Special report on the ideal car of the new power of new energy automobile industry

(Report Producer/Author: Pacific Securities, Bai Yu, Fan Xiapei, Fu Bingzheng)

First, the "home + smart" SUV market leader

The new forces are powerful, and a single model creates a blue ocean in the market

Ideal Auto was founded in July 2015, adhering to the brand mission of "creating a mobile home, creating a happy home", focusing on creating safer, more convenient and more exquisite smart electric vehicle products for families. The first product ideal ONE created a blue ocean in the market, solved the car purchase needs of middle-class family users, accurately cut into the new energy segmentation track of the extended-range electric SUV, and provided a standard unified high-quality experience in the field of intelligent cockpit and intelligent driving, and the sales of single models in November and December 2021 exceeded 10,000 consecutively, showing the strength of the explosion. On March 15, 2022, Ideal Auto's second "Ideal L9" real car that integrates intelligent technology and life concepts in the official spoilers on social media is expected to be released in the second half of the year.

North to work together to develop, multi-plant layout to open up production capacity space

R&D in Beijing and Shanghai: Ideal Motors' Beijing headquarters and the new Shanghai R&D center team completed in May 2021 are working together to develop electric vehicle technologies, including next-generation powertrains and intelligent cockpits, high-magnification batteries, high-voltage platforms, ultra-fast charging technologies, autonomous driving technologies, operating systems and computing power platforms. Changzhou, Beijing, Chongqing three places of capacity expansion: in 2016 in Changzhou, Jiangsu Province, the early production capacity of 100,000 vehicles / year; in 2021, Ideal Automobile invested 6 billion yuan to transform the original Beijing Hyundai First Factory into an intelligent manufacturing base, planning to put into the production of pure electric models at the end of 2023, with a production capacity of 100,000 vehicles / year; in December 2021, Ideal Automobile signed a strategic cooperation with the Chongqing Municipal Government to build a Chongqing manufacturing base in Liangjiang New Area, with a design capacity or the sum of Changzhou and Beijing factories.

The store system is fully directly operated, and the hard power of word of mouth is beneficial to innovation

Ideal Auto has built a direct sales and service system integrating online and offline retail, delivery and after-sales, and as of the end of February 2022, there are 220 retail centers in the country, covering 105 cities; 279 after-sales maintenance centers and authorized sheet metal spray centers, covering 204 cities. The establishment of a direct sales model not only achieves consistent transparency of retail prices, but also directly obtains user data, increases sales conversion rate, and indirectly reduces marketing expenses. Through the collaboration of various online channels and offline channels such as official APP, e-commerce platform, test drive experience center, user community, etc., digital empowerment provides immersive experiences at key touchpoints, drains, nurtures, converts, and retains users. The channel synergy strategy around the two endpoints online and offline and the main body of the user has greatly optimized the operational efficiency while improving the whole life cycle experience.

Sales volume led the way, and gross profit margin increased steadily

In 2021, it increased by 177.4% year-on-year, leading the segment in sales: Ideal ONE won the top spot in medium and large SUV sales for 10 consecutive months, and the delivery volume exceeded 10,000 for three consecutive months from November 2021 to January 2022. In 2021, a total of 90,491 vehicles were delivered, showing the potential of explosive models. The gross profit of the whole year nearly tripled in the same period, and the quarterly gross profit margin increased steadily: the gross profit of Ideal Automobile in 2021Q4 was 2.38 billion yuan, the first exceeded 2 billion yuan, more than three times that of the same period last year, and the gross profit margin reached 22.3%. In addition, the total revenue of Ideal Automobile in 2021 reached about 27.01 billion yuan, and the company's annual gross profit reached 5.76 billion yuan, nearly 3 times that of the same period last year. With the increase in cash flow and the continuous expansion of the sales network, the delivery volume and gross profit margin of the ideal car are expected to continue to maintain a healthy growth trend.

Second, the product positioning is accurate, and the intelligent experience is outstanding

Accurately positioning medium and large luxury SUVs to meet the needs of middle-class families

Ideal Car locks middle-class families as potential consumer customers, and caters to the broader mass consumer market, choosing medium and large size SUVs as the main products to provide users with a wider and more comfortable travel space. Ideal ONE as a 5-6 people medium and large range extender luxury SUV, the market positioning is precise, the body length of 5030mm, the interior space is spacious, leather seats are heated and ventilated, and the ride comfort is high. With practicality as the first goal, the ideal ONE is designed with the full crew seating space and luggage storage space in mind. Abandoning the more slippery back design adopted by other car companies, the exterior design is more square, ensuring the head space and luggage storage space of the third row of seats.

