Strategic decision ranking: "Wei Xiaoli" financial reporting season rearranged seats

Author | Zhou Yongliang

Edit | Zheng Xuan

The past year has been a particularly critical year for Wei Xiaoli. To use a black word in the Internet industry: in 2021, Wei Xiaoli has crossed the "0 to 1" hurdle.

Recently, Wei Xiaoli has successively released the financial report data for 2021. The most critical delivery volume, Wei Xiaoli went hand in hand, more than 90,000 vehicles, more than double the year-on-year growth rate. Among them, Xiaopeng made efforts in the second half of the year, ranking first with 98,200 vehicles, with a year-on-year growth rate of 263%. Although WEILAI's growth rate slowed, it still held the second place with 91,400 vehicles delivered. Ideal came in third with 90,500 units.

Not only has the "quantity" of delivery been significantly improved, but the "quality" of production operations has also improved significantly. From the perspective of gross profit margin, Weilai and Ideal, which take the high-end route, have a gross profit margin of more than 20% in automobile sales, even above traditional luxury car companies such as Ferrari (18%), Porsche (16%); Xiaopeng Automobile, which is slightly lower in positioning, has a gross profit margin of 11.5%, which is a significant improvement of eight percentage points over 2020.

Draft: Geek Park

But looking at Wei Xiaoli's respective performances, in 2021, their rankings in different data dimensions have also changed. From the perspective of market capitalization, Weilai > ideal > Xiaopeng; from the perspective of delivery, Xiaopeng > Weilai > ideal; from the perspective of revenue, Weilai > ideal > Xiaopeng; from the perspective of losses, the ideal > Weilai > Xiaopeng... "Wei Xiaoli", who has been called for several years, seems to be unable to fully represent their ranking.

It is particularly worth mentioning that today's financial data of Wei Xiaoli is very close to Tesla in 2017. At that time, Tesla's global sales were 103,200 vehicles, only a little higher than Wei Xiaoli in 2021; in terms of gross profit margin, Tesla's automobile business at that time was 23%, and it was only less than two percentage points higher than ideal and Weilai.

There is also the performance in the secondary market. As the world's leader in electric vehicles, Tesla entered the valuation reshaping stage in 2017, and the market is full of expectations for model 3, with a market value of between $43.6 billion and $80.6 billion; Nio's stock price in 2021 is between $27.52 and $66.99, and the valuation is between $46.6 billion and $113.3 billion. Xiaopeng and Ideal followed, with market capitalizations fluctuating between $16 billion and $50 billion.

01 WEILAI: The price of accepting service users

2021 is a challenging year for NIO. From the data point of view, Weilai Automobile has delivered 91,400 vehicles, an increase of 109% year-on-year, and it seems that the performance is still good. However, compared with Xiaopeng and Ideal, Weilai's delivery growth rate is the lowest. According to the financial report, Xiaopeng and Ideal will grow at a year-on-year growth rate of 263% and 177.4% in 2021.

Not only that, Weilai's growth rate is even lower than the national average. According to the Association of Automobile Manufacturers, in 2021, China's new energy passenger car sales reached 3.334 million units, an increase of 120.6% year-on-year.

Especially in the fourth quarter of 2021, the slowdown in WEI's growth rate was the most obvious. NIO delivered 25,000 units in Q4, up 44.3% year-on-year and only 2.4% sequentially, compared with 41,800 units and 35,200 units delivered by Xiaopeng Motors and Ideal, up 222% and 1.43.5% year-on-year, and also reached 63% and 40.2% month-on-month growth.

In this regard, NIO explained that it "faces many challenges, especially supply chain fluctuations". The shortage of batteries and chips from 2020 has indeed affected global car sales. However, this is the external environment faced by all car companies, and weilai is not the only one. It is not convincing to explain the reasons for the slowdown in growth only by changing the external environment.

