From layman to shock IPO, does the zero-run car that has been losing money for many years have a chance to call Tesla?

Produced by Radar Finance and | Li Yihui, ed. | Deep Sea

The new forces of the second echelon of car manufacturing opened the listing competition, and zero running was the first step.

On March 17, ZeroCar submitted a listing application to the Hong Kong Stock Exchange for listing on the Hong Kong Stock Exchange, with CICC, Citi, JPMorgan Chase and CCB International as co-sponsors of the IPO. If the listing is successful, Zero Run will become the fourth new car company to land on Hong Kong stocks after "Wei Xiaoli".

According to the prospectus, from 2019 to 2021, the total revenue of zero-run cars was about 117 million yuan, 631 million yuan and 3.132 billion yuan, showing rapid explosive growth.

However, at the same time as the growth, the amount of loss is also increasing rapidly. In the past three years, the net loss of zero-run cars was 901 million yuan, 1.1 billion yuan and 2.845 billion yuan, respectively. The Company expects to continue to generate net losses in 2022 due to R&D investment in new models and the expansion of production facilities and sales network.

Looking back at the history of zero-run car building, the process is full of ups and downs. Founder Zhu Jiangming came from the IT industry, and before building a car, he did not even know that automobile production and sales needed access qualifications, and was quickly labeled as a "stranger outside the door" by the industry. The dismal sales data of its first pure electric coupe S01 has left the zero-run car without a sense of existence for a long time.

It wasn't until the mini car T03 was listed that zero-run cars began to counterattack. The price of about 70,000 yuan, the endurance of more than 400 kilometers, and the intelligent driving assistance system have become the biggest advantages of the T03. This is reflected in the sales data of 2021, and the zero-run T03 delivered a total of 39,149 new cars throughout the year, which is its absolute main sales force.

However, in the era of new forces in the head of the monthly sales of more than 10,000, the achievement of zero running is still slightly thin.

It is worth noting that the company's founder Zhu Jiangming also shouted that he has surpassed Tesla in the field of assisted driving for 3 years, but at present, it is not optimistic to achieve this goal.

"The road to building a car outside the door"

The zero-run car, which is also a new force for car-making, is said to have really "zero run" at the beginning of its founding, to what extent is "zero run"?

"When I first wanted to make cars in 2015, I really didn't know what the majors of cars were, I went to recruit people, which people I wanted to recruit, it was all a smear." Zhu Jiangming once told the media.

Before entering the automotive industry, Zhu Jiangming was one of the main founders of Dahua Co., Ltd. and was the vice chairman of Dahua Co., Ltd.

Until December 17 last year, Dahua co., Ltd. issued an announcement that Zhu Jiangming applied for resignation as a director of the seventh board of directors of the company and a member of the strategic committee of the board of directors for personal reasons, and he would no longer hold any position in the company after his resignation. However, as of the date of the announcement, Zhu Jiangming held about 161 million shares of Dahua shares, accounting for 5.36% of the total share capital.

According to the data, Zhu Jiangming was born in Yiwu, Zhejiang In 1967. In 1987, Zhu Jiangming came to Zhejiang University to study radio. After graduation, he was assigned to the school-run factory of Zhejiang Electronic Industry School to do research and development work.

In 1993, Zhu Jiangming took out 5,000 yuan and together with Fu Liquan, the current chairman of Dahua Co., Ltd., founded Hangzhou Dahua Electronic Equipment Factory (later renamed Dahua Co., Ltd.) to make communication scheduling products. By slowly turning the plate type of the dispatching machine into a program-controlled exchange, Dahua shares rely on this product are almost the first in the market.

But the dispatcher is only a niche product, and the overall market cake is not large. After 1999, Dahua began to transform into the security industry and develop remote image monitoring products.

When cutting into the field of remote image monitoring, Dahua started from the research and development of embedded hard disk recorders, and gradually promoted the monitoring industry to achieve an upgrade from the tape route to the hard disk route. In 2017, Dahua achieved operating income of 18.8 billion yuan and net profit attributable to shareholders of listed companies of 2.4 billion yuan, an increase of 30% year-on-year.

"Dahua shares have a dream of a market value of 100 billion, and now the global market of the security industry is more than 100 billion, which cannot be exclusively obtained by one company, and the cake of the automotive industry is large enough." This time, Zhu Jiangming turned his attention to electric vehicles.