The supply gap of the charging pile is large, and the extender solves the charging problem

In 2021, the ratio of public charging piles to vehicles in mainland China was 6.8, a slight decrease compared with 7.2 in 2015, but it still could not meet the needs of all car owners. The number of public charging piles in developed areas and coastal provinces is relatively large, and the number of public charging piles in underdeveloped areas is significantly less. The weather in the northeast and highlands is cold, and the number of public charging piles is also low. The ideal ONE adopts a range extender power system, which has the advantages of pure electric and hybrid vehicles, which solves the problem of difficult and slow charging for consumers, and winter travel and long-distance travel are no longer limited by charging piles.

Strong endurance, high cost performance, the listing is an explosion

The ideal ONE chooses a ternary lithium battery with a capacity of up to 40.5 kWh, and the pure electric mileage is increased to 188km. The ideal ONE acceleration is poor, the acceleration time of 100 kilometers is 6.5s, but the NEDC circular cruising range reaches 1080km, which really allows users to use electricity for short distances and long-distance oil. Ideal ONE is priced at 338,000 yuan, the price is moderate, the superimposed perfect product design, comprehensive configuration and high-quality parts supply system make the ideal ONE a popular product in the intelligent electric vehicle market. With the ideal ONE product, Ideal Auto exceeded the monthly delivery level of 10,000 units after 24 months on the market. Compared with Tesla, the head of electric vehicles, the ideal car delivery volume will grow faster in 2020 and 2021.

The degree of intelligence is high and the user experience is good

The Ideal ONE 2021 features a horizon acceleration processor, Bosch 5th gen millimeter wave radar and a 4K ultra-clear front-view camera with a navigation-assisted driving system that supports functions such as up and down ramps, automatic adaptive acceleration, and fully automatic park assist. The first to use the four-screen interactive system, the dashboard screen provides driving monitoring for the driver, and the central control large screen provides video entertainment for the rear passengers, which meets the entertainment needs of most members of the family. Built-in four microphones create an "on-board multi-tone zone interaction technology" for users, so that passengers in different positions in the car can give instructions to the ideal car system. In contrast, other competing models only have two sound zones to interact, ideally responding more fully to the needs of rear passengers.

The performance has been greatly improved, and the ideal L9 is ready to go

Benefiting from the liberalization of the domestic three-child policy, medium and large SUV models will enter the family car purchase plan more often, and the ideal L9 is opportune. The length, width and height are 5200/1998/1800mm, the wheelbase is 3100mm, and the positioning is a large SUV, which can meet the needs of car owners of different ages in the family. The L9 is equipped with L4 autonomous driving hardware, a standard horizon chip, and a 128-line lidar on the roof, which can achieve extremely high-precision spatial perception. Lidar located on top of the vehicle can reduce the risk of collision damage, but it may also bring additional air resistance and wind noise to the vehicle, which has a certain impact on the overall endurance level and quietness of the vehicle. The traditional instrument design has been eliminated, and the head-up display and safe driving interaction screen have been added to improve driving safety. Equipped with a flagship sound system, the five-screen interactive mode is used to elevate the audiovisual and entertainment experience of smart cars to a new level. The 6 leather seats are equipped with electric adjustment and seat heating, bringing users a more comfortable riding experience.

Third, the transition of the extended range, the high-voltage pure electric platform synchronously advanced

The choice of power routes is diverse, and the ideal car is a different way

For HEV and PHEV vehicles, the engine can drive the vehicle directly or with the motor after power coupling, while the motor can work alone. The electric motor of the EREV range extender vehicle drives the wheels directly, and the engine is used to drive the generator to charge the battery. Ideal ONE adopts range extended power technology, the power system includes battery pack, engine and motor, equipped with a 55L capacity fuel tank, in the electric vehicle power and fuel vehicle energy convenience to find a balance, to solve the user's long-distance driving range anxiety problem. (Source: Future Think Tank)

The increaser gradually welcomed the market recognition, and sales increased steadily

From the perspective of the power type of new energy vehicles, the market share of extended range vehicles has grown rapidly, and compared with 2020, it has doubled in the first 10 months of 2021. Range extenders balance the electric driving experience with range anxiety, which can not only ensure a long pure electric driving range, but also provide a relatively stable mileage guarantee. Ideal, Lantu, Nezha and other new energy vehicle brands will continue to lay out long-term layout in extended range electric technology. In the next 5-10 years, the weight of range extended vehicles in the mainland new energy vehicle market can be expected.

