Wen | Li Qin
Edited by | Yang Xuan
After traveling to the U.S. stock market, the Science and Technology Innovation Board and other trading markets, on June 1, WM Motor submitted a prospectus to the Hong Kong Stock Exchange, and finally chose to land on the Hong Kong Stock Exchange and enter the open market. If the review goes well, WM Motor is expected to be listed for trading in the third quarter.
According to the prospectus, WM Motor's last round of financing occurred at the end of last year, with a valuation of $7.02 billion to obtain financing from companies including PCCW, Shun Tak Group, Agile and other companies - the valuation of new car companies has risen collectively in the past two years, but this year, taking Weilai as an example, the market value has now fallen by half compared with the end of last year.
As a gold-devouring beast with a cumulative financing amount of 35 billion yuan, the amount of funds raised by entering the open market will not be too low. Can the current market pricing meet the previous investor's price expectations?
Weima, which once belonged to the first echelon of new cars, was listed 2-3 years later than Weilai, Ideal Automobile, Xiaopeng Automobile, etc. Li Bin, the helmsman of Weilai, once said that time is an easily overlooked cost, so in September 2018, Weilai grabbed the New York Stock Exchange with the report of just 100 vehicles delivered. It is indeed a little hasty, and Weilai's overstretched data was prematurely exposed in the field of public opinion.
However, nearly 3 years late, the second echelon companies of new cars that have been accumulating momentum for a longer time, such as WM Motors, do not seem to have seized the value of time. According to the prospectus of WM Motors, in 2021, the company delivered 44,152 new cars, although it more than doubled compared with 2020, but it is still less than half of the Weilai and ideal cars.
The delivery volume of more than 44,000 units only earned 4.74 billion yuan in annual revenue for WM, and the bicycle income was worth more than 100,000 yuan.
The automotive industry is highly dependent on scale, and a small amount means that costs are difficult to amortize, and the prospectus shows that from 2019 to 2021, the gross profit margin of WM Motors is -58.3%, -43.5% and -41.1%, respectively.
WM Motors' three-year financial profile, documents from the prospectus
Xiaopeng Automobile has a low gross profit margin among the new car-making head companies, but it also has 10%, and the second echelon of WM Motors is struggling at about -40%, which also leads to a loss of up to 8.2 billion yuan for WM Motors in 2021, far exceeding Weilai, which is known for "burning money" (4.02 billion yuan in 2021).
With a large amount of blood loss, WM Motors still has 4.16 billion yuan in cash on its account, which is even more urgent, and the Hong Kong listing seems to have become a struggle to enter the safety zone.
The story of "popularizing electric vehicles" is not easy to tell
In 2015, Shen Hui appeared in the lineup of car-making entrepreneurs as vice president of Geely Group and chairman of Volvo China. Some WM investors once told 36Kr that the founding team of WM Motors at that time was Shen Hui, Hou Haijing, Lu Bin and other industry veterans, "Everyone in their respective fields, is a research and development or sales elite." ”
Shen Hui also told a story that is attractive enough to use the manufacturing experience and supply chain advantages of the old cannon of automobiles to create an electric vehicle version of "Volkswagen". Volkswagen is one of the world's largest car companies, with tens of millions of sales every year, which has fulfilled the dream of free travel for countless families.
But in the field of electric vehicles, the rules of the game have changed. Batteries are the core components of electric vehicles, and their cost remains high all year round.
Some WM people told 36Kr that when WM auto executives first visited a head battery company, they did not even pass the door post, and waited for several days before being received. Even in 2021, the initiative of battery prices is still in the hands of upstream companies, which has become a difficult burden for car companies.
According to the prospectus, in 2021, WM's purchase of batteries from the first two battery suppliers reached 1.7 billion yuan, more than 30% of its annual revenue. Under such a cost structure, WM Motor, with an average price of 100,000 yuan, is bound to hand over a statement with a gross profit margin of negative 40%.