In July 2015, the zero-run car was born. Zero-run angel round investment comes from Dahua Shares and Entertainment Factory. According to Dahua shares on the investor interactive platform on January 6 this year, the company initially invested 90 million yuan in zero-run technology.

At that time, the new forces of car manufacturing were also just starting out. In terms of time, when Zero Run was founded, two years had passed since Tesla entered China, and it was only one year after the founding of Weilai and Xiaopeng, about 5 months after the establishment of Ideal Auto.

But different from the "car artificial car" of Weima and Aiways, there are industry resources and understand production and manufacturing; it is also different from the Internet artificial car of "Wei Xiaoli", they understand users and can also attract capital; Zhu Jiangming belongs to the third category, lacks car-making genes, and even does not understand cars.

According to media reports, when he first started to build cars, Zhu Jiangming did not even know that automobile production and sales needed access qualifications, thinking that if he was qualified for testing at the China Automobile Center, he could sell them, nor did he know what professions the cars were and who to recruit.

At an exhibition in Hangzhou in November 2017, Zero Run introduced itself, the company has more than 400 employees, of which 80% are R & D personnel, but the core team has no experience in the automotive industry.

Relying on this team, Zero Run released its first "mass production car", the two-door four-seat pure electric coupe S01, which accelerates from zero to 100 kilometers in 6.9 seconds and has a cruising range of 360 kilometers. The S01 is scheduled to be delivered in 2019, and manufacturing issues will be solved before then.

As early as 2015, the National Development and Reform Commission and the Ministry of Industry and Information Technology jointly issued the "Regulations on the Administration of New Pure Electric Passenger Vehicle Enterprises", which stipulates that car companies must have "production qualifications" and "product qualifications" to produce pure electric vehicles.

In order to solve the qualification problem, Zero Run found Changjiang Automobile, which had recently obtained the qualification, and cooperated to complete the production. In the self-built Jinhua factory, zero-run production of white body and three electric parts, and then handed over to the Yangtze River passenger car assembly.

However, the mass-produced S01 market performance is not satisfactory. According to the data, as of May 2020, the S01 has sold about 1,000 units, which is far from the target of 10,000 sales in 2019 set by zero-run cars.

According to the prospectus, in 2021, the S01 delivery volume for the whole year was only 634 vehicles.

In the past three years, the cumulative loss is 4.847 billion yuan

S01's performance is not good, and Zero Run has to hope that T03 can open up a broader market space.

According to the data, the zero-run T03 is an A00-class pure electric vehicle, using lithium iron phosphate battery. Among them, the lowest price of the comfort version after the subsidy price of 69,800 yuan, NEDC pure electric cruising range of 403km, while equipped with the same level of competitors rarely with the L2 intelligent auxiliary driving function.

Although the T03 has now alleviated the passive situation of the zero-run car, the car was once negative at the beginning of the market.

According to the "Leifeng Network", in the T03 media test ride, the car's face recognition, L2 intelligent driving assistance, and automatic parking failed to varying degrees.

Many car owners have also said that the auxiliary driving system of zero-running cars in the T03 publicity has not been pushed for a long time, or there is a phenomenon of large-scale overdue non-delivery due to factors such as chip shortage and insufficient production capacity.

However, after the car began to be delivered in May 2020, sales have increased year by year. According to the prospectus, zero-run vehicles delivered a total of 44,000 electric vehicles during 2021, an increase of more than 443.5% year-on-year. Among them, the main sales product zero-run T03 model subsidy after the guidance price of 68,900 yuan - 84,900 yuan, the model in 2021 delivery volume of 39,149 units, accounting for 89.48% of the annual sales of zero-running cars.

In October 2021, the delivery of the medium-sized pure electric SUV Zero Run C11 was started, and by the end of the year, 22,536 orders had been received and 3,965 units had been delivered.

Some analysts believe that channel expansion is also one of the reasons for driving zero-run sales. According to the data, by the end of 2021, the number of zero-run car stores nationwide has reached 291, which is 3 times the number of stores in the same period in 2020.

In horizontal comparison, although the sales volume of Zero Run in 2021 is less than the more than 90,000 vehicles of "Wei Xiaoli", in the second echelon of new car-making forces, it is comparable to the sales volume of WM Motors, ranking 5th among new forces.

It is worth mentioning that in January this year, the monthly delivery of zero-run cars reached a new high, reaching 8,085 units, an increase of 434% year-on-year; but in February, sales fell to 3435 units, down nearly 60% month-on-month and 447% year-on-year.