At present, some voices in the industry believe that the current challenge for Weilai is mainly that the rhythm of launching new cars has been disrupted. In the early days, WEILAI once set up the flag of "one new car a year". In June 2018 and June 2019, NIO began to deliver ES8 and ES6 respectively, and the subsequent plan should be to launch ET7 based on the new platform in 2020.

But in 2019, Weilai suffered a "life and death crisis", and Li Bin was also rated by the media as the "most miserable man" of the year. In desperation, WEILAI suspended its plans to launch ET7, and instead launched EC6 developed on the original platform in September 2020. Although a lot of personalized changes have been made in the details, the EC6 is essentially a coupe model of the ES6. From the data point of view, EC6 is not enough to support Weilai's sales. In 2021, ec6 deliveries will be only 29,000 units, accounting for 32% of total sales; the main model will still be the ES6 (41,000 deliveries), accounting for 45% of total sales.

Subsequently, in 2021, WEILAI did not have any new car deliveries. On the other hand, Xiaopeng and Ideal used new cars and remodels to sell by leaps and bounds. In addition to the P7, Xiaopeng launched the P5 in 2021, becoming the world's first mass-produced model equipped with lidar. Subsequent deliveries of the G3i began in July, and the "blockbuster" model, the Ideal ONE, underwent a mid-term redesign in May 2021. This has led to THE FACT THAT WEILAI's former advantages in hardware and software have been greatly weakened.

This performance of Weilai has not changed in 2022. In the first quarter, NIO's cumulative deliveries reached 25,800 units, up only 28.5% year-on-year; Xiaopeng and Ideal deliveries reached 34,600 units and 31,700 units, up 159% and 152.1% year-on-year. The gap between NIO and the leader is widening.

The good news is that NIO will intensively deliver three new cars this year. ET7、ET5、ES7。 At the same time, in late May, NIO will release 2022 ES8, ES6 and EC6 to upgrade smart hardware, including 8155 chips, 360 surround view cameras and 5G modules, and the performance will be greatly improved. These new cars of Weilai have high hopes.

Although in terms of delivery volume, WEILAI has been surpassed by Xiaopeng, but thanks to the increase in sales, Weilai's gross profit margin has improved significantly. According to the financial report, in 2021, the gross profit margin of Weilai's automobile was 20.1%, an increase of 8 percentage points over last year, and it was close to the ideal of the best performance of the three companies (20.6%). At present, the benchmark of the automotive industry is Tesla, and the gross profit margin of the car can reach 29.3%.

However, there is a noteworthy detail, that is, Weilai's auto gross profit margin (20.1%) is higher than the overall gross profit margin (18.9%), but the ideal and Xiaopeng are just the opposite. Taking the ideal of close automotive gross margin as an example, the total gross profit margin of NIO and Ideal is 18.9% and 21.3%, respectively, the gap is 2.4 percentage points, but the difference between automotive gross margin is only 0.5 percentage points.

What happened in the middle? This is mainly related to other revenues and services. If you break down wei xiaoli's total revenue, it can be roughly divided into vehicle sales revenue and other sales and service revenue. Among them, WEILAI's other sales and service revenue reached 2.97 billion yuan, far higher than the ideal (880 million yuan) and Xiaopeng (950 million yuan), with a gap of nearly 2 billion yuan.

But in terms of gross profit margin, Weilai is the lowest. In 2021, NIO's other sales and service costs reached 2.798 billion yuan, and the gross profit margin was only 5.7%. In the fourth quarter in particular, gross margin for other sales and services was -32.5%. This is a serious drag on NIO's gross margin performance; in 2021, Ideal and Xiaopeng's other sales and service gross margins were 44% and 33%.

In this regard, Weilai explained that in 2021, they accelerated the layout of the power exchange network, and more replacement stations can better serve users, but compared with Q3 in 2020, operating costs have also increased. The layout of the substation is an important part of WEILAI's operation strategy, which has long-term value for Weilai's brand, sales and user experience, but the corresponding increase in operating costs is also the "price" that Weilai pays for this.

