming is a native of Yiwu, Zhejiang Province, and graduated from Zhejiang University in 1990 with a major in electrical engineering. Two years after being assigned to work in a school-run enterprise, in 1993, Zhu and his friend Fu Liquan founded the future Dahua Shares, and seized the opportunity of the digitization of video surveillance and video technology to "break into" the security industry.
Starting from scratch for the first time, Zhu Jiangming used the only 5,000 yuan when he started a business to beat the security giant with the world's second largest market share and a market value of more than 60 billion yuan.
In 2015, over fifty years old and free of wealth, Zhu Jiangming decided to start over.
"I still have a dream of 100 billion, but the global total number of security products is only 100 billion, so I have to choose a new industry." At that time, the state encouraged non-car manufacturers to enter the new energy automobile industry, and the development of electrification and intelligence was in full swing. Aiming at the timing, Zhu Jiangming founded zero-run cars.
Veterans become rising stars. Moreover, there is no shortage of opponents in this track - BYD is old, early in school, BAIC BJEV state-owned enterprises, weilai debut is the peak. Newcomers run zero and need the advantage to lean forward.
With previous entrepreneurial experience, Zhu Jiangming believes that "only by adhering to technical self-research can we create a car with a soul." ”
More than two years after its establishment, Zero Run has become the second manufacturer in the world to have the complete independent research and development capabilities of intelligent electric vehicles after Tesla. Among all parts, in addition to the battery cells, interior and exterior decorations purchased, chassis, automotive electronics and electrical appliances outsourced production, other parts are self-developed and self-produced.
From zero to one, Zhu Jiangming frankly said that building a car burns money, and when he had more rational analysis, he would not have the courage to take a step. "We (once) thought that after the testing of the China Automobile Center was qualified, we could sell it, but we did not expect that there was a problem that the factory could not be built."
Zhu Jiangming immediately made a decision and decided to make up for the puzzle of car-making qualifications. In December 2020, Zero Run acquired Fujian Xinfuda and took over the automobile production qualification. In terms of production capacity, the plant in Jinhua, Zhejiang Province, has an annual production capacity of 200,000 units.
Zero run into the "self-produced era" and aim to achieve a total sales volume of 800,000 vehicles by 2025.
Valued at $27.5 billion, it is still losing money
For Zhu Jiangming, choosing to impact the IPO at this time node is a good time, because the overall sales of zero-run cars have risen.
The company's first model, the electric coupe S01, was officially delivered in July 2019, and the price after subsidies was close to 200,000, and the sales volume of the year was only 1,034 units.
Mid-end sales are not good, low-end cars to make up.
In 2020, zero-run mini car T03 was priced at less than 100,000 units, and this model alone sold more than 7,000 units that year.
The explosion boosted overall sales, with a total of 43,748 electric vehicles delivered by Zero Run in 2021, an increase of 443.5% over 2020. Among them, the T03 sold 39149 units.
According to the prospectus, in terms of sales in 2021, Zero Run is the world's top five and China's fourth largest pure electric vehicle company.
It is worth noting that the limited to "pure electric company" means that the ideal car that has been listed is out, and the Wuling Hongguang MINIEV and Great Wall Euler, which have monthly sales of more than 10,000, belong to traditional car companies and are not included in the ranking.
Of course, Zhu Jiangming was satisfied. Growing sales have also pushed up zero-run revenue. From 2019 to 2021, the total revenue of zero-run vehicles was 117 million, 631 million and 3.132 billion yuan, respectively.
From the perspective of revenue composition, the main revenue of zero running comes from automobile sales, and the total revenue of automobile and parts sales in 2021 will exceed 3 billion yuan, accounting for 97.7% of the total revenue.
Like other new forces, Zero Run is still at a loss.
During the reporting period, the company's operating losses were about 730 million, 869 million and 2.868 billion, respectively, and the total loss in the three years was as high as 4.467 billion yuan.
