Recently, the financial market has warmed up, and the Hong Kong stock IPO market has also warmed up, and many new faces have emerged, such as another new car-making force--- Zero Run Automobile (hereinafter referred to as "Zero Run") also officially submitted a public prospectus to the Hong Kong Stock Exchange on the evening of March 17. According to the prospectus, the IPO will be co-sponsored by CICC, Citi, JPMorgan Chase and CCB International.
Like Tesla and "Xiao Liwei", Zero Run is actually a new car-making force with a very personal color of the founder. It is understood that the founder Zhu Jiangming was the co-founder and CTO of the global security giant Dahua Co., Ltd., and has deep qualifications in the field of artificial intelligence, so this makes the company's technical background colorful.
Since its establishment 7 years ago, Zero Run has also attracted the blessing of well-known financial investors and industrial investors, including Sequoia China, Shanghai Electric, CRRC, Gopher Assets, Jiuzhi Investment, Yijing Capital, Heda Investment, CICC and so on.
In recent years, zero-run sales have begun to achieve a qualitative leap and have attracted a lot of attention. According to prospectus data, in the whole year of 2021, zero-run cars delivered a total of 43,748 electric vehicles, an increase of 443.5% year-on-year, which is the fastest growing company among China's leading emerging electric vehicle companies in terms of delivery volume.
The reason is that in addition to the dividends brought about by the comprehensive acceleration of the development of electrification, what is the uniqueness of zero running in terms of strategic layout, competitive strategy, development path, etc., which also makes the outside world curious.
The all-pure electric route, focusing on the high-end mainstream market, plans to launch 1-3 cars every year
According to the prospectus, zero-running products are mainly positioned in China's high-end mainstream new energy vehicle market of 150,000-300,000 yuan. Frost & Sullivan expects this market to be the largest and fastest-growing new energy vehicle segment by the end of 2023.
At present, there are three models on sale, namely S01, T03 and C11, covering medium-sized SUVs, small coupes and mini cars, all of which are pure electric routes.
Delivered in October last year, the C11 has the richest range of autonomous driving features in the electric range (the self-developed Leapmotor Pilot 3.0 system) and is equipped with a triple-screen interactive system equipped with Leapmotor Power, and the NEDC has a range of up to 610 kilometers. As of December 31, 2021, Zero Run had received 22,536 C11 orders and delivered 3,965 units.
According to the zero-run plan, the C01 medium and large pure electric sedan will be launched again in the second quarter of this year and delivered from the third quarter. According to the prospectus, the C01 is based on the same platform as C11, with a body length of more than five meters, equipped with Leapmotor Power and a 90 kWh battery, neDC cruising range of about 700 km, and an acceleration time of less than four seconds per 100 km/ h.
In contrast, whether it is key indicators such as endurance or 100 km acceleration, C01 has surpassed it, which also reflects the brand development strategy of zero running from the bottom up, which is in line with the upward trend of independent brands. This also means that in addition to scale, the improvement of the future profit margin of zero running will also be driven by the upgrading of product structure.
According to the plan, zero-run will be promoted at a pace of 1-3 models per year, and 8 new models will be launched by the end of 2025. It is expected to cover sedans, SUVs and MPVs in various sizes from compact to medium-sized.
In addition, it is worth mentioning that while launching new models, Zero Run is also continuing to launch new versions of existing best-selling models, such as April, August and December 2021, Zero Run has successively released 3 redesigned models of T03, and plans to launch a four-wheel drive version and a range extender version of C11 this year.
With a richer combination of models, and new cars launched every year, according to this rhythm, zero running stamina do not have to worry. In addition, the performance and configuration of C11 and C01 models are usually only available at higher price points, which also reflects their leapfrog product strength.
Focusing on global self-research and vertical integration capabilities, R&D investment in 2021 is the sum of the previous two years
The development of automobiles has emerged from mechanical definition, hardware definition and now software-defined cognition, and the essence is the improvement of electronic technology discourse power in the automotive value chain. In fact, behind each round of iteration is inseparable from the more underlying changes, that is, the process of continuous evolution of electronic and electrical architecture to higher orders. It is the consensus to eventually move from distributed to centralized, which involves the integration of modularity, integration, cross-domain integration and so on. According to the six phases proposed by Bosch, the world's largest component supplier, the mainstream is currently in the direction of functional module merger to multi-domain controller architecture.
Therefore, compared with the industry's constant emphasis on full-stack self-research capabilities, zero-run pays more attention to global self-research capabilities.