The cost of power system research and development is controllable, and the first-line suppliers build a solid vehicle quality pass

The power system of extended range electric vehicles is composed of range extenders, battery packs and electronic control systems, etc., and the third-party suppliers have sufficient options, so the company does not need to focus on the research of engines and transmission systems, and the investment cost of research and development is low. In terms of parts selection, the ideal ONE mainly chooses international first-line suppliers. In the automotive traditional parts suppliers, electric assembly parts suppliers, intelligent driving parts suppliers, ideally choose international first-class enterprises, to provide users with the most reliable quality assurance.

Based on the extender, pure electric high voltage synchronous propulsion

Ideal Auto also promotes the research and development of extended-range electric and pure electric high-voltage technologies, and builds a differentiated product matrix to meet the different acceptance of new energy technologies by consumers. In 2022, the large-scale Haohua SUV Ideal L9 was launched, and two high-voltage pure electric platforms were simultaneously developed, Namel and Shark, of which Whale paid more attention to space utilization, shark was performance-oriented, and both platforms were equipped with L4-level automatic driving hardware as standard. Layout of high-voltage platforms, utilizing electronic components based on SiC semiconductor materials, and designing high-voltage platforms using high-power powertrains. The high-voltage platform brings pressure on the cost side, but it can improve the power consumption level of the whole vehicle and improve the endurance. To create a three-level energy supplementary system, the first layer is a household charging pile, which mainly meets the needs of companies and families. The second layer is the public charging pile system, which meets the charging needs of short and medium-term stays. The third layer is a 400kW high-speed high-voltage fast charging solution to achieve rapid refueling of gas stations.

Fourth, the intelligent cockpit starts first, and intelligent driving defines the future

The first four-screen linkage, full vehicle voice interaction

Ideal Car pioneered a four-screen interactive system, using a Linux-Android Automotive dual-system architecture, the Linux system is mainly used for vehicle driving control, and the Android system is used for in-car entertainment and interaction. The ideal ONE four screen division of labor is clear, the instrument screen and function control screen for the Linux system, responsible for vehicle air conditioning, lighting and other settings, the central control screen and co-driver entertainment screen for the Android system, responsible for vehicle settings, navigation, entertainment video and other functions. Deployed in-vehicle, the vehicle-wide voice interaction system uses four omnidirectional, high-sensitivity digital microphones, allowing passengers to converse naturally from anywhere in the vehicle to find directions, make calls, listen to music and other audio programs, configure system settings, control windows, and initiate other activities.

Personalized navigation, easy to control by mobile phone

Ideal ONE is internally compatible with AutoNavi and Tencent maps, and car owners can switch map providers according to their own preferences, while the car data can be synchronized with other terminal account data. The AutoNavi map equipped with the car has a navigation team function, which can share the location through the AutoNavi map account and serve the self-driving tour team needs of multiple families traveling. The smartphone can also be turned into a Bluetooth car key, which can be unlocked by simply being close to the vehicle. The "Ideal Car" APP on the mobile phone side supports downloading the image of the driving recorder to help users pursue responsibility and determine the loss of the accident, and can also set the air conditioning temperature before getting on the car, open the seat heating and other functions.

"Shadow Mode" is supported by intelligent driving algorithm optimization

"Shadow mode" keeps the car's intelligent driving software on, and sensors detect data around the road where the vehicle is traveling, but the driving operation is completely done by the person, and the machine does not participate in driving. In the process of human driving, the machine can learn the driving operation of the human being, so as to achieve the purpose of improving the intelligent auxiliary driving ability. The company collects driving data through "shadow mode" with its self-developed autonomous driving data platform. The driver's real driving data and decisions will be encrypted and uploaded to the cloud database, and analyzed through the artificial intelligence algorithms and data mining technology of the cloud database, so as to optimize the automatic driving algorithm. Ideal Has already offered an L2.5 level driver assistance system and expects to achieve L3 level autonomous driving in 2022 and L4 level intelligent driving and mass production applications in 2024.

Join forces on the horizon, and new forces grow together

The 2021 Ideal ONE uses two dedicated chips for Horizon Journey 3 autonomous driving, its navigation assistance driving function supports a 120-degree horizontal viewing angle, and an 8-megapixel front-view camera for a wider range of visual perception and higher accuracy. Journey 3 is a new generation of high-performance vehicle-grade AI chips launched by Horizon for high-level assisted driving scenarios, which not only supports image detection, classification, pixel-level segmentation and other functions based on deep learning, but also supports efficient encoding of H.264 and H.265 video formats, which is an ideal platform for multi-channel AI computing and multi-channel digital video recording. Horizon Journey 3 chip has high performance and strong software support, replacing the previous relatively closed chip solution, and AI performance has been increased by 12 times. The physical computing power of the two Journey 3 chips on the production train is 10TOPS, and the performance of the perceptual computing FPS is comparable to that of the 30TOPS GPU, and the computing power consumption is only 6W.

