With NIO handing over the report card, Wei Xiaoli's performance in the first half of this year has been clearly put on the table.
Financial report data shows that in terms of revenue, NIO's revenue in the second quarter of this year was 8.77 billion yuan, down 14.8% year-on-year and 17.8% month-on-month. Xpeng Motors' revenue was RMB5.06 billion, down 31.9% year-on-year and up 25.5% month-on-month. Li Auto's revenue was RMB28.65 billion, up 228.1% year-on-year and 52.5% month-on-month.
In terms of profit, NIO's net loss in the second quarter was 6.056 billion yuan, an increase of 119.6% year-on-year; Xpeng Motors' net loss was RMB2.8 billion, up 3.7% year-on-year and 20% month-on-month. Li Auto achieved a net profit of 2.31 billion yuan, turning losses into profits for three consecutive quarters.
What needs to be watched is the gross margin. In the second quarter, the gross profit margin of ideal automobiles remained at 20%; NIO's overall gross margin was 1%, falling to the lowest level in the past year, while the gross margin of automobiles was only 6.2%, compared with about 16.7% in the second quarter of last year. Xpeng's overall gross profit margin fell to -3.9% in the quarter, down 14.8 percentage points year-on-year, and the gross profit margin of automobiles fell to a new low of -8.6%.
Under the comparison of the three financial reports, Wei Xiaoli has shown obvious differentiation in the first half of this year. Li Auto's performance was quite eye-catching, with revenue, net profit and gross margin hitting record highs. In terms of net profit, NIO's performance is the most under pressure, followed by Xiaopeng, and the ideal state is currently the most optimistic.
The performance of financial data has a lot to do with sales. Data show that NIO's sales in the second quarter were only 23,500 units, down 6.1% year-on-year and 24.2% month-on-month. Xpeng Motors delivered 23,200 new vehicles, down 32.6% year-on-year and up 27.3% month-on-month. Li Auto delivered a total of 86,500 new vehicles in the second quarter, a year-on-year increase of 201.6%, a record high.
Still, the ideal car doesn't have peace of mind.
On the one hand, as sales climb, Li Li has gradually approached the capacity ceiling, and in the view of management, the capacity problem is also the biggest challenge facing Li Auto at present. Li Xiang, founder, chairman and CEO of Li Auto, previously said on social media, "This quarter (third quarter) production capacity is the only bottleneck (Li Auto), and there is no solution in this quarter. "On the other hand, with the transition of the product route from extended range to pure electric, the second half of the superimposed smart electric vehicle accelerates, and it is unknown whether the ideal car can still maintain its existing advantages in the pure electric track to further grow."
Under pressure, NIO and Xpeng carried out a number of measures to reduce costs and increase efficiency internally in the first half of the year to get out of the trough as soon as possible. In the second half of the year, Wei Xiaoli's challenges will take different forms.
"Buddhist" NIO desperately sells cars
NIO's performance is still in a period of sluggishness.
Unlike Xpeng, ideal product strategy and business philosophy, NIO has always believed that the high-end market needs to have the right diversity. Therefore, in Wei Xiaoli, NIO has the most models, including three SUVs, three sedans, and two coupe SUVs; Xpeng has six models; The ideal car with the highest sales took the explosive route, with only three models.
However, multiple models make NIO face great challenges in cost control ability and profitability.
During the product replacement period in April and May, NIO even had "no cars to sell" for a while, and its sales volume was almost halved month-on-month, and the main sales models were only ET5 and ES7. This also caused NIO to experience a short period of pain in the second quarter. In the financial report, NIO explained that the second quarter is in the product iteration investment period, and there are many related expenses such as research and development, sales, marketing service network expansion, and user maintenance required for replacement.