With the hot sale of vehicles, the revenue of zero running has also accelerated significantly. In 2019, 2020 and 2021, the company's operating income was 117 million yuan, 631 million yuan and 3.132 billion yuan, respectively. Among them, from 2019 to 2021, the company's revenue from automobile and parts sales was about 110 million yuan, 6.16 yuan and 3.058 billion yuan respectively, and the rest was the sales revenue and service income of automobile supervision points.

In terms of profit, the annual losses attributable to the company's equity holders in 2019, 2020 and 2021 were 901 million yuan, 1.1 billion yuan and 2.846 billion yuan respectively, with a cumulative loss of about 4.847 billion yuan, while the adjusted net losses in the same period were 810 million yuan, 935 million yuan and 2.629 billion yuan, respectively.

Correspondingly, the gross profit margin of zero run during the reporting period was -95.7%, -50.6% and -44.3%, respectively, and the company said that it is expected to further improve its gross margin level as the delivery volume of higher-margin models increases and the production scale expands.

However, from the perspective of customer structure, the profitability of zero running is not only limited by the low price of the dominant model, but also related to the high proportion of B-end customers. Because in general, such customers have stronger bargaining power, leaving a narrower profit margin for car companies.

According to the prospectus, the company's revenue from the largest customers in the reporting period accounted for 6.8%, 5.1% and 2.3% of the total revenue of the whole year, and the revenue from the top five customers accounted for 27.1%, 16.2% and 9.5% of the total revenue of the whole year, respectively.

In terms of sales expenses, the sales expenses of Zero Pao Automobile during the reporting period were 131 million yuan, 155 million yuan and 428 million yuan respectively, accounting for 112.1%, 24.5% and 13.7% of the revenue, respectively, mainly due to the expansion of the sales service network and the increase in marketing and promotion activities.

In addition, as of December 31, 2021, the cash and cash equivalents of Zero-Run Cars were $4,338 million.

Is there still a chance to call Tesla?

Although the sales of the zero-run T03 are good, relying only on an A00-class car to support revenue is bound to doom the brand's future development online.

Therefore, it is necessary to enrich the product matrix as soon as possible. According to the zero-run plan, the fourth model C01 will be launched in 2022 and will be delivered in the third quarter of this year. The new car is positioned as a medium and large car, which will be built on the same platform as the zero-run C11, and the length of the car will exceed 5 meters.

Some people believe that the C01 will be benchmarked against the BYD Han EV and Xiaopeng P7. However, the industry is not optimistic, because in the high-end market of more than 200,000 yuan, the current competition is very fierce, including Weilai, Xiaopeng and domestic BYD and other car companies that have established strong brand recognition among consumers, so it is expected that the future sales of C01 are not optimistic.

The prospectus also mentions that the company will launch 8 new models by the end of 2025, during which time it will launch 1-3 new cars per year, covering sedans, SUVs and MPVs of various sizes.

According to Zhu Jiangming's previous statement, the more ambitious goal of zero-running cars is to catch up with the industry leader Tesla.

In July last year, Zero Run released the 2.0 strategy, and Zhu Jiangming released a harsh word at the press conference, "In the field of assisted driving for 3 years, surpass Tesla, and the sales target of Zero Run cars will be 800,000 vehicles by 2025." ”

With the same IT background as Tesla founder Musk, Zhu Jiangming is well versed in technology, but zero-run cars last year launched China's first vehicle-grade AI intelligent driving chip with completely independent intellectual property rights, "Lingxin 01", with a computing power of only 4.2TOPS, and the performance is far behind Tesla's HW3.0 144TOPS chip, not to mention the HW4.0 that will be put into production.

In fact, the R&D investment of the two companies is not on the same order of magnitude. According to data, Tesla will invest nearly 2.6 billion yuan in research and development in 2021, and according to the prospectus, the R&D investment in 2019, 2020 and 2021 will be 358 million yuan, 289 million yuan and 740 million yuan, respectively.

Some industry insiders believe that from this point of view, Zhu Jiangming's statement that "autonomous driving technology surpasses Tesla in three years" seems to be unable to resist scrutiny, and can its sales target of 800,000 vehicles after 3 years be achieved? Radar Finance will continue to pay attention.

Note: This article is the original of Radar Finance (ID: leidacj). Unauthorized reproduction is prohibited.