Fifth, the core capabilities of the management analysis

Complementary advantages, with the Internet and car genes

Ideal Auto founder Li Xiang founded Bubble Network at the age of 19, founded Autohome at the age of 23, made Autohome the first in industry traffic in 4 years, successfully landed on the New York Stock Exchange in less than 10 years, and served as a director of Weilai Automobile, with rich investment and experience in the automotive and Internet industries. In addition, co-founder Shen Yanan Technology Co., Ltd. management background, was a vice president of Lenovo, with experience in the high-tech industry; chief engineer Ma Donghui was the director of Sany Heavy Industry Research Institute, well versed in traditional depot technology; former CTO Wang Kai announced in February 2022 that he will continue to serve as the company's senior consultant until the end of the year, and the responsibility for intelligent vehicle technology research and development will be taken over by Ma Donghui. On the whole, the ideal automobile senior management team has experience in the fields of auto parts, intelligent networking, consulting and other fields, and the management team members have rich experience in founding and managing Internet technology companies, deeply engaged in automobile research and development for many years, familiar with global supply chain operation management, involving a wide range of fields, and the composite background can flexibly pay attention to and respond to market demand.

Fine focus, early to create a high-quality product

In the era of fuel vehicles, considering that it is difficult to surpass the joint venture car factory in technology, Wei Jianjun, founder of Great Wall Motors, focused on the product Haval H6 and created a generation of divine cars from the model category and cost performance. In the current new era of electric vehicles, considering the market trend of new energy and the user's demand for mileage, the founder of Ideal Auto focused on the ideal ONE, the first range extender intelligent electric vehicle, positioned as a six-seat medium and large luxury electric SUV, surpassing BBA in power performance in one fell swoop, laying the foundation for the "top-down" play method of occupying high-end and expanding a wider range of user groups in the future. The two domestic car companies lead the governance ideas and play similarly, and the explosive models have successful experience to follow.

Planning and then moving, strategic planning is easy to worry about

The team has a pragmatic layout, concentrates its superior resources to enrich itself, and reserves energy to accumulate thick and thin. On February 22, 2021, Ideal Auto CEO Li Xiang announced Ideal Auto's updated 2025 strategy. The core goal of the strategy remains unchanged, in order to obtain more than 20% of the market share of China's intelligent electric vehicles in 2025 and become a recognized head enterprise. In terms of target users, expanding home users to users who want to have their own [home], implying that the future launch of products will be aimed at a wider range of audiences; in terms of products, the ideal target enriches the two product lines of "Whale" and "Shark", officially transitioning from extenders to pure electric; in terms of branding, the company's management has differentiated and positioned according to the mission vision, focusing on the ideal brand core value. (Source: Future Think Tank)

Sixth, investment strategy

The blockbuster is expected to reappear, helping the ideal to leapfrog for the second time

Ideal plans to release the second car since its inception, ideal L9 in April 2022, with audio, seats, safe driving interactive screen and other configurations, and continue to take ride space and comfort as the core selling points. Ideal based on a strong perception of China's family car market, derivative product definition and efficient iteration ability to help expand the 500,000 yuan domestic family car blue ocean market, from the initial feedback from the market, 45-50 million pricing did not exceed market expectations, ideal L9 is expected to "applaud and applaud", becoming the second explosive model of ideal car.

Affected by the Russo-Ukrainian War, oil prices and trams rose both, and the impact of the extended range ideal car was relatively small. Although the retail price will be raised by 11,800 yuan on April 1, 2022, in the context of the general price increase of new energy vehicles, the advantage of range increase has not been weakened, and the market size will continue to grow steadily in the next few years. It is expected that the ideal ONE will continue the impressive results since delivery, and there is still a large room for sales after the expansion of the factory's actual production capacity. At the end of the second quarter of 2022, the ideal L9 or will begin to deliver, in addition, before 2025, the ideal will launch "Whale" and "Shark" two series of products, with the help of more abundant product lines and the original market reputation and channels, ideal car sales will maintain a healthy growth rate, is expected to further expand the dominant position in the new forces of car manufacturing, it is expected that the main business income in 2022 will exceed 50 billion yuan, 2024 exceed 100 billion yuan.

Excerpts from the report:

(This article is for informational purposes only and does not represent any of our investment advice.) For usage information, see the original report. ）

Featured report source: [Future Think Tank].