As for the biggest difference between the two, in Mr. Zhu Jiangming's view, the "global self-development" of zero-run refers to the core system of intelligent electric vehicles, including the entire intelligent driving system and the intelligent electric drive system, from hardware to software. The hardware structure starts with the resistors, and the software starts with the code. The hardware of other new car-making forces relies more on third parties, who mainly do applications and algorithms, not hardware.
According to Frost & Sullivan's data, Zero Run is currently the only emerging electric vehicle company in China that realizes all key software and hardware of core systems and electronic components. It starts from the bottom layer to carry out software and hardware modularization and platform development, so that it can be highly reused between different electric vehicle models, and achieve a high degree of interoperability between various systems and a high degree of integration of software and hardware. In other words, such a strategy can help Zero Run quickly apply the latest self-developed technology to all smart electric models, thereby shortening the development cycle and accelerating the introduction of new products with greater cost-effectiveness.
In addition to the global self-research capability, the vertical integration capability is also one of the core advantages of zero running. According to Frost & Sullivan, zero-run cars have also achieved the highest degree of vertical integration from R&D to manufacturing among Emerging Electric Vehicle Companies in China, thereby greatly simplifying the supply chain, which in turn can reduce procurement costs, achieve supply chain stability and strict quality control in the production process.
According to the company's prospectus, Zero Run currently independently designs, develops and manufactures core systems and electronic components including electric drive systems, battery systems, automatic driving systems and intelligent cockpit systems, and the factory has a complete production capacity from the core components of electric vehicles to the whole vehicle.
R&D investment is seen as the key to winning the future, and it is also the key to determining the technological background of a company, especially for car companies. As shown in the chart below, R&D investment in zero-run surged to 740 million yuan last year, more than the previous two years combined. As of December 31, 2021, zero-running R&D personnel accounted for 33.9%.
(Source: Company Prospectus)
According to the current development cycle and law of the new power car companies, the R & D investment of zero-run will still be in a long-term rapid growth trend, but thanks to the accumulation and application of the underlying software and hardware technology capabilities and the continuous introduction of new models, driving sales and capacity utilization rates, will gradually produce scale effects, thereby reducing marginal research and development costs. Of course, the resources brought by the smooth listing of zero run will undoubtedly help it further expand its core advantages.
Three-year revenue soared nearly 27 times, and gross margin continued to improve
As mentioned in the opening paragraph, in recent years, zero running has achieved a qualitative leap in sales, which has also led to a surge in its performance.
According to the prospectus data, from 2019 to 2021, the revenue of zero running was 117 million yuan, 631 million yuan and 3.132 billion yuan, respectively, showing an explosive momentum in the past two years; the gross profit margin in the corresponding period was -95.7%, -50.6% and -44.3%, showing a gradual improvement trend.
China has long been the world's largest automobile producer and sales country, so it has the world's largest new energy vehicle market, of which pure electricity is currently the highest proportion of market segments. In terms of sales in 2021, China's new energy vehicle sales are roughly 2.5 times that of the entire European market and 5 times that of the US market.
According to Frost & Sullivan data, China's new energy vehicle penetration rate will reach 16.0% in 2021, which is generally considered to have entered an inflection point of accelerated growth, of which pure electric vehicles account for 82.0% of new energy vehicles, accounting for 13.1% of China's passenger car market penetration. It is expected that under the trend of full electrification in the future, with the promotion of policies and the transformation of driving experience brought about by intelligent software and hardware upgrades, pure electric intelligent vehicles will continue to be the protagonists.
Therefore, in recent years, the wave of full electrification of automobiles, especially the rapid penetration of pure electric vehicles, has significantly accelerated the pace of development of zero-run. Thanks to the zero run that takes precedence over the underlying technology field to complete a certain accumulation, it now seems more like a wolf that has been dormant for a long time, and while stepping up the layout of the domestic production and marketing network, it is also waiting for an opportunity to enter the overseas market:
In terms of sales channels, as of December 31, 2021, Zero Run has 23 directly operated stores and 268 channel partner stores in 101 cities in China, and plans to set up the first overseas flagship store in Europe by 2023 and enter other major markets around the world at an appropriate time; the factory in Jinhua City, Zhejiang Province, which produces intelligent electric vehicles and its core systems and electronic components, and its wholly owned digital artificial intelligence factory currently has an annual production capacity of 200,000 vehicles.
Zero run has developed rapidly in recent years, and has a proud underlying technical strength, which is expected to continue to consolidate its leading position in the future with the blessing of capital. This listing will inevitably become a watershed in the development of zero-run, and may also have a new impact on the industry pattern, and the capital market will therefore have more choices and expectations.