WM Automobile's 2021 battery procurement costs are from the prospectus
Of course, this is not only the problem faced by WM Motor, but also the zero-running car that submitted the prospectus to the Hong Kong Stock Exchange in March, nor did it break through the spell of "huge loss in the low-price market", during the period from 2019 to 2021, the company's net losses were 810 million yuan, 935 million yuan and 2.629 billion yuan, and the gross profit margin was -95.7%, -50.6% and -44.3% respectively.
Weilai Automobile locked its positioning at the price of 400,000 yuan early, the ideal car also anchored the price of 300,000 yuan, Xiaopeng Automobile delivered the first 100,000-level G3 model, and immediately shaped the coupe P7 with heavy money, allowing itself to enter the price band of 200,000 yuan - 300,000 yuan. Ideal Auto made it clear in its internal letter in 2021 that the company's product range is in the market range of 150,000-500,000 yuan. Similarly, Weilai's sub-brand Alps is also priced between 150,000 and 300,000 yuan.
Almost all the leading car companies are aware that in the short term, the development curve of battery costs is not enough to support the popularity of electric vehicles in the parity market.
After this year's battery raw material lithium carbonate soared, the power battery also raised the price by 30%-50%, and the car companies that are entrenched in the low-price market are bound to usher in more violent losses.
Break through upwards, a battle of strangles
The dilemma of the low-price market has been seen by car companies. Nezha Automobile, which is also in the second echelon, shouted out the slogan of "science and technology equality" after receiving a large investment from Zhou Hongyi, but soon tied up industry leaders such as Huawei and Ningde Times, hoping to launch a model with a price of more than 200,000 yuan this year, Nezha S, to improve the financial situation.
WM's layout is similar, and in its future model planning, it also hopes to use intelligence and technology features to launch products with higher prices.
WM Automobile's future product layout comes from the prospectus
According to the prospectus information, the flagship sedan M7 to be launched by WM Motor in the second half of this year has undertaken many new technology frameworks, including a centralized three-zone electronic and electrical architecture similar to Tesla, soa (software as a service), and high-level automatic driving.
The M7 model will be equipped with 32 autonomous driving sensors, almost covering the industry's hot hardware configuration: 7 8-megapixel high-definition cameras, 4 2-megapixel surround view cameras, 5 millimeter wave radars, 12 ultrasonic radars, and 1 independent high-precision positioning module and 4 NVIDIA Orin-X autopilot chips with a maximum computing power of 1016 TOPS.
However, it is worth noting that according to the prospectus information, WM Motor's R&D investment is still weak, and the three-year R&D expenditure from 2019 is 893 million yuan, 992 million yuan and 981 million yuan, respectively, and the annual R&D expenditure is only comparable to the single-quarter expenditure of Weilai, Xiaopeng and other companies. By the end of 2021, there are 1141 R&D personnel in WM, while in contrast, new car companies such as Weilai and Xiaopeng Automobile have more than 5,000 R&D teams.
Conservative R & D strategy, how to support and achieve dazzling scientific and technological functions, need WM with landed products to give answers.
In addition, although stacking hardware configuration and preaching intelligent functions, it has long been in the industry. However, whether intelligent functions are just needed for automotive products is still not a consensus.
Li Bin, the helmsman of Weilai, once told 36Kr that the automotive industry does not have a breakthrough path with fresh moves, and the test is the systematic ability of technology, service, experience, and energy replenishment. Xiaopeng Motors' smart driving has a good reputation, but it has not helped the company break the dilemma of low gross profit.
Whether it is WM, or zero running, Nezha, if you want to get out of the low-price market of about 100,000 yuan and grab more profits upwards, you need to make more efforts in channels, services, products and other aspects. The window period left is not long.
Weilai's sub-brands are gearing up, Xiaomi cars are about to come out, and Tesla, Xiaopeng, Ideal, etc. will extend their layout to the mass market in order to expand the market territory. A fierce conquest is not difficult to foresee.
Entering the open market, leveraging capital, and getting more chips may have become a backwater battle for Weima.