According to the financial report, by the end of 2021, NIO has deployed 777 substations in urban areas and highways in 183 cities in China, an increase of nearly 600 compared with 2020. Among them, starting in April 2021, WEILAI began to deploy the second generation of substations, which can shorten the power exchange time to less than three minutes.

02 Xiaopeng: Use money, exchange time

Compared with the slowdown of Weilai, Xiaopeng is at the other end of the scale, and its performance can be described as "considerable growth".

Thanks to the strong performance of P7, Xiaopeng delivery volume achieved a significant leap of 263%, achieving a "double first" in delivery volume and growth rate; in terms of revenue, Xiaopeng Automobile was 20.988 billion yuan in 2021, up 259% year-on-year, lagging behind Weilai (36.1 billion yuan) and ideal (27 billion yuan), mainly due to the low price of bicycles.

Entering 2022, Xiaopeng's momentum is still very strong. In the first quarter, Xiaopeng's deliveries reached 34,600 units, up 159% year-on-year, similar to the ideal (152.1%) and significantly higher than Weilai.

Although Xiaopeng delivered the most, it also lost the most. In 2021, the net loss of Xiaopeng Automobile was 4.863 billion yuan, an increase of 78% year-on-year; the non-GAAP net loss was 4.483 billion yuan, compared with 2.992 billion yuan in 2020; compared with the net loss of 4.017 billion yuan in 2021, down 24.3% year-on-year. Non-GAAP net loss of $3,006 million, down 41.2% year-on-year. However, this is still significantly lower than Tesla in 2017 (a loss of $1.96 billion, about 12.47 billion yuan).

The widening of the loss margin is mainly related to Xiaopeng's aggressive strategy. According to the financial report, Xiaopeng Automobile's expenses in 2021 totaled 9.419 billion yuan, an increase of 102.7% year-on-year. Among them, R&D expenses reached 4.114 billion yuan, an increase of 138.4% year-on-year, accounting for 19.6% of total revenue, higher than WEILAI (12.7%) and ideal (12.2%); sales, general and administrative expenses were 5.305 billion yuan, up 81.7% year-on-year, accounting for 25.3% of total revenue, also higher than NIO's 19% and ideal 12.93%.

In this regard, Xiaopeng explained that the increase in R&D expenses was mainly due to the increase in salaries due to the increase in R&D personnel, as well as the increase in expenses related to the development of new models to support future growth; the increase in sales, general and administrative expenses was mainly due to the increase in marketing, promotion and advertising expenses, as well as the expansion of sales network and related personnel costs, and the increase in franchise store commissions.

According to the financial report, by the end of 2021, Wei Xiaoli has 358 retail centers, 357 and 206 respectively. From the data point of view, Xiaopeng has been close to Weilai, exceeding the ideal of about 150. At present, Wei Xiaoli's channel layout has sunk to third- and fourth-tier cities, and is about to enter a bottleneck period, and then each company needs to promote sales through new products.

At the same time, here you can pay attention to the average annual sales volume of a single store, which is an important indicator of channel efficiency, generally with annual delivery / number of stores. Although Wei Xiaoli's sales network is currently expanding, it is difficult to estimate the average annual sales volume of a single store. However, it is roughly estimated that the average annual sales of a single store in Weilai is 255 vehicles, the Xiaopeng is 274 vehicles, and the ideal is 439 vehicles. At present, Tesla has been able to reach 1100 vehicles, which also means that Wei Xiaoli still has considerable room for growth.

An industry insider once told Geek Park that the new car is still in the initial stages, and in the case of ensuring the safety of cash flow, short-term losses are not important, what is important is the efficiency of the use of funds. At present, Wei Xiaoli does not seem to be too short of money. According to the financial report, in terms of cash and cash equivalents (excluding restricted cash), Ideal ranked first with 27.85 billion yuan, NIO ranked second with 15.334 billion yuan, and Xiaopeng ranked third with 11.025 billion yuan. All they have to do is translate their investment in technology and channels into better sales and user experience.

