Zero-run car mall store (photo by Du Ge)
Author | Pan Hong
Edit | Wan Jiali
Source | CarVisibility
Zhu Jiangming harvested a good March.
In March, zero-run car deliveries entered the 10,000-car club. As deliveries climbed steadily, ZeroCar also submitted a listing application to the Hong Kong Stock Exchange that month, with co-sponsors including Citi, JPMorgan Chase and other top institutions.
Prior to submitting the application, Zero Run Auto had completed 8 rounds of financing. The amount of financing is as high as 10 billion. However, relying only on these rounds of financing, if Zero Run wants to mix in the new energy warband with capital, the family foundation is not thick.
In the past three years, the loss of zero-running cars has exceeded 4.8 billion yuan. The prospectus discloses that as of the end of 2021, the cash and cash equivalents of Zero Run Automobile are only 4.338 billion yuan. The "Wei Xiaoli", who ran zero to catch up, has cash and equivalents in his hands as high as 20 billion yuan.
Zhu Jiangming, the founder and chairman of Zero Run, who started with monitoring equipment, is a capital player who instigated zero run to accelerate the listing to transfuse blood for cars. He also has the same dream as Jia Yueting and others, that is, to surpass Tesla. Zhu Jiangming once said in mid-2021: "Surpass Tesla in 3 years!" "It seems more like ambition now.
In addition to the lack of money and the urgent need to go public, zero-run cars with constant quality complaints are also facing brand uphill problems.
01
Dahua support
Before founding Zero Run, Zhu Jiangming had already experienced two ventures.
In 1992, with 5,000 yuan, he and Fu Liquan founded Hangzhou Dahua Electronic Equipment Factory and concurrently served as the CTO of Dahua Electronics. 30 years ago, in the spring of entrepreneurship, many people were blown by the spring breeze.
Zhu Jiangming, who graduated from Zhejiang University majoring in radio, has nearly 30 years of experience in product research and development and achievement entrepreneurship in electronics and artificial intelligence technology. As the founder, chairman and executive director and CHIEF EXECUTIVE OFFICER of Zero Run Auto, he directly or indirectly controls the 11.89% interest of Zero Run Car through Hangzhou Xinyuan, Ningbo Jinghang and Wan Zai Ming Zhao.
Fu Liquan is the 002236 of Dahua Shares. SZ) is the actual controller and chairman of the board, which directly and indirectly controls a 13.53% interest in zero-running cars through Ningbo Huachang and Ningbo Kirin.
Fu Liquan's spouse, Chen Ailing, holds a 5.59% interest in Zero Run Car through Ningbo Huaya (Limited Partnership). Chen Ailing holds a 1% stake in Ningbo Huaaya, and her son Fu Yiqin holds a 99% stake in Ningbo Huaaya as a limited partner.
Among the shareholders of Zero Run, Zhu Jiangming, Fu Liquan, Liu Yunzhen (Zhu Jiangming's spouse) and Chen Ailing (Fu Liquan's spouse) are the same actors, and jointly hold 31.01% of the total issued share capital of Zero Run Automobile.
The prospectus discloses that Fu Liquan and Zhu Jiangming signed a concerted action agreement in 2016 to vote uniformly according to the consensus reached by each other, and if there is no consensus, they will vote according to Zhu Jiangming's instructions. Through such concerted action, the two old partners of Dahua Shares firmly controlled zero run.
(Data source from the prospectus and the national enterprise credit information publicity system)
Dahua not only holds 8.89% of the equity of Zero Run Car, but also provides support for Zero Run Car venues, supply chains and technology. According to the prospectus, Zero Run will continue to lease Dahua shares as a laboratory from 2021 to 2022, and record related lease liabilities of 1.062 million yuan in 2021, an increase of 100% year-on-year.
Among the other major related party transactions, the first is the signing of a parts and system supply agreement with Sino-Ruijie Technology, a subsidiary of Dahua Co., Ltd., to purchase certain types of sensors and systems used in electric vehicles from it, reaching 67.461 million yuan in 2021, an increase of 1110.74% year-on-year. In other words, the R&D and production of ADAS sensors are provided by the shareholding company Sinogen Technology.
The second is to sign a service procurement agreement with Dahua Co., Ltd. to outsource the assembly process of various objects used in the production of electric vehicles, reaching 23.591 million yuan in 2021, an increase of 269.76% year-on-year.
