Zero-run cars are listed in Hong Kong and plan to launch eight new models by the end of 2025

After "Wei Xiaoli", the fourth new car-making force listed in Hong Kong is coming.

On the evening of March 17, Zhejiang Zero Run Technology Co., Ltd. (hereinafter referred to as "Zero Run Auto") submitted a listing application to the Hong Kong Stock Exchange. The co-sponsors of the IPO are CICC, Citi, JPMorgan Chase & Co. and CCB International. For the purpose of raising funds, Zero Run Automobile said that it plans to use it for the research and development of smart electric vehicles, improve production capacity, and enhance brand awareness.

R&D investment continues to rise, and deliveries are increasing year by year

As a new force in the second-tier echelon, zero-run cars are not as popular as "Wei Xiaoli", but they can also be regarded as the first batch of new car companies in China. According to Frost & Sullivan's data, Zero-Run Vehicle was founded in 2015 and is currently the only emerging electric vehicle company in China with global independent research and development capabilities, and it is also the emerging electric vehicle company with the highest degree of vertical integration in China. At present, zero-run cars mainly focus on the high-end mainstream new energy vehicle market with prices between 150,000 yuan and 300,000 yuan, and have delivered three models in the past three years.

It is worth mentioning that Zhu Jiangming, CEO of Zero-Run Automobile, is one of the founders of the domestic security giant Dahua Shares, which has a high reputation in the field of security technology, which also makes Zero-run Cars have a strong "obsession" with technology research and development. In the IPO document, Zero Trojan mentioned that in terms of R&D expenditure, the R&D expenditure of Zero Run Auto in 2019, 2020 and 2021 was about RMB358 million, RMB289 million and RMB740 million respectively. The high R&D expenditure also enables the R&D team of zero-run vehicles to have expertise in electrical and electronic architecture, electric drive systems, battery systems, and artificial intelligence, which is also one of the core advantages of zero-running cars.

Under the empowerment of core technology, the sales volume of zero-run cars is also increasing year by year. According to the IPO documents, the delivery volume of zero-running cars in 2019, 2020 and 2021 was 1034, 8050 and 43748 respectively, with a cumulative delivery of 52832 vehicles. Among them, starting from the third quarter of 2021, the quarterly delivery volume of zero-run cars exceeded 10,000 units for the first time, exceeding the delivery volume of the whole year of 2020, and the sales volume continued to exceed 10,000 units in the subsequent fourth quarter, reaching 17,045 units.

With the rise in sales, the revenue of zero-run cars is also growing year by year. According to the data, the total revenue of zero-running cars in 2019, 2020 and 2021 was about 117 million yuan, 631 million yuan and 3.132 billion yuan respectively. In terms of specific business, in 2019, 2020 and 2021, the sales revenue of cars and parts of zero-running cars was about 117 million yuan, 616 million yuan and 3.058 billion yuan.

At the same time, the gross profit margin of zero-running cars is also improving year by year. In 2019-2021, the gross profit margin of zero-run cars is -95.7%, -50.6% and -44.3%, respectively. In response, ZeroCar said that the improvement in gross profit margin is mainly due to the increase in the delivery of electric vehicles with higher profit margins year by year, as well as the reduction in unit costs caused by economies of scale. In the future, zero-run cars will continue to control costs, and gross profit margins may continue to improve.

Although the overall revenue data is good, due to the continuous investment in research and development, marketing, service network and increase in production capacity, zero-running cars have not yet achieved profitability, IPO documents show that the net losses of zero-running cars in 2019-2021 are 900 million yuan, 1.1 billion yuan and 28 yuan, respectively, with a total of about 47 yuan, for 2022, zero-running cars are expected to continue to lose money.

Eight new cars will be launched by the end of 2025

In addition to elaborating on the funding situation in recent years, the IPO document also made plans for the future development of zero-run cars. According to the IPO documents, 40% of the fundraising of zero-running cars will be used to expand the category of smart electric vehicles, expand the team, and invest in the research and development of intelligent technologies such as automatic driving. In terms of products, ZeroCar plans to launch 1-3 new models per year and 8 new models by the end of 2025, including three sedans (coupes/mini cars), four SUV models, and one MPV model.

Industry analysts said that although the high-frequency launch of new cars can further improve the product matrix of zero-run cars, there are also huge risks. Judging from the current market situation, most of the popular models by consumers are the explosive models of the brand, such as Xiaopeng P7 and Zero Run T03. Although the launch of more models will make consumers more selective, but may not become its explosive model, sales may not catch up with expectations, resulting in more difficulty in profitability.

In addition to refining the product matrix, in the IPO document, the zero-run car also demonstrated autonomous driving technology.

According to the IPO documents, ZeroCar's latest Leapmotor Pilot 3.0 autonomous driving system provides 360-degree visual perception and 22 autonomous driving functions. Moreover, the multi-sensor perception fusion algorithm, planning decision-making algorithm and control algorithm at the software level are all self-developed by zero-run vehicles. According to Frost & Sullivan, the autonomous driving system is currently the most comprehensive autonomous driving system in the electric vehicle range of the same price range.

Last July, zero-run cars released a 2.0 strategy, when Zhu Jiangming set a goal of surpassing Tesla within three years of self-driving technology, and for now, although it is still far from the same, zero-run cars have begun to accelerate on this chasing road.

For zero-run cars, going to Hong Kong for listing is only the first step of "blood transfusion", and if you want to gain market share in many new car-making brands, you also need to create differentiated product competitiveness while adhering to self-research in all fields, so as to obtain more "ammunition".

Responsible Editor: Li Yan'an Editor-in-Chief: Yu Jianping