Once called "autopilot three years super Tesla", the main low-end zero running on the market?

What is ZeroCar? Mr. Zhu, who intends to start a new energy vehicle, asked reporters.

Recently, Zhejiang Zero Run Technology Co., Ltd. (hereinafter referred to as "Zero Run") submitted a listing application to the Hong Kong Stock Exchange, and CICC, Citi, JPMorgan Chase and CCB International served as the joint sponsors of the IPO. This means that if it is successfully listed, Zero Run will become the fourth new energy automobile enterprise listed on the Hong Kong Stock Exchange after "Wei Xiaoli".

However, just like Mr. Zhu, many prospective owners of new energy vehicles are familiar with new car-making forces such as "Wei Xiaoli", but they are relatively unfamiliar with zero running. Behind this is that the zero-run car used to walk is basically a mini car.

Zero Run said in the prospectus that 40% of the IPO will be used to expand the smart electric vehicle portfolio, expand the team and develop intelligent technologies including automatic driving systems and intelligent cockpit systems, and improve electrification technologies; about 25% will be used to increase production capacity; about 25% will be used to expand business and enhance brand awareness. However, in the prospectus, Zero Run has not yet disclosed the issue price of the shares and the amount of funds planned to be raised.

Even so, with the formal submission of its prospectus on the Hong Kong Stock Exchange, the IPO process and listing valuation of this second-tier new power company that is neither an "Internet person" car maker nor a "traditional car person" car manufacturer are still attracting market attention. Can Zero Run achieve a breakthrough in the mid-range of the main model? Can we go any further in our R&D investment? Can it enter the first line from the second line of the new car-making force?

The main "volume" products are trapped in the low end, which contradicts the brand strategy

Looking back at the history of zero-run car building, the process is full of ups and downs.

Before its establishment in 2015, Zero Run founder Zhu Jiangming had been in the security industry. According to previous media reports, it did not even know that the production and sales of automobiles needed access qualifications before making cars, so it was also labeled as a "layman" and was not optimistic about the industry.

The dismal sales data of the first pure electric coupe S01 has made zero running have no sense of existence in the industry for a long time.

According to the data disclosed in the prospectus, as of December 31, 2021, the Zero Run S01 had sold only 2,708 units, which was far from its previous target of delivering 10,000 vehicles in 2019.

The S01 model underperformed, and ZeroCar had to hope to open up the market through cost-effective mini cars.

In May 2020, Zero Run launched its second model, zero run T03. According to the official statement at that time, from the configuration to the price, this car showed zero running full of sincerity. The price of about 60,000 yuan, 400 kilometers of endurance and intelligent driving assistance system and other configurations make this miniature pure electric car shouldering the mission of "walking volume" indeed alleviate the passive situation of zero running to a certain extent.

According to the data disclosed by Zero Run, in 2020, Zero Run T03 delivered a total of 10,266 vehicles, crossing the 10,000 mark; in 2021, Zero Run T03 delivered 38,463 vehicles, accounting for about 90% of the total sales of Zero Run, which is its absolute sales force.

Nevertheless, compared with the era when the new forces of the head have gradually opened the monthly sales of more than 10,000 vehicles, the delivery performance of zero-run models is slightly thin; with the gradual development of zero-run to the mid-to-high-end market, the gradual saturation of the A00-level market segment and the impact of rising raw material prices, T03 is becoming a "double-edged sword" for the future development of zero-run.

On the one hand, T03 has become the main contribution of zero running among the first echelon of delivery of new car-making forces, and zero running in the IPO process also needs the huge sales and revenue brought by T03; but on the other hand, as a typical low-end volume model, the more T03 sells, the more zero-run products are trapped in low prices, and it is difficult to lock in more high-end customers, which is also contradictory to the brand strategy it currently proposes.

In order to get out of this situation faster, in September 2021, Zero Run launched the mid-size smart pure electric SUVC11, and called it the "half-price Tesla Model Y", but the sales of less than 4,000 vehicles in two months made it unable to narrow the gap in the hard fight with other competitors with strong endorsements.

"Compared with the model of 'Wei Xiaoli', the zero-run C11 is decent in function and has no core highlights." Zhang Xiang, an analyst in the automotive industry, said in an interview with the Beijing News Shell Financial Reporter that the zero-run C11 is still mainly cost-effective, coupled with its inherent low-end car brand image and software and hardware does not have obvious advantages, the zero-run C11 model has not been recognized by more consumers.

In the next three years of "global self-research", nearly 1.4 billion yuan was invested in research and development, and the loss expanded year-on-year

Similar to most car companies, which are new car manufacturers, zero running has not yet entered the profit stage and is still in the investment period; and in the past three years, while revenue has been increasing, losses have also expanded year-on-year.

According to the information disclosed in the prospectus, from 2019 to 2021, the total revenue of zero running was 117 million yuan, 631 million yuan and 3.132 billion yuan, respectively, and the net loss was 901 million yuan, 1.1 billion yuan and 2.845 billion yuan, respectively.

