"Wei Xiaoli" annual report: who is in the sky and who is in the pit?

Shynrancaijing original

Author | dawn

Edit | Wei Jia

With the release of Xpeng Motors' financial results last night, "Wei Xiaoli" has handed over the answers for 2022.

Overall, all three companies have grown in 2022 – releasing more models, selling more new cars, and generating more revenue. But at the same time, without exception, their losses are widening.

NIO and Ideal have both rushed through the 40 billion yuan mark, and Xiaopeng is still hovering below 30 billion yuan. NIO lost 14.4 billion, Xiaopeng was 9.1 billion, and Ideal also had 2 billion. Combined, their losses have increased by almost 1.8 times compared to 2021.

Losses are not terrible, what matters is why they are losing, whether there is any hope of turning them around, and how much value these losses have generated.

When it comes to new cars, many people still think that they are money-burning and unreliable representatives. Even if he has reached the first echelon, "Wei Xiaoli" still faces many doubts. In particular, Ziyujia struggled with delivery last year, and WM almost shut down this year, casting a shadow over the prospects of new forces.

Putting aside these emotional factors and returning to rational analysis, we may wish to start from the figures in the financial statements to take a look at the real business conditions of the new car.

"Wei Xiaoli"'s latest 2022 financial report provides us with an entry point. Through comparison, we try to figure out which of them can make the most money, who dares to spend the most, and who is the most dangerous?

Who makes the most money?

When it comes to making money, many people's first reaction may be NIO, because NIO's cars are the most expensive. However, this is not the case.

From the perspective of revenue alone, NIO is indeed the largest.

In 2022, NIO's revenue will be 49.3 billion yuan, while Lili and Xiaopeng will be 45.3 billion yuan and 26.9 billion yuan, respectively. Correspondingly, the number of new vehicles sold was 122,500, 133,200 and 120,800 units, respectively.

There is little difference in car sales and large differences in revenue scale due to the difference in vehicle prices. The average selling price of NIO's car is around 400,000 yuan, and the ideal is more than 300,000 yuan, while Xpeng is 200,000 yuan. Converted into income accounting, NIO can earn an average of 370,000 yuan per car sold, ideally 330,000 yuan and Xiaopeng 210,000 yuan. This directly determines how profitable they are.

In 2022, except for SAIC-GM-Wuling, which is competing with new forces, almost all car companies are rushing to the high-end and launching new models with more expensive prices. NIO launched ES7, ET7, ideal launched L9, and Xpeng took out the most expensive model in history, G9. This has increased the revenue scale of "Wei Xiaoli" and the revenue of bicycle sales.

However, an increase in revenue does not mean that you can make money, and in terms of gross margin, which can best measure profitability, "Wei Xiaoli" will decline in 2022.

NIO's gross margin on vehicle sales decreased from 20.1% in 2021 to 13.7% in 2022; Ideal decreased from 20.6% to 19.1%; Xiaopeng dropped from 11.5% to 9.4%. Cars are selling more, but there is less profit margin.

Cartography / Deep burning

The reasons for the decline in gross profit are manifold. In general, one is the rising cost of batteries, and the other is the replacement of new and old models.

The price of lithium carbonate soared last year, and CATL launched a linkage mechanism between lithium carbonate price and power battery price, passing on the pressure of rising costs to OEMs, which directly eroded the profits of car companies. NIO CEO Li Bin once said that if the price of lithium carbonate drops by 200,000 yuan per ton, NIO's gross profit margin can rise by 4 points.

The sharp decline in gross profit margin brought about by model switching was rare before. Last year, Li Li misjudged the market and was forced to cut prices to deal with Li ONE, and released the replacement model L8 in advance, resulting in a loss of 800 million yuan in inventory provisions, so that the gross profit margin of vehicles in the third quarter fell to 12%. NIO lowered its sales forecast due to the replacement of the "866" models (ES8, ES6, EC6), resulting in a loss of 985 million yuan in inventory provisions and procurement commitments in the fourth quarter of last year.

After a variety of factors, the gross profit margin of NIO, Lili and Xpeng last year was 10.4%, 19.4% and 11.5% respectively. NIO's gross profit margin is at the bottom, even behind Xiaopeng. However, due to the high unit price of NIO's cars, the gross profit is not low. In 2022, for every car sold by NIO, it will earn an average of 42,000 yuan, the ideal is 63,000 yuan, and Xiaopeng is 19,000 yuan.