It is worth mentioning that Ningbo Jinghang is one of the zero-run employee shareholding platforms, controlled by Zhu Jiangming as the general partner and holding 0.08% of the shares, wu Baojun, executive director and president of the company, Xu Wei, former director, and Jinghua, senior vice president and secretary of the board of directors, as limited partners, hold 70.28%, 24.62% and 5.02% of the shares respectively.
Among the major investors are Guoshun Leading and Green Leading (Limited Partnership). Among them, Guoshun led by three state-owned enterprises Hangzhou Industrial Investment, Hangzhou Industrial Development Investment Co., Ltd. and Hangzhou Heda Industrial Fund held 60.6%, 30.3% and 9.09% respectively.
In addition, Hangzhou Heda Investment Management holds 0.01% of the shares as the green leading general partner, and Heda Industry Fund holds 99.99% of the equity as a limited partner. And Zero Run non-executive director Jin Yufeng is also a director of Heda Investment Management.
From the perspective of the connection between shareholders and related party transactions, Dahua shares have played an important supporting role in the growth process of zero run.
02
Bleeding listing
According to the operating data of the past three years, the total revenue of zero running in 2019-2021 reached 117 million yuan, 631 million yuan and 3.132 billion yuan respectively, and the year-on-year increase of 439.74% and 396.13% from 2020 to 2021 was respectively.
Revenue from zero-running consisted mainly of sales of automobiles and components and sales of automotive regulatory points. Revenue from automotive and parts sales accounted for 100%, 97.62% and 97.67% of total revenue from 2019 to 2021, respectively. From 2019 to 2020, the specific amount of sales revenue of automobiles and components was 117 million yuan, 616 million yuan and 3.059 billion yuan, respectively.
Like many new energy vehicle companies, zero runs, which have increased several times in revenue every year, are still bleeding.
From 2019 to 2021, the zero gross loss was 112 million yuan, 320 million yuan and 1.388 billion yuan, respectively, and from 2020 to 2021, it increased by 185.44% and 334.18% respectively.
From 2019 to 2021, the operating loss of zero running reached 731 million yuan, 870 million yuan and 2.868 billion yuan, and from 2020 to 2021, it increased by 18.96% and 229.87% respectively year-on-year.
For new energy vehicle companies, research and development is undoubtedly extremely important and the most expensive. From 2019 to 2021, the R&D expenditure of zero-run reached 358 million yuan, 289 million yuan and 740 million yuan respectively, accounting for 48.97%, 33.21% and 25.8% of the operating loss, respectively.
Looking at zero running alone, it seems that it has indeed spent a lot of money on research and development, but compared with "Wei Xiaoli", it is a dime.
The R&D expenses of one year of zero running are less than the R&D expenses of "Wei Xiaoli" in one quarter.
According to the third quarter results of each company, the R&D expenditure of NIO, Xiaopeng and Ideal reached 1.193 billion yuan, 1.264 billion yuan and 889 million yuan respectively in the third quarter of 2021, an increase of 101.9%, 99% and 165.6% year-on-year, and an increase of 35%, 46.6% and 36% respectively.
It can be said that Zero Run is still far from claiming that it is the only new energy vehicle company in China with global independent research and development capabilities. After all, this R&D capability is directly proportional to the investment. With less money invested, if you want to get a big breakthrough in technology, it will only be a castle in the air.
Why? In fact, there is still too little money in hand.
According to the Zero Run Prospectus, from 2019 to the end of 2021, the cash and cash equivalents on the Zero Run account were 206 million yuan, 100 million yuan and 4.338 billion yuan, respectively.
In the worst year, zero run only 100 million yuan in cash, for a new energy automobile company, almost equivalent to the pool has to be done. Even in the richest years, there are only a few billion dollars in cash. "Wei Xiaoli" casually smoked out, and the cash in his hand was also tens of billions. As of the end of the third quarter of 2021, NIO's cash reserves reached more than 60 billion yuan.
Due to financial problems, Zero Run wants to achieve the global self-development of core technologies such as intelligent driving + intelligent cockpit + three-electric system, and obviously continues to burn money. Not only in research and development, production and sales are everywhere short of money.
