With revenue of 120 billion and profits of more than 10 billion, why did Li Auto take the lead in breaking through?

People with good grades always hand in their papers first. In 2023, Li Auto almost delivered a perfect answer. Just after the Lantern Festival, Li Auto released its financial report. Last year, the total revenue exceeded 120 billion yuan, and the net profit is expected to reach 11.8 billion yuan. In the past year, Li Auto has not only become the fastest company in China to rank among the world's top 500 companies, but also the fastest car company to achieve large-scale profitability among China's new car-making forces.

Those who once regarded Wei Xiaoli as the three fools of new energy were blinded by the performance of Li Auto. In the future, Wei Xiaoli is afraid that only Weilai and Xiaopeng will be left stupid. Li Auto has always been in the midst of group ridicule and has grown rapidly. I haven't won in public opinion, but I haven't lost in sales. When Gaohe Automobile went bankrupt, Li Xiang, the founder of Li Auto, had already shouted out that he supported and encouraged the mergers and acquisitions of car companies. In other words, Ideal now regards itself as the first predator to go ashore, and is also ready to give the industry mergers and acquisitions integration, a little shock.

Why did Li Xiang take the lead in shouting the slogan of mergers and acquisitions? There are two main reasons:

First, the ideal has indeed gained a foothold in the high-end. At present, Li Auto is the only car company in China that can achieve large-scale profitability at a price of more than 300,000 yuan. The annual sales volume was 376,000 units, and the volume and price soared, ranking first among the new forces. A major factor that is overlooked by many people is that the ideal achieves such results without participating in the price war. When Tesla, BYD, Great Wall, Geely, and joint ventures all ended up fighting a price war, Li Auto basically did not reduce its price much, and stood firm at more than 300,000.

Li Auto has won the high-end market.

Second, the ideal account is too rich, with a cash balance of more than 100 billion. In 2023, Li Auto's net profit will be 11.8 billion, which is just the beginning. After entering 2024, Li Auto's net profit will be further amplified. The reason is simple, the ideal product matrix will be richer. In addition to the Ideal Mega that has already been released, there is also the Ideal L6.

L6 is a high-volume model, which will pull the unit price of Li Auto below 300,000 yuan for the first time, entering the range of 200,000 yuan, and compete head-on with the new M7 of Wenjie. Wenjie is the only opponent of the ideal.

However, in the captain's view, the question and the ideal are likely to go hand in hand in 2024, and the probability of being really beaten down is Cadillac, Lexus, Volvo and other second-tier luxury brands. For luxury brands, whoever lowers the price dies quickly. The Cadillac CT5 has been reduced by 70,000 yuan at one time, and the starting price has been pulled to 210,000 yuan, which does not mean that Cadillac's sales will skyrocket. On the contrary, it is just Cadillac's way of survival in the face of fierce competition.

In today's Chinese auto market, price reductions are not necessarily for promotion, but for survival. If you survive, you may not really be able to survive, but it is more likely to give yourself a booster. If it sounds good, it will be exchanged for quantity, and if it is ugly, if the price is not reduced, it will be unbearable.

Among the many new car-making forces, why is it the ideal car that is the first to break out of the encirclement? Many people ridicule the ideal, isn't it just a color TV, a refrigerator, and a big sofa? How can it be that it can reap 120 billion yuan in revenue? Is it true that the rich people who buy the ideal are fools? If we only look at the ideal in this way, we will never be able to figure out where the advantages of the ideal product are. If a product can open up the market, it must have its advantages. In the captain's view, Li Auto has three main killer features:

First, accurate demand positioning. The color TV is for children, the big sofa is for wives and parents, and the refrigerator is for guests and friends. There's nothing cooler than pulling a bottle of ice water out of your car on a hot summer day. Ideal does not pursue top technology, but pursues the ultimate experience. Ideal car is the most unfriendly to drivers, but the people who can buy the ideal are mainly based on family needs, and they are just willing to contribute.

This car is not fun to drive, but it can please children, wives and parents. Buying BBA is just external decency, while buying ideals is to return to the family and satisfy one's own emotions. Moreover, most of the car owners who buy the ideal have already owned BBA and do not need BBA to decorate their façade. In the past, I bought BBA for decency, but now I buy ideals for comfort. This ultimate demand satisfaction makes the ideal differentiated.

Second, accurate cost control. Ideal is the most popular among many new power brands. The core powertrain and basic configuration of the L7, L8 and L9 cars are almost identical, with only minor differences. This ensures that the components of the three cars are highly common to the greatest extent possible. Li Auto does not need to purchase and reserve a large number of parts, nor does it need to adjust the production line additionally, and the three cars will be mass-produced together to maximize the scale and minimize the cost.

The third is low-cost advertising and marketing. The first marketing director of Li Auto is Li Xiang himself. No matter what hot spots there are, whatever can be given, Li Xiang has to go up and rub it. Xpeng questioned Huawei's AEB technology, and Li Xiang immediately said: "The whole company learns from Huawei together." After making money, Li Xiang was not stingy, and distributed year-end bonuses generously, and by the way, there was another wave of topic traffic on Huawei's year-end dividends.

In fact, among the heads of major car companies in China, Li Xiang is the least educated. He only has a high school education, but among the new forces, he is also the most successful in building cars. Why? One of the big reasons is that he is the founder of Autohome. As a comprehensive automotive media platform, Autohome has allowed Li Xiang to get too much big data about car owners.

What kind of car do Chinese want? I don't need to feel it, I don't want you to think, I want big data to feel. The essence of Internet car manufacturing is to take Internet big data as the guide, find out the precise demand, and then use software technology as the entry point to improve the intelligence of new energy vehicles. As for electrification, it is up to the supplier.

That's what Tesla did. The motor and battery are outsourced to suppliers, and you can make your own electronic control and automatic driving systems. As a high-end car brand, it does not need to be recognized by everyone, only the recognition of target customers is enough. In the eyes of the Chinese people, the ideal car with no technical content has already made a certain reputation overseas through the parallel import car channel before it has been done in the overseas market.

For Li Auto, it does not need the recognition of the public, and it is enough to break into middle-class families.