At the same time, among the various indicators of Xiaopeng, there is also a very noteworthy data, that is, gross profit margin. According to the financial report, Xiaopeng increased from 3.5% in 2020 to 11.5% in 2021, up 8 percentage points like Weilai, with obvious progress. Xiaopeng said that this is mainly due to the decline in material costs, the improvement of the product portfolio and the economies of scale to drive production efficiency.

However, there is still a certain gap between Xiaopeng and the ideal (20.6) and Weilai (20.1%), which is only equivalent to the level of Weilai in 2020 (12.7%), lower than the ideal 16.4% in 2020.

This is largely related to Xiaopeng's current product structure. From the perspective of product price range, Xiaopeng is the most eager to achieve sales breakthrough brands. Xiaopeng products are mainly in the market of 150,000 to 300,000, Weilai's products are in the price range of 350,000 to 600,000, and the ideal product is located between 300,000 and 400,000. Generally speaking, a lower product positioning, although it means that the user group is larger, but the gross profit margin is also relatively low.

Therefore, increasing the gross profit margin as soon as possible will be the focus of Xiaopeng's next work. He Xiaopeng said that the improvement of the overall gross profit margin can not only rely on the luck of a single product outbreak, but more importantly, the system platform, which will promote Xiaopeng's "transformation in the power system, manufacturing process and BOM cost system." Gross margins for new models, including the G9, and the gross margin for the company as a whole will be structurally improved."

This has also been interpreted as one of the reasons why Xiaopeng first raised the price in Wei Xiaoli. In the face of the rise in the price of raw materials for power batteries, on March 18, Xiaopeng Automobile officially announced a price increase, and the price of different models was raised by 10,100-20,000 yuan. Immediately after that, on March 23, ideal cars announced on the official Weibo that the price of the ideal ONE model will be raised by 11,800 yuan, and the latest price after adjustment is 349,800 yuan.

In the medium to long term, "Xiaopeng Motors' goal is to increase the company's overall gross profit margin to more than 25%. And with the help of scale effects and operating leverage, the expense ratio will continue to decline." With Tesla (25.3% overall gross margin in 2021) in the front, with higher sales and product pricing, Xiaopeng Motors is still very promising to achieve its goals.

03 Ideal: Seek stability and stability

In the three wei xiaoli families, the ideal is impressive with its high operating efficiency. In 2021, Ideal still maintained a similar performance.

In terms of deliveries, the ideal of 2021 will achieve 90,500 deliveries of only one car, an increase of 177% year-on-year, ranking third among new forces. Although the ranking is down one place compared with 2020, the gap between the ideal and the first place (Xiaopeng 98,100 vehicles) has narrowed, and in 2021, it is only 0.77 million vehicles away from Xiaopeng. In 2020, the ideal was 11,200 units different from the first at that time (4.37 units delivered by NIO). In terms of automotive gross margin, the ideal is to maintain more than 20% for the whole year, which is very healthy.

In terms of losses, the ideal is still the least in Wei Xiaoli, only 320 million yuan, especially in the fourth quarter to achieve positive profits. According to the financial report data, the ideal fourth quarter revenue was 10.62 billion yuan, an increase of 156% year-on-year; the net profit was 296 million yuan, an increase of 175% year-on-year. In contrast, WEILai and Xiaopeng both lost more than 4 billion yuan, reaching 4.02 billion yuan and 4.86 billion yuan respectively.

This is also the first time that a new car-making force has achieved single-quarter profitability. From November 2019, when new cars were delivered, to profitable in the fourth quarter of 2021, the ideal took only two years.

This speed is even faster than Tesla. According to public information, Tesla produced its first Roadstar sports car in 2008, but it was not until 2013 that it achieved its first quarterly profit. According to the data, in the first quarter of 2013, Tesla delivered 4900 Model Ss, with revenue of $562 million, an increase of 83% year-on-year, and a profit of $11.2 million.