Before the bloody listing, Zero Run Automobile was frantically financing, and has now carried out 8 rounds of financing, raising 11.867 billion yuan.
However, it does not matter if the bloody listing is shed, and all the new energy vehicle companies in the Current Chinese market have been losing money for consecutive years. For investors, they are more concerned about whether zero-run cars can be sold.
03
Upward difficulty
Will zero-run cars satisfy investors?
For the full year of 2021, zero-run T03 sales were 46,100 units, contributing 88% of zero-run vehicle sales.
However, A00-level T03 gross margin is low, and the supply chain is prone to losses once the price rises. For traditional car companies, relying on mini cars to accumulate new energy credits can also obtain a certain amount of income.
The Great Wall Euler series with a huge fuel vehicle system is a good example. In 2021, the cumulative sales volume of the Great Wall Euler cat series in the first half of the year alone was 52,600 units, an increase of 428.72% year-on-year. But the Euler brand has already brought huge losses to the company. Taking black cat as an example, after the sharp rise in raw material prices in 2022, the loss of black cats alone exceeded 10,000 yuan.
In pursuit of a range of more than 400 kilometers, the 2021 version of the zero-run T03 is equipped with a 41-degree lithium iron phosphate battery, while the low-end version is priced at 59,800 yuan, and the income after deducting 13% value-added tax is only 48,500 yuan.
The gross profit margin of zero run from 2019 to 2021 was -95.7%, -50.6% and -44.3%, respectively. Obviously, zero-run sells one and loses one. Of course, from the data and careful analysis, the gross profit margin of zero-run cars is still improving.
Of course, this improvement is also under the pressure of rising raw materials, according to the zero-run prospectus, in addition to the fluctuations caused by short-term raw material price increases, lithium batteries are not counted at The Pack cost is expected to be at $100 per kWh, about 634.95 yuan / kWh.
That is to say, under normal circumstances, the battery energy of the 2021 version of the T03 Light Edition is 41 kWh, and the cost of the battery alone is not less than 26,000 yuan, which is not counting the cost of the pack and the body, interior and exterior decorations and motors.
According to the prospectus, based on the delivery volume of 43,700 vehicles in 2021, Zero Run lost 65,600 yuan for every one sold.
So a big question facing Zero Run right now is, how to seek more space for sales increments and brand premiums? This space mainly comes from the high-end market of 150,000-300,000 electric vehicles.
It's not easy to just go to the high end.
Both zero-run models are low-end models. The C11 delivered in September 2021 has the same size and configuration as medium- and large-sized SUVs, such as the NIO ES6.
However, zero running has not established a strong brand image and cannot be sold at a good price. In order to accelerate the capture of the market, the C11 is priced at only 159,800 yuan, which is less than half the price of the WEIO ES6.
The sales side is not called the price, but the cost side is rigid.
With the rise in the price of raw materials upstream of new energy vehicles, the pressure on zero-running costs has increased, and some models with zero-running have also announced price increases recently.
The official announcement of zero running, affected by the growth of upstream raw material costs and the decline in national subsidies, the official guidance price after raising the subsidies of its C11 series will be raised by 20,000-30,000 yuan according to different models from 00:00 on March 19. After the adjustment, the price of C11 subsidies is 179,800-229,800 yuan.
In addition, its T03 series has also been raised from 59,800-76,800 yuan in 2021 to 68,900-84,900 yuan in 2022. Not only that, but the low-end version's battery capacity has been reduced by 9.1 kWh, achieving a cruising range of only 301 km.
It can be said that the cost-bearing zero run has to reduce losses by increasing prices and gradually shifting to the high-end version, but in fact, the cost performance of T03 is reduced, hitting the pain points that target customers are already price sensitive.
It can be said that the funds required to build cars are still huge, and research and development, sales and production need money inside and out. Since the establishment of Zero Run, relying on the support of the old owner Dahua shares, at the same time through 8 rounds of financing to stabilize the position. However, whether in terms of financing level or sales volume, zero running and competitors such as "Wei Xiaoli" do not have an advantage.
In the case that its own hematopoietic ability cannot solve the continuous loss, accelerating the listing has become a must for zero running.
It's just that rising raw material prices and fluctuations in the Supply Chain System in the Yangtze River Delta are testing whether zero-run cars can really run.
EDN