Increase investment in technology research and development Xiaokang shares to increase the prospect of new energy vehicles can be expected

Caijing New Media Cui Miao/Wen Panxi/Editor

On April 30, Xiaokang Shares (601127. SH) released 2021 and 2022 first quarter performance report shows that in 2021, Xiaokang shares revenue of 16.718 billion yuan, an increase of 16.89% year-on-year, of which new energy contributed 4.279 billion yuan, accounting for 25.60%. In the first quarter of 2022, benefiting from the continuous increase in sales volume of Xilisi, the revenue of Xiaokang shares increased by 56.03% year-on-year to 5.131 billion yuan.

Under the influence of policies and other factors, the automotive industry is accelerating its transformation to electrification. According to the data of the Association, in the first quarter of 2022, domestic new energy vehicle sales increased by 138.6% year-on-year to 1.257 million units. It is worth noting that Xiaokang Co., Ltd., a vehicle manufacturing company that has been in the automotive market for 19 years, is increasing the layout of the new energy industry by increasing investment in new energy model technology research and development, sales channel construction, and jointly designing the Xilis brand with ICT company Huawei. According to the data, Xiaokang co., Ltd.'s annual investment in innovation and research and development exceeds sales revenue by 10%, and has invested more than 6 billion yuan in the past five years, of which 1.949 billion yuan was invested in research and development in 2021, an increase of 7.03% year-on-year.

The industry generally believes that the new energy industry will usher in a full-scale outbreak in the next three years or so, until the market is divided equally with fuel vehicles. These three years are regarded as the window period for the development of the industry, and major car companies have accelerated their layout in order to seize market opportunities. However, the transformation of traditional car companies into new energy is not only to realize the electrification of fuel vehicles, in the face of new intelligent technologies and channels, it will also face many challenges such as technology research and development, vehicle manufacturing, sales networks, etc., but in the future, car companies with core technologies are bound to seize more market share.

Sales of Cyris climb The results of cross-border cooperation have begun to appear

Under the influence of policies and other factors, the automotive industry is accelerating its transformation to electrification. Although affected by the upstream of the industrial chain, since the beginning of the year, a number of new energy models have raised their prices several times, but the enthusiasm for market consumption is still undiminished. According to the data of the Association, in the first quarter of 2022, domestic new energy vehicle sales increased by 138.6% year-on-year to 1.257 million units, and the market penetration rate in the first three months was 19.3%, an increase of 5.9 percentage points over the whole year of 2021.

The wave of new energy has completely changed the market pattern between car companies in the past, and the scuffle between traditional car companies, Internet companies and new car-making forces is about to erupt. With the intensification of competition, cost-effective products have become the key to car companies competing for market share. In various segments, intelligent electric vehicles of more than 200,000 yuan are regarded by car companies as a mainstream market that needs to be vigorously grabbed.

18 years ago, Xiaokang co., Ltd. and Dongfeng Group jointly produced the "Dongfeng Xiaokang" brand, which is later known to the market. At a time when electrification, intelligence, and networking have become an obvious trend in the development of the automotive industry, "Xilis", a brand of Chongqing Jinkang Xilisi Automobile Co., Ltd., a subsidiary of Xiaokang Co., Ltd., has chosen to cooperate with Huawei in the whole chain from research and development, manufacturing to sales and service, and provides users with active intelligent services, smooth, efficient and safe travel experience and intelligent life experience in all scenarios through Xiaokang's pure electric drive range extended range technology, vehicle technology and high-quality intelligent manufacturing capabilities, as well as Huawei's cutting-edge technology in the fields of information communication and smart travel.

At present, Xilis mainly positions the SUV market of more than 200,000 yuan, and there are two models on sale, SF5 and M5. Among them, Q&D M5 shortens the "design and development - manufacturing - market delivery" cycle from about two years to one year. According to the latest production and sales data of Xiaokang Shares, as of March 31, 2022, the cumulative output of new energy vehicles this year increased by 296.87% year-on-year to 17,400 units, of which Cyris increased by 1812.36% year-on-year to 6808 units; in terms of sales, the cumulative sales of new energy vehicles this year were 14,200 units, an increase of 207.43% year-on-year, of which 5044 units were Cyrus, an increase of 1186.73% year-on-year.

In fact, the competition between new energy vehicle manufacturers is far more than research and development capabilities, production and manufacturing capabilities, as well as brand promotion and channel construction. Starting from Tesla, well-known domestic and foreign new energy automobile manufacturers are no longer obsessed with the 4S store sales model, but will focus on the core business district of the city. Taking Beijing as an example, in large shopping malls such as Xihongmen Huiju, Huaifang Wanda, and Shuangjing R&F Plaza, new energy vehicle brand sales stores are lined up one after another.

