In the face of the failure of the first electric car MEGA, Li Auto released an internal letter entitled "How to Solve the Problems Facing Li Auto" on March 21 to reflect on this. In the internal letter, Li Xiang said that there are two problems with MEGA's listing, one is the rhythm problem, and the other is that the internal is too focused on sales and the desire for sales is too strong.
In terms of rhythm, Li Xiang said that the essential reason is that the ideal MEGA is operated from the 0 to 1 stage (commercial verification period) as the 1 to 10 stage (high-speed development period). He pointed out that the ideal MEGA and high-voltage pure electric must go through a similar 0 to 1 stage of the ideal ONE and extended range electric, and cannot have the business potential energy from 1 to 10 as soon as the ideal L series is listed, which is a misjudgment of the ideal strategic rhythm of pure electric vehicles. The chaotic rhythm of the Ideal MEGA also allowed the sales team to greatly reduce the time and energy of serving L series users, and the main model Ideal L8 did not even have a place in the store.
In this regard, Li Xiang proposed a solution, which will operate the ideal MEGA according to the rhythm from 0 to 1, focusing on the core user groups and cities with strong high-end pure electric consumption capacity. At the same time, Li Xiang will abandon the full-scale sales strategy, concentrate on large retail centers in top cities for product experience and test drives, and accelerate the construction of supercharging stations in these cities. When the stage from 0 to 1 is effectively completed, it will be promoted to more cities and larger user groups.
Secondly, Li Xiang pointed out that the entire company has a desire to focus too much on sales. He pointed out that Li Auto paid too much attention to sales and competition from top to bottom, which made desire go beyond value, and significantly reduced the user value and business efficiency that Li Auto was best at. "The pursuit of desire makes us become the person we hate. Li Xiang said. In this regard, Li Xiang said that he would reduce the expectations and desires of sales and return to healthy growth. Focus on users rather than competition, focus on value rather than desire. Focus on the improvement of user value and management efficiency that we are best at.
Li Xiang, CEO of Li Auto
This statement seems to mean that Li Li is going to lower its sales forecast. Ideal's annual sales this year are 800,000 units, while the MEGA, which was launched in March, aims to achieve 70,000 to 80,000 units. The car, which went on sale on March 1, will mean an average of 7,000 to 8,000 units per month this year. In 2023, Li Auto delivered a total of 376,030 new vehicles, a year-on-year increase of 182.2%. This year, MEGA is out, and Ideal will also launch its L series of L6 products, and the price is expected to enter within 300,000. This would be where the ideal maximum increment would be.
Li Xiang believes that the March 2024 question is an "enhanced version" of the ideal question in 2022. "Seek truth from facts, and correct when you know your mistakes". Li Xiang said.
MEGA, in fact, is not a failure
As a seven-seat pure electric MPV priced at 559,800 yuan, MEGA is a product that has received more attention recently. When MEGA was launched on March 2, Li Xiang said that MEGA would be the next explosive product of Li Auto, becoming the No. 1 product with more than 500,000 sales. He also stressed that the goal is to be "the number one seller regardless of category and energy form". However, after the launch of the MEGA, its overly avant-garde styling caused a crisis of public opinion about the model. There are many voices calling the MEGA a "coffin car", which makes some consumers hold back.
On the other hand, the price of the car is more than 500,000 yuan, and it is not competitive enough in the industry. This product is 100,000 yuan higher than the most expensive L9 in the ideal L series, so many people have chosen similar products such as Xpeng X9, Denza D9, and VOYAH Dreamer. On March 17, some media broke the news that the expected orders for MEGA within 24 hours were about 3,000, but the final result did not meet expectations after the listing, and only half of the target, that is, about 1,500 orders. In the first half month of its launch, orders for MEGA increased by 2,500 units, and nearly 4,000 orders were received half a month later.
The media also revealed a key statistic, Li Xiang's factory MEGA production capacity in March was 5,000 units. That is, sales in the first month may be around 5,000 units. However, the first month's sales are not telling, but rather depend on the recent new orders. So how MEGA performs, it may have to start next month. Judging from the current performance, the performance of the first month is still far from Li Auto's expectations.