In fact, as early as the beginning of this year, NIO's founder, chairman and CEO Li Bin pointed out in an internal letter that NIO's delivery growth in 2022 lagged behind the industry as a whole, and "in response to supply fluctuations, many manufacturers responded faster and more efficiently." A person familiar with the matter told China Entrepreneur that after the release of the internal letter, NIO began to reorganize the personnel structure and business processes, "The current strategy is to prioritize sales and focus relevant resources on the most important things." ”
In June, NIO announced that the starting price of all new cars will be reduced by 30,000 yuan, and the power replacement rights and vehicle purchases will be unlinked, and new car buyers will no longer enjoy the past free power replacement rights and pay for power replacement. After the divestment of power exchange rights, the proportion of NIO's paid power replacement has been significantly increased. According to Li Bin, the third-generation station can reach breakeven by changing power about 60 times a day, and about 20% of the current power exchange stations have reached this level. "With the development of our third-generation platform, NIO's global competitive advantage will be enhanced, and the research and development of core technologies will help us improve gross margin, as well as promote operational efficiency and R&D efficiency."
According to information from the automotive data company Jelan Road, since July, NIO has included the order conversion rate in the assessment, increased efforts to motivate front-line sales personnel, and adjusted the sales commission of each new car from 800 yuan to 2,000 yuan, and the sales commission of inventory cars and exhibition vehicles from 800 yuan to 4,000 yuan. In addition, the position of store product expert is abolished, and the sales staff receives the whole process, and the last-place elimination system is introduced.
The effect is obvious, and NIO's sales in the third quarter ushered in a bottoming out. In July, NIO delivered more than 20,000 units for the first month, up 104% y/y and 91% m/m. In August, NIO delivered 19,300 units, up 81% y/y.
Photo: Ren Yafei
In the second quarter earnings call, the most important signal sent by Li Bin was to fully enhance sales potential, which was also interpreted by the industry as one of the key driving forces for NIO's performance breakthrough in the second half of the year.
Li Bin pointed out that the number of NIO sales personnel is much lower than that of other luxury brands. "As of June, we found that our sales capacity could not meet the demand for 7~8 vehicles sold at the same time." Li Bin said, "Since July, we have begun to comprehensively increase the sales capacity construction, aiming to reach 30,000 units per month, and plan to complete the construction by the end of September, and the results of the sales capacity building will gradually begin to appear from October." ”
Li Bin's sense of urgency is not unreasonable, "BBA almost every city has 4S stores, and NIO's current layout is insufficient, such as Anhui, we have just opened NIO House in Wuhu, the second largest city in Anhui. Channel sinking is an urgent task. In the sinking market, we hope that more experienced salespeople can join. ”
In the view of Zhang Yi, CEO and chief analyst of iMedia Consulting, NIO's products, word of mouth, brand building and sales system are all worthy of recognition, and increasing the construction of sales channels will definitely help sales. However, the biggest pain point of the current pure electric vehicle market is still mileage anxiety, especially in second-tier cities and below consumers' concerns about pure electric battery life, so that this year's pure electric vehicle market is facing a development bottleneck, this shackle may continue until 2025.
Xiaopeng said goodbye to "single",
Expand your circle of friends
Compared with NIO and Ideal, Xiaopeng is currently facing more pressure.
According to the financial report, Xpeng Motors' net loss in the second quarter reached 2.8 billion yuan, setting a record high for a single-quarter loss. Previously, Xpeng's highest quarterly loss was in the second quarter of last year, which was 2.7 billion yuan, an increase of 3.7% year-on-year.
In fact, since the beginning of this year, Xpeng Motors has made a lot of changes in terms of organizational structure and product development. "From the current point of view, the internal and external effects of these changes exceed expectations and formally bring the company into an initial positive cycle." At the earnings call, He Xiaopeng, chairman and CEO of Xpeng Motors, said.
However, the continued decline in gross margins still worries the market. According to the financial report, Xpeng's overall gross profit margin was -3.9% in the second quarter, and the gross profit margin of automobiles fell further from -2.5% in the first quarter to -8.6% in the second quarter.
Regarding the performance of gross margin, Wu Jiaming, vice president of finance of Xpeng Motors, explained that first, because of the inventory write-down and inventory purchase commitment loss related to G3i, which had a negative impact on the vehicle profit margin in the second quarter of 2023 by 4.5 percentage points; second, because of the increase in promotional activities and the expiration of new energy vehicle subsidies.