In terms of net profit, the ultimate indicator of earning power, all three companies are loss-making, with NIO having a net loss of 14.4 billion yuan, ideal 2 billion yuan, and Xiaopeng 9.1 billion yuan, a significant increase from 2021. If the disturbing factors such as equity incentives are excluded, under non-GAAP, the losses of NIO and Xpeng are still as high as 12.1 billion yuan and 8.4 billion yuan, and the ideal is to achieve a small profit of 20.82 million yuan.

Cartography / Deep burning

In terms of amount, NIO loses the most, which is a typical loss of money. But from a structural point of view, the most difficult to make money is Xiaopeng - only 26.9 billion yuan in revenue, but a net loss of 9.1 billion yuan, a net loss rate of 34%, higher than NIO's 29%.

On the whole, Xiaopeng's car sells the cheapest, loses the most, and makes the most money; The ideal financial position is relatively healthy and the profitability is strongest.

Who dares to spend the most?

In terms of spending money, the most generous is NIO, the most critical is ideal, and the least efficient is Xiaopeng.

Ideal is known as "picking" in the industry and is famous for strict cost control. Last year, Ideal released three new cars (L9, L8, L7), delivered two of them, and spent a total of 12.5 billion yuan on various operating expenses. Among them, sales and management expenses that were most related to management efficiency were 5.7 billion yuan, lower than NIO's 10.5 billion yuan and Xpeng's 6.7 billion yuan.

NIO has always been generous and daring to invest. Last year, NIO's operating expenses reached 20.8 billion yuan, far ahead of the major new forces.

This has to do with NIO's style. NIO is the most brand-conscious among the new forces, positioning itself as a high-end from the beginning of its establishment, "replacing BBA", and willing to invest in daily marketing and brand building. Moreover, NIO's expansion in overseas markets is very radical, and its products have successively landed in Norway and other countries. It all costs money.

In the third quarter of last year, NIO reached a cooperation with Australian lithium miner Greenwing Resources, which is advancing exploration plans for a lithium salt lake project in Argentina, making NIO the first car company among the new domestic forces to get involved in mining. Wei said that this is to improve gross profit margin through vertical integration.

Last year, Xiaopeng's operating expenses were 11.9 billion yuan, which on the surface seemed to be the smallest amount of "Wei Xiaoli", but it accounted for 44% of revenue, even more than NIO. This shows that Xpeng's operational efficiency is relatively low and cost control is weak.

Taking the release of new cars as an example, when Xpeng released the blockbuster new car G9 in September last year, it spent a lot of effort on marketing and promotion. In order to build momentum, G9 conducted a 9-hour live broadcast before its official launch, inviting some stars, musicians, and car critics to stand on the platform.

The money was spent, but the effect was not good. A Xiaopeng employee described the live broadcast as "desolate and desolate", saying that he did not find the right person to bring the goods at all, and did not form a hot spot at all, and everyone did not know what to see. What is surprising is that this conference ended with a "rollover" of too chaotic price configuration.

In this earnings call, He Xiaopeng said that after the internal organizational adjustment at the end of last year, Xpeng's marketing expenses will be greatly reduced this year, and it is necessary to ensure that the efficiency of sales is improved.

Therefore, it is learned to spend money, and good steel must be used on the blade, otherwise it is really burning money.

For Wei Xiaoli, a major investment in the current stage is focused on research and development, which is an investment in the future.

All three companies are willing to spend money on research and development. NIO, Li Li and Xpeng spent RMB10.8 billion, RMB6.8 billion and RMB5.2 billion respectively last year, a significant increase compared with 2021. NIO and Ideal, in particular, have doubled their R&D spending and surpassed Xpeng.

Cartography / Deep burning

Xpeng was originally very radical in research and development, and has been toughening Tesla, trying to make intelligent driving its own label. But last year, Xpeng's investment in research and development slowed down, and research and development spending increased by only 27%, lagging behind NIO and Ideal. The advantages accumulated by Xiaopeng in intelligence are being caught up and narrowing the gap.

In contrast, Ideal is willing to invest in research and development from 2021, and then increase investment. NIO has maintained large-scale and even cost-free investment.

NIO has been developing its own AD (autonomous driving) chips since 2021, and according to Li Bin, the team size has 500 people. NIO also develops its own power battery and even develops its own mobile phone, which will be unveiled this year. These are all very demanding tracks, and the technical barriers are high.