Zhu Jiangming invested heavily in research and development. From 2019 to 2021, the R&D expenditure of zero-run was 360 million, 290 million and 740 million yuan respectively, with a total investment of nearly 1.4 billion yuan in three years. At the end of 2021, of the company's 3190 employees, R&D personnel accounted for 33.9%.
To fill huge losses, it depends on investors to continue to transfuse blood.
Since 2021, Zero Run has completed 4 rounds of financing, of which the valuation after the C2 round of financing has increased by 5 times compared with the Pre-A round.
Zhu Jiangming has many supporters around him. Zero-run shareholders include Dahua Shares, Sequoia China, Shanghai Electric, CRRC and other institutions. Based on the total share capital before the listing and the price per share of 27.26 yuan, the company is valued at 27.58 billion yuan.
Zhu Jiangming directly holds 9.15% of the shares, according to which his wealth has already exceeded 2.5 billion yuan.
There are billions lying on the zero running account. Cash and cash equivalents of approximately $4,338 million by the end of 2021. According to the net outflow of operating cash of 1.02 billion yuan in 2021, it can still support 4 years of operation.
Stuck in a low price, it is difficult to rush to the high end
Zero run said that it mainly focuses on the mainstream new energy vehicle market with a price of 150,000-300,000 yuan. The fact is that the mini car T03 has achieved impressive sales results, and zero runs still rely on low-priced models.
Taking the fourth quarter of 2021 as an example, T03, which is priced less than 100,000, accounts for 78% of the total sales volume in the current period, while C11 in this price range (about 160,000-200,000 after subsidies) accounts for only 22%.
In terms of offline channel layout, unlike Weilai and ideals that face consumers directly, Zero Run has chosen the "direct operation + channel" cooperation model.
By the end of 2021, among the 291 stores with zero running, only 23 were directly operated stores and 268 were channel partner stores. Direct store sales accounted for only 17.4%.
This made Zhu Jiangming have some headaches. Sales rely more on channel providers, products trapped in low prices, is not conducive to zero running to create a "tall" brand image, it is difficult to lock in more high-end customers.
The gross profit margin of zero running has also been negative, with -95.7%, -50.6% and -44.3% respectively in 2019-2021. In contrast, Weilai, Xiaopeng and Ideal, which focus on the high-end market, have gross profit margins of more than 10% in the third quarter of 2021.
Zhu Jiangming once said that in terms of automatic driving technology, zero running is very confident, and it is expected to achieve full-scenario automatic driving technology in 2024, surpassing Tesla within three years.
In the face of low-priced products, even if self-driving technology surpasses Tesla, it is difficult to convert into new revenue.
In 2021, the revenue of zero-run services including car networking and OTA firmware was only 1.3 million yuan, accounting for less than 1% of the company's total revenue. Xiaopeng Motors, which is known for its self-driving technology, accounted for 4.74% of its total revenue in other revenues such as services.
Zhu Jiangming's main battlefield is still the mid-to-high-end line.
Zero Run plans to launch eight new models by the end of 2025 at the rate of 1-3 new models per year, covering cars, SUVs and MPVs of various sizes, and in the second quarter of 2022, launch a smart pure electric medium and large sedan C01, and start delivery in the third quarter of the same year.
In addition, the company will also raise 1/4 of the funds raised from the listing to expand its business and enhance brand awareness.
The new energy vehicle market is in full swing. Whether it is the "three fools of car manufacturing" who occupy the market through huge financing, or Baidu Jidu, Xiaomi Automobile and traditional car companies, they have laid out the mid-end market.
At a zero-run-focused price point, competition will only intensify.
Wang Xing, an ideal automobile investor, once judged that the new forces can only live 3 in the future. In addition to the three new listed forces, the second echelon of car companies will also accelerate financing and listing.
For Zhu Jiangming, the greater the chance of raising more funds through listing, the greater the chance of living and surviving.