Wu Jiaming said that Xpeng Motors has corresponding tracking and measures in terms of gross profit margin and efficiency increase cost, and expects the gross profit margin to reach a positive value in the fourth quarter.
At the second quarter earnings call, He Xiaopeng emphasized the importance and measures of cost reduction and efficiency increase. In He Xiaopeng's view, the cost reduction measures will significantly improve the gross profit margin of Xpeng Motors while greatly improving the competitiveness of products.
After the failure of Xpeng G9 last year, Xpeng Motors' performance fell into a sluggish period, sales were difficult to boost, and the stock price has been fluctuating at a low level of $7 to $14. Since then, He Xiaopeng has carried out drastic organizational changes to improve collaboration efficiency. At the beginning of this year, Wang Fengying, a veteran of the automotive industry, became the president of Xpeng Motors, becoming one of the main forces in reshaping Xpeng Motors. After joining Xpeng, Wang Fengying adjusted the sales structure, merged the two sales systems of direct management and franchise, and changed the four regions of the northern, eastern, central and southern regions into 24 war zones, realizing flat sales and improving feedback speed.
The core configuration and price of the G6, which was launched in June, are the result of several rounds of discussion and collision with Wang Fengying with product planning and sales team. After the launch of the G6, Xpeng Motors' deliveries rose to 11,008 units in July, and 13,690 new vehicles were delivered in August, a year-on-year increase of 43%, setting a record for the highest sales this year.
Photo: Ren Yafei
In the process of change, He Xiaopeng also gradually adapted to the change of role, often emphasizing cost and efficiency. He Xiaopeng said that together with President Wang Fengying, he will make cost reduction one of the core goals of multiple teams such as product, research and development, manufacturing, supply chain, and marketing. "I am confident that I will achieve my goal of reducing overall costs by 25% by the end of 2024, and even exceed this target in several individual areas." He Xiaopeng said.
Achieving this goal will not be easy. In the eyes of industry insiders, the maximum annual cost reduction set by automakers is only about 5%. Although Xpeng Motors has carried out a number of internal measures to reduce costs and increase efficiency since last year, the results are not obvious, and its sales and R&D expenses are relatively limited.
"We will enable the mainstream 150,000-level market to enjoy the cutting-edge results of autonomous driving technology through 'hard bones of technological innovation and cost reduction'." In terms of intelligent cost reduction, He Xiaopeng said.
According to "China Entrepreneur", a number of new models of 150,000 to 300,000 yuan developed by Xpeng Motors are based on the newly released Fuwan technology architecture. Under this architecture, Xpeng Motors can not only shorten the development cycle of new models by 20%, but also achieve a commonality rate of up to 80% in parts of the architecture.
It is worth noting that the technical cooperation reached between Xpeng Motors and Volkswagen has also helped Xpeng Motors to achieve cost reduction to a certain extent.
In July this year, Xpeng Motors bid farewell to "singleness" and first joined hands with Volkswagen, and the two sides will jointly develop two B-class pure electric vehicle models sold under the Volkswagen brand in the Chinese market. Volkswagen's $700 million increase in Xpeng has also increased the latter's ability to resist risks. In August, Xpeng Motors and Didi jointly announced a strategic cooperation to acquire the relevant assets and R&D capabilities of Didi's smart electric vehicle project, take over the core team and assets of Didi Automotive, and plan to launch an A-class smart electric vehicle to enter the market, priced at about 150,000 yuan.
However, some analysts believe that if Xpeng Motors wants to increase sales and scale, it needs to be more characteristic in terms of product positioning and marketing services. Zhang Yongbin, an analyst in the automotive industry, said: "Xpeng Motors has been strengthening its intelligent strategy, but intelligence is also the focus of all new energy vehicle brand layout, and how to implement core competitiveness and make differences is more important." ”
Recently, Liu Lanjichuan, head of Xpeng Motors' autonomous driving AI, and Wu Xinzhu, vice president of Xpeng Motors' autonomous driving, have left one after another, and Xpeng's autonomous driving R&D team is facing restructuring and other problems, which has also added more uncertainty to Xpeng Motors.