JPMorgan Chase once pointed out in a report that by 2025, China's annual sales of new energy vehicles will exceed 10 million. By then, about 35% of car sales will come from new energy vehicle models.

In the industry's view, the user center, as one of the most important sales channels for new energy vehicle manufacturers, is not only the main place for consumers to experience and purchase new energy vehicles and receive after-sales service, but also an indispensable way for marketing and brand promotion, and high-quality user centers have become an important resource for new energy vehicle brand enterprises.

In April last year, Xilis entered Huawei's stores in the core areas of mainstream business districts. At that time, Yu Chengdong, managing director of Huawei, CEO of terminal BG, and CEO of smart car solution BU, said: "Innovation is not only at the technical level, in the face of changes and preferences in consumer demand, we provide consumers with a more convenient way to experience, so that everyone can experience Cyrus Huawei Smart SF5 in the city center without going far away in the future." ”

With the launch of the M5 and the expansion of sales stores, in the first quarter of 2022, The sales of Xilix increased by 1186.73% year-on-year to 5044 units. The voice of the market believes that although Cyrus is still far from the annual sales target of 300,000 vehicles, with the continuous landing of sales channels in 100 cities and thousands of stores, the production capacity of Cyrus Liangjiang and Phoenix Smart Factory has climbed, as well as the six medium and large SUVs launched this year and next year and the new large-sizeD SUVs, the performance brought by the Cyris brand needs to be released.

Increase the layout of the new energy industry Technology research and development into core competitiveness

Although the technical threshold for new energy vehicle manufacturing has been lowered, it does not mean that there is no need for core competitiveness in the field of new energy vehicles. Risks caused by supply chain disruptions occur frequently, and the manufacturing industry is becoming more aware of the importance of technological autonomy and control. Car companies increase the layout of the new energy industry, and technology and supply chain are topics that can never be bypassed.

Xiaokang shares have repeatedly stressed that Xiaokang did not do foundries before and now, let alone foundries. At present, Xiaokang Co., Ltd. and other independent brand enterprises have carried out research and development around batteries, motors, and electronic control technologies, and signed production orders with core enterprises in the supply chain to ensure the normal progress of various productions. According to the financial report, in 2021, Xiaokang invested a total of 1.949 billion yuan in research and development funds, an increase of 7.03% year-on-year.

Previously, Xiaokang had disclosed the use of funds raised in May 2021. According to the data, as of January 4, 2022, the investment of 1.622 billion yuan in the development and product technology upgrading project of the Cyrus Intelligent Network New Energy Series model has been used, and 1.119 billion yuan has been used. Among them, 1.063 billion yuan was used for the development project of Cyrus Intelligent Network New Energy Series models; 0.56 billion yuan was used for vehicle technology upgrades. Committed to invest 273 million yuan in the marketing channel construction project, has used 6.5 million yuan to invest in the offline store network.

It is worth mentioning that Xiaokang shares are still increasing the scale of technology investment. Recently, Xiaokang Co., Ltd. announced that it intends to raise no more than 7.13 billion yuan with a total investment of 7.608 billion yuan for the development of electrified models and the upgrading of product platform technology, the intelligent upgrading of factories and the construction of electric drive production lines, the construction of user centers and supplementary working capital projects.

Specifically, Xiaokang intends to invest 4.748 billion yuan in the development of 3 high-end intelligent electric vehicles and 3 practical electric vehicle models, as well as the upgrading of the DE-i platform and the development and upgrading of a series of product technologies. 633 million yuan is used for the construction of three parts, including the intelligent upgrading of automobile production lines, the intelligent upgrading and transformation of auto parts assembly production lines, and the construction of high-efficiency and high-power density electric drive high-flexibility production lines; 227 million yuan is used to expand and build offline store network systems.

Up to now, in addition to the establishment of a well-off science and technology center and an independent research and innovation center in Chongqing, China, the United States, there are more than 3,000 technical research and development teams in China and the United States, with nearly 3,000 core patents. In addition, in order to ensure the performance and reliability of product development, Xiaokang co., Ltd. has established a platform for energy-specific trial production and testing capabilities.

Industry experts believe that in the stage of technology research and development investment, enterprises need to spend a lot of manpower, material resources and financial resources, so it is difficult for enterprises to make profits at this stage. Whether an automotive product is good to sell mainly depends on three factors: supply chain, product strength, and channel. Although the intuitive experience brought to consumers by R&D investment in the short term is difficult to open up the gap with the mainstream models on the market, with the continuous increase of technology investment and the gradual improvement of various technologies, car companies with core technologies in the future are bound to seize more market share.