Spend 50 million to buy snacks and lose 200,000 yuan to sell a car, when will the money-burning war of the new forces end?

Some time ago, "Every time Weilai sells a car, it will lose 200,000 yuan" on Weibo hot search, this new car-making force known for its "boutique service" has not been losing money for 9 years, and finally let the people who eat melons can't stand it.

On the other hand, other new car-making forces, although Li Auto has made a profit, but Xiaopeng, Leap, Nezha, and Zeekr Automobile are still losing blood, especially now that the competition in China's auto market is becoming more and more fierce, and the financing environment is not better than before, including Weilai, they are trying to change the business logic of throwing money on scale and storytelling in the past, and begin to emphasize "hardening the village, fighting a dumb battle, and selling cars one by one".

"Things that don't help companies improve their financial performance in three years are either canceled or delayed. On November 20, the founder of NIO said this in an internal speech on the ninth anniversary.

Can shrinking the front line and reducing costs make the new car-making forces profitable? Can the new car-making forces stand out from the brutal market competition on their own? And how long can these new car-making forces in the limelight lose money?

Spending too much

As representatives of new car-making forces, Weilai, Xpeng and Ideal are not low in terms of revenue, but they can't afford to spend too much.

There are several classic cases where new car-making forces can spend money. 300 people in the R&D department of Byton Motors in North America eat 50 million yuan of snacks a year, with an average of 400 yuan per person per day, and thousands of yuan per box of employee business cards. When the number of employees is less than 1,000, there are as many as 29 vice presidents, and the treatment is comparable to that of the world's top 500 companies.

The ratio of snacking and marketing expenses is just a drop in the bucket. Brand public relations, activities, advertising, auto shows, press conferences, car owner operations, etc., which one costs money, the press conference is set on the bank of the Huangpu River or the small waist of the Pearl River, whether to use 2000 drones to pose a big LOGO, or to invite a well-known band, whether to open a high-end experience store in a first-tier city bronzing area, or to open two theme restaurants in the literary and artistic community of Force, whether to invite a well-known traffic artist to endorse, or the founder himself to end the scene, behind every copper plate is clamoring.

A public relations person from a new car-making force told Xiaozhi that they have to put more than 50 million yuan on outdoor advertising in a quarter, but it is still difficult to sell cars. There are few people who advertise and buy, and no one buys if they don't advertise!

According to the statistics of the 2022 annual report, the proportion of marketing & management expenses of new EV manufacturers has almost reached double digits, and the contrast with traditional car companies is even more obvious. Evenly distributed to each car, NIO has a marketing cost of 86,000 yuan per car after apportionment, becoming the most willing to spend money on marketing among Chinese car companies, while Xpeng is 55,400 yuan, and Li Auto corresponds to a single car marketing cost of 42,500 yuan. SAIC, China's largest auto group, spent only 5,700 yuan on the marketing of its bikes last year. And BYD, which sells the most hot, is only 8,400 yuan.

As long as advertising can reach consumers and enhance brand awareness, it is not a waste, but as a high-incidence area of corruption, appropriate control of marketing rates is a compulsory course for new car manufacturers.

Sales are too low, earnings are too small

Although in the field of public opinion, the joint venture car companies have failed. Dong Changzheng, senior executive deputy general manager of Toyota China, said that "looking forward to the failure of the joint venture is definitely not a prospect that China's auto industry should see", and then a senior executive of GAC Toyota said, "The joint venture is not a backward representative, it has maturity and stability, and has the resilience of a latecomer".

However, the new car-making forces that have won the volume advantage and the war of words are far from being able to compare with their old rivals in terms of sales and profits. In the first half of 2023, Li Auto delivered 139,000 units, while NIO, Leap, and Xpeng delivered 55,000, 44,500, and 41,000 units, respectively. In terms of revenue, Li Auto's revenue in the first half of the year was 47.44 billion yuan, Weilai was 19.4 billion yuan, Xpeng was 9.1 billion yuan, and Leap was 5.813 billion yuan. Ideal's net profit in the first half of the year was 3.24 billion yuan, while Weilai lost 10.65 billion yuan, Xiaopeng lost 5.14 billion yuan, and zero-run lost 2.2 billion yuan.

In the half year from April to September 2023, the net profit of seven Japanese automakers, Toyota, Honda, Nissan, Mazda, Suzuki, Subaru, and Mitsubishi, increased by 57.7% year-on-year to 7.62 trillion yen, or about 368 billion yuan. It is 104 billion yuan higher than the profit of all Chinese auto companies above designated size, which is equivalent to the revenue of 6 BYD, 12 SAIC and 40 BAIC in the same period.

In order to participate in market competition, it is necessary to have sufficient ammunition and capital as a guarantee. Li Bin said: "In the next few years, the intensity of competition will only increase and will not decrease, and we must be mentally prepared." A lot of fantasies to give up. "For example, everyone thinks that high-end cars, trams should be sold more expensive than oil cars, no matter how bad it is, it is the same price of oil and electricity, but in fact, in the field of high-end cars, oil and electricity are upside down, and the EQE of this car has dropped by more than 100,000, which is cheaper than fuel vehicles of the same level.

The new leading car-making forces have passed the era of complacency after monthly sales of more than 10,000, but they are desperately trying to increase sales. NIO said that from July and August this year, it will establish the ability to sell 30,000 units per month, and Li Auto is challenging the goal of selling 50,000 units per month, and according to media reports, Li Auto will give supply chain companies a sales forecast of 800,000 units in 2024. Whether these goals can be achieved and whether they can provide sufficient turnover and profits is another story.

Rejection of the "giant baby"

"How long can the new car-making forces lose?" depends on when these car companies can correct their mentality, have the heart of "supporting their families", and whether they can get a steady stream of financial support before they can officially support their families.

In 2019, some media exposed that NIO had a cumulative loss of 40 billion yuan in 4 years, and Li Bin said very aggrievedly: "NIO is just a 4-year-old child, and a 4-year-old child cannot be expected to support the family." According to some data, the average life expectancy of China's private enterprises is only 3.7 years, and 4 years can be called the prime of life. It's like a 30-year-old man telling you, "I'm still a baby." ”

Around 2016, under the wave of entrepreneurship and entrepreneurship and mobile Internet, many fast-growing and dying companies were born, and they were vigorous. Some of them don't think about profits, they always think about how to expand their valuations, and some even don't hesitate to cheat. You ask him how your company makes money, and he says that you are too small and it is not time to make money. Capital and entrepreneurs are coerced by each other, and no one can slow down.

In the era of the new energy automobile industry running blindfolded, LeTV, Byton, Singularity, Bojun, and most recently Weimar and Evergrande Automobile, once the shipments are less than expected, the financing can't keep up, and even "live like livestock" can't do it, and can only watch the APP be deactivated, the car machine is paralyzed, and the car bought for hundreds of thousands of dollars becomes scrap metal that cannot be moved.

Therefore, the advice of a serial entrepreneur is that in the long run, to become a company that can continue to operate business, only in this way can it continue to make commercial value, can it feed its team, and can it pay taxes, which is the meaning of a company's existence, otherwise it should not exist.

Whether it is "picking", or layoffs, whether it is cutting unprofitable business units, or recruiting more partners, Ideal, Weilai, and Xpeng have taken a step forward.