Huge losses may be related to the technical route of zero running.

From the power system to the intelligent network system, and then to the intelligent driving system, zero-run main "global self-research". At the 2021 Guangzhou Auto Show, Zhu Jiangming introduced the "global self-research" implemented by zero-run, saying, "We have achieved our core competitive advantage through global self-research. He revealed that the drive assembly and battery fields have also developed from external batteries to their own modules, packs and BMS (battery management systems). In addition, zero-run cars have achieved self-development in vehicle systems, cloud platforms, intelligent driving, etc.

According to the prospectus, as of now, zero running has 1495 patents and patent applications related to self-developed technologies (including electric drives, battery systems and autonomous driving technologies).

In July 2021, at the zero-run 2.0 era strategy conference, Zhu Jiangming, the founder of zero-run, also shouted the goal of "surpassing Tesla in the field of automatic driving in three years and selling 800,000 vehicles in 2025".

As far as the current situation is concerned, zero running is not optimistic to achieve the goal of "surpassing Tesla in three years".

Last year, ZeroCar 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 its performance is far behind Tesla's HW3.0 144TOPS chip, not to mention the upcoming HW4.0.

In research and development, the investment of the two companies is not on the same order of magnitude. According to the data, Tesla's research and development expenditure exceeded $2.5 billion in 2021, accounting for 5% of revenue. According to the prospectus disclosed by Zero Run, in 2019, 2020 and 2021, Zero Run's R&D investment was 358 million yuan, 289 million yuan and 740 million yuan respectively, with a cumulative R&D investment of 1.387 billion yuan.

Zhang Xiang believes that at present, zero running is also mainly cost-effective in terms of automatic driving. "Its autopilot function is a bit like a scaled-down version of Tesla, like some icons or menus displayed on tesla's software interface, zero running; but the actual autopilot function is still different from Tesla."

In addition, some industry insiders believe that the zero-run global self-development also means that it is technically all-inclusive, although it has applied some self-developed technologies and products to mass-produced models, but the strategic value of global self-development still needs to undergo multiple tests.

According to the data disclosed in the prospectus, in 2021, the revenue of the zero-running service business such as the Internet of Vehicles and OTA firmware will be only 1.3 million yuan, accounting for less than 1% of the total revenue. If new technologies are converted into new revenues, zero running will also face many challenges.

Pushing forward 8 models by the end of 2025, how to make capital pay for zero runs that require a lot of funds?

Facing the future, Zero Run also elaborated on a detailed product plan in the prospectus. In the future, Zero Run will focus on China's high-end mainstream new energy vehicle market of 150,000 yuan to 300,000 yuan. Zero Run believes that this pricing range will become the largest and fastest growing new energy market by 2023.

"We plan to launch eight new models by the end of 2025 at a rate of one to three models per year in the future, covering sedans, SUVs and MPVs of various sizes. We plan to launch a smart pure electric medium and large sedan C01 in the second quarter of 2022, with deliveries starting in the third quarter of 2022. At the same time, it plans to use 25% of the funds raised from the listing to expand its business and increase brand awareness.

Preempting users is still the focus of the current new energy vehicle market. From the perspective of annual delivery, the delivery volume of 43,748 vehicles in 2021 of Zero Run is a big gap compared with the delivery volume of the first echelon of "Wei Xiaoli" approaching 100,000 vehicles, and it is similar to Weima in the second echelon, followed by 69,000 vehicles in Nezha.

It is worth noting that the new forces of head car manufacturing have collectively explored, the electrification transformation of traditional car companies and the entry of technology giants have entered the game, which is making the 150,000-200,000 yuan market one of the most competitive markets for new energy vehicles in China.

Zhang Xiang believes that compared with the first model of Xiaopeng, Weima and other new car-making forces that launched a car of more than 100,000 yuan, the high-end market of zero-run power faces greater challenges. "From a car of 50,000-60,000 yuan to a car of nearly 200,000 yuan in the middle and high-end, the (zero run) span is too big, and the brand upgrade is not smooth." In addition, in the marketing efforts of the C-end market, zero running also has a short board.

It is foreseeable that in the future, the competition in the new energy vehicle track will be more intense, and new energy vehicle companies will also face the fact that R& D expenditure will rise. According to the prospectus, Zero Run started the Pre-A round of financing in January 2018 and completed the C2 round in November 2021, raising a total of 8 rounds of financing with 11.866 billion yuan, which is not short of money compared with the loss of 2.868 billion yuan of Zero Run, but compared with the research and development expenses of billions of yuan in the first echelon, Zero Run still needs a lot of financial support to win this game in the future.

Whether capital will pay for it in the future, the sales of the first SUV model C11 and the development of a new zero-run car will be crucial.

Beijing News Shell Financial Reporter Zhang Bing Song Meilu Editor Xu Chao Proofreader Liu Jun