The latest research report released by Bank of America Securities pointed out that from the second half of 2023 to 2025, the new models launched by Xpeng Motors will bring a significant increase in sales, while strengthening cost control will improve the company's profit margin from 2024 to 2025. Analysts expect Xpeng Motors to be profitable in 2025.
Good students are ideal, and production capacity is urgent
While both NIO and Xpeng were confused about how to make a profit, Li Auto had been profitable for three consecutive quarters. Since the fourth quarter of 2022, Li Auto has turned a profit and taken the lead in getting rid of losses among new automakers such as "Wei Xiaoli". In the first half of 2023, it achieved a net profit of 3.244 billion yuan.
From the quarterly data, Li Auto's performance in the second quarter was quite eye-catching, with revenue and net profit hitting record highs, with month-on-month growth rates of 52.21% and 146.66% respectively.
For emerging automakers, gross profit margin is the most important indicator. In the industry's view, gross profit margin of more than 20% can ensure the long-term healthy development of car companies, otherwise once the financing channel is frustrated, it will be difficult for car companies to continue to make long-term investment such as R&D and delivery.
Li Auto's overall gross profit margin in the second quarter was 21.8%, a year-on-year increase of 0.3%, and vehicle gross margin reached 21.0%, both year-on-year and quarter-on-quarter growth. It is worth noting that Li Auto has surpassed Tesla in terms of gross margin for two consecutive quarters. Public data shows that Tesla's gross profit margin in the first two quarters of this year was 19.3% and 18.2%, respectively. In the first half of the year, its overall gross profit margin reached 21.2%, of which the gross profit margin of automobile sales business was about 20.5%.
"The gross margin for the second quarter reflects the efforts of the company's sales and marketing teams." For the gross profit trend in the third and fourth quarters, Li Tie, co-founder and CFO of Li Auto, said on the earnings call, "From the perspective of the entire year, there are still 5 months before the end of the year, and we still hope to maintain the gross margin guidance of more than 20% for the whole year." ”
However, with the gradual increase in sales and the pursuit of higher market share, the tight production capacity has become a problem that ideal cars urgently need to break through.
Ideal expects deliveries of 100,000~103,000 units in the third quarter. Combined with the delivery of 34,100 units and 34,900 units in July and August, only 31,000~34,000 units will be completed in September.
In the earnings call, Li Xiang confessed, "The current sales guidance is indeed the limit of production capacity in the third quarter. ”
According to the research report of Deppon Securities, there are currently three main production lines of Li Auto, namely Changzhou base production line 1, Changzhou base production line 2 and Beijing green intelligent factory (planned). The production capacity of the three lines is 20,000~25,000 units/month, 10,000~12,000 units/month, and 100,000 units/year (planned). The above three production lines produce the ideal L9 and ideal L8, the ideal L7 and the ideal L8, as well as the planned pure electric models.
"In the ideal automobile Changzhou intelligent manufacturing base has two production lines for the production of L7, L8, L9, purely from the perspective of vehicle production capacity, if it is a double-shift system, our production capacity can reach up to 50,000 units per month. At present, the main bottleneck is in the supply of parts, mainly because production demand has improved compared to the target set at the beginning of the year. Ma Donghui, president and chief engineer of Li Auto, said bluntly when talking about the main reasons for the company's current production bottleneck, although the strategy and plan to increase production capacity have been formulated in the second quarter, and the parts production line is still being debugged and verified, it will take some time to release new production capacity.
Photo: Ren Yafei
Ideally, the pressure comes not only from capacity, but also from unknown challenges on the pure electric track.
At the earnings call, Li Xiang revealed that the first 5C pure electric super flagship model Ideal MEGA will be released at the end of this year. Next year, four cars will be released, three pure electric models, and an extended-range SUV, excluding the ideal MEGA. The challenge that Ideal Auto is about to deal with is how to maintain high gross margins and low expense rates while expanding at a high speed.
A research report by Ping An Securities believes that Li Auto has not yet proven itself in the field of pure electric vehicles, and if the sales of pure electric models are not good, it will affect its valuation level; In addition, after the launch of pure electric models, the investment of ideal automobiles may increase significantly, and various indicators such as gross profit margin may also decline.