How do you achieve your ideals? In addition to higher gross margins, it is also due to fewer operating expenses. From 2018 to 2021, ideal cars have operating expenses totaling $11.986 billion. In contrast, the cost of WEIlai and Xiaopeng in the four years is as high as 36.11 billion yuan and 18.99 billion yuan, which is 3 times and 1.6 times the ideal. Among them, in 2021, the cost of WEIlai and Xiaopeng was 11.47 billion yuan and 9.42 billion yuan respectively, which was much higher than the ideal of 6.78 billion yuan.

From the perspective of expense ratio, the expense ratio of the ideal car in 2021 is only 25.4%, which is lower than Xiaopeng (44.8%) and Weilai (31.7%). Li Bin once introduced on the conference call that NIO's financial strategy in 2021 is that gross profit can cover sales and management expenses. In other words, Weilai's loss will basically be comparable to the research and development costs. At present, Weilai has performed well. According to the data, NIO's net loss in 2021 was 4.02 billion yuan, and its research and development expenses were 4.59 billion yuan.

Looking at Tesla in 2017, the total operating expenses are 3.855 billion US dollars, and the expense ratio is 32.8%, which is comparable to Weilai and is in the middle of Xiaopeng and Ideal. Among them, R&D expenses were US$1.378 billion (about 8.77 billion yuan), and sales and administrative expenses were 2.477 billion US dollars (about 15.76 billion yuan), accounting for 11.7% and 21% of the total revenue (US$11.8 billion), respectively.

In addition to the increasingly healthy business data, there is also a big change in the ideal, that is, the recognition of it by the capital market is rising. In terms of market capitalization, the ideal surpassed Xiaopeng and leapt to the second place in the new forces, second only to Weilai. As of the close of trading on April 5, 2022, NIO's market capitalization was $38 billion, ideally $28.7 billion, and Xiaopeng's was $25.2 billion.

The reason behind this, in addition to the increase in sales and gross profit, is that the hybrid has been re-recognized by the market. Previously, because of Tesla's strong performance, the capital market was more optimistic about the pure electric route. Ideal's first car, which used range extender technology, was a hybrid type that was for a long time seen as a "transition route", and the secondary market had doubts about the future of the ideal.

However, with the outbreak of the plug-in hybrid market in 2021, the capital market gradually realized that in the process of moving towards the end of new energy vehicles, it is not only necessary to pay attention to the direction, but also to control the rhythm. In 2021, plug-in hybrid products have become one of the main forces in the new energy market because there is no mileage anxiety, policy dividends in some regions, and other factors.

According to the China Association of Automobile Manufacturers, in 2021, China's new energy passenger car sales reached 3.334 million units, an increase of 120.6% year-on-year. Among them, the sales volume of plug-in hybrid vehicles (PHEV) reached 600,000 units, with a growth rate of 121.6%, even slightly exceeding the growth rate of pure electric vehicles.

After entering 2022, the plug-in hybrid vehicle market has ushered in explosive growth. According to the China Association of Automobile Manufacturers, from January to February this year, plug-in hybrid vehicles sold 160,000 units, an increase of 2.5 times year-on-year. Among them, the sales of plug-in hybrid vehicles in February were 75,000 units, an increase of 3.4 times year-on-year.

Ideal vision doesn't stop there. In its 2025 strategy, it mentioned that "the sales volume of China's new energy market in 2025 is 8 million vehicles, and it is ideal to achieve a market share of 20% and 1.6 million vehicles.". To achieve such a sales target, it is impossible to occupy only a few small segments, and it is ideal to invest more in the development of new products and pure electric platforms, as well as the service layout of the energy replenishment network.

For Wei Xiaoli, 2022 will be a very busy year, not only to accelerate the introduction of new products, increase the number of deliveries, but also to do a good job of production cost reduction, improve system efficiency, but also to maintain the pace and speed of research and development, in preparation for the next "championship".

*Header image source: wsupercars

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