However, the risk is how much value the R&D expenses invested can ultimately generate. We must be wary of blind, unnecessary and value-creating research and development.

Who is most dangerous?

As we enter 2023, competition rises to unprecedented heights. From volume products, configurations, and prices, to volume strategy, organization, and culture, automakers are among car companies. Any side that drops the chain may fall into crisis. For many brands, staying at the table may only have one chance to play.

Xiaopeng is the sales champion of the new force in 2021, but its sales will be surpassed by NIO, Ideal, and Nezha in 2022. For a while last year, Xiaopeng's stock price fell to freezing point, sales plummeted, and the outside world even worried whether Xiaopeng could survive. Later, Chairman He Xiaopeng carried out drastic organizational changes internally, only to save a little confidence.

Until now, Xpeng Motors is also the most dangerous one in "Wei Xiaoli", because the results of the reform are difficult to reflect in the short term.

Judging from market feedback, the sales of the Xpeng G9, which has high expectations, are difficult to say optimistic, and only 4,020 units were delivered at most in the peak month; The sales of the pillar model Xpeng P7 have fallen to the level of one or two thousand units per month, because everyone knows that the P7 will be remodeled, and there is a strong wait-and-see mood; The facelifted P7i finally hit the market in March, but it will take a while for the volume to start.

In the earnings call, Xpeng gave the new car delivery forecast in the first quarter of this year, between 18,000 and 19,000 units, far lower than NIO and Ideal - NIO is 31,000-33,000 units, ideal is 52,000-55,000 vehicles. Xpeng's revenue is expected to decline by nearly half in the first quarter.

He Xiaopeng said that today, the adjustment cycle of products and management in the automotive industry is more difficult than that of other industries such as the Internet, and the time period required is longer, but Xiaopeng is still willing to sacrifice short-term sales to prepare for more patient and medium- and long-term success that can achieve greater victory.

After the auto industry veteran Wang Fengying joined this year, Xpeng Motors adjusted and accelerated. He Xiaopeng said that the biggest pressure on him personally is that Wang Fengying works seven days a week, and now everyone starts working seven days a day.

Whether Xiaopeng can completely survive this crisis and take off again is still uncertain. According to He Xiaopeng's plan, Xiaopeng's adjustment will see results until the second half of the year.

The ideal currently looks proud. Last year, it won the new force sales championship, and this year it sprinted to sell 30,000 vehicles per month, and took the lead in achieving company-level profitability.

Ideal is an "extreme reality" player, and its current achievements are largely based on product positioning and marketing packaging.

Under the leadership of "product manager" Li Xiang, Ideal Auto has put a relatively simple and even backward technology on a product that meets the needs of users, matching a heartwarming story and creating a popular ideal ONE. It then replicates this experience to the L-Series models and accelerates the harvesting market with nesting dolls.

You can't say it's not innovative, at least it better meets the needs of car buyers. While serving good users, the company also made money. Some would say that it may not be a great company, but it makes a refined businessman.

Ideals require real skills in technological innovation. In the research and development and landing of pure electric models, there are still many roads to be taken and pits to be stepped on.

NIO is the type that is not very good at "living" in the eyes of many people. It has some bold ideas, which you can also understand as "dreams", such as it throws a lot of money into the power exchange, which is a very valuable but quite money-burning thing, and companies that are looking at short-term profits will not do it. There are also the aforementioned NIO mobile phones, self-developed batteries, chips, which are all big patterns, in line with the style of Li Bin, who has experienced big storms and waves, and has seen big money.

NIO's risk is whether it has enough strength to control this big chess game. The cash flow crisis in 2019 is a good lesson.

At present, "Wei Xiaoli" has developed to this stage, the company's fundamentals are no problem, unless a big mistake is made, there will be no embarrassing situation for WM. By the end of last year, NIO, Li Li and Xpeng had cash, cash equivalents and restricted cash of 23 billion yuan, 40.4 billion yuan and 14.7 billion yuan respectively, and they can survive for a while without financing in the short term.

It's just that now the price war is fierce, Tesla, the catfish, comes out from time to time to muddy the waters, and there are players like BYD who don't talk much. Whether "Wei Xiaoli" can maintain its current position, continue to expand its market share, and continuously improve its competitive advantage depends on its next performance.

*The title image comes from Weibo.