In order to become the No. 1 product with more than 500,000 sales, it means that the sales volume of the Ideal MEGA must reach 10,000 units per month. Judging from the sales volume of the models currently on sale, the model with the largest sales volume of more than 500,000 yuan is the BMW X5 long wheelbase version, with monthly sales of about 8,000-10,000 units. Ideal's annual sales this year are 800,000 units, while the MEGA, which was launched in March, aims to achieve 70,000 to 80,000 units. The car, which went on sale on March 1, will mean an average of 7,000 to 8,000 units per month this year.
Even with a slightly lowered internal target, MEGA's performance is still a long way from expectations. However, if MEGA can achieve the monthly sales target of 3,000-4,000 units a month, it does not seem to say that the product has failed. Even in the segment, this number is not bad.
At present, there are not many pure electric MPV products in the pure electric MPV market segment, including ZEEKR 009, Volvo EM90, VOYAH Dreamer, Hechuang V09, Roewe imax 8 ev, Denza D9, Xpeng X9 and other products, among which the only pure electric products with monthly sales of more than 1,000 units are ZEEKR 009 and Xpeng X9. Even the most sold Denza D9 will only sell more than 7,000 units of its all-electric version in 2023. As the most direct competitor, ZEEKR 009 is priced between 500,000 and 580,000 yuan, and the monthly sales scale is stable at 1,000 to 2,000 units.
Mistaken pricing strategy
However, in the ideal reflection, in fact, Li Xiang did not mention the real reason for the impact of the L series, but only said that because of the launch of MEGA, the sales team has greatly reduced the time and energy to serve L series users. But in fact, with the increase in sales of Huawei, the biggest rival of Ideal, the sales of the Ideal L series have already been affected. According to reports, the number of new orders for the L Series is currently around 1,000 units per day, which is less than expected. According to Li Xiang's previous expectations, sales will recover to the level of 50,000 units in March and reach more than 70,000 units per month in June.
While the opponent was approaching strongly, Ideal also made a mistake in the facelift. For example, on the same day that MEGA was launched, the ideal 2024 L series was collectively launched, and the upgrade idea at that time was that the price would remain unchanged and the configuration of the whole series would be increased. For example, the 2024 Ideal L series is equipped with air suspension as standard, 9 airbags as standard, new dual-chamber distal airbags, and all intelligent space chips will be upgraded to Qualcomm 8295. However, at present, the new car is basically increased and reduced, such as the cost of ZEEKR 001 increased by 50,000 and the price fell by 57,000.
The rest of the new products basically adopt this idea, and adhere to the ideal of price, and its idea of enhancing value has not been recognized by the market. Recently, when the sales volume was less than expected, Li Auto adjusted its product sequence and launched a cash discount of 5,000 yuan only 11 days after the new car was launched. But this price cut has brought new negative public opinion to the ideal.
The reason is that in order to avoid the impact of short-term price reductions, after the official announcement of the cash discount of 5,000 yuan, Li Auto withdrew the first push of the "2024 Ideal L Series, the first sale of car purchase rights and interests to upgrade", and re-pushed the "2024 L Series Series Product Announcement" through directional shielding, blocking all old car owners. In the end, Ideal proposed to compensate the owner of the car who had just picked up the car with 80,000 points, but it still made many car owners feel that they had been "stabbed in the back". Therefore, many car owners have poured into the official APP to complain under the preferential announcement.
In fact, the styling of the MEGA itself is not a big problem, and the pursuit of sales is not a problem in itself. The core problem is that Ideal overestimates the demand of the high-end pure electric MPV market, or overestimates its ability to transform the market by redefining products. Moreover, in the case of MEGA's products, the ideal itself has not really been reviewed. MEGA pursues too much novelty in the shape and ignores the product itself. For example, on the eve of Apple's announcement of the construction of a car, Li wanted to say that if Jobs was still alive, the Apple car should be like MEGA.
But is MEGA an epoch-making technology or not?
In fact, at last year's Guangzhou Auto Show, Ideal showed off its MEGA body-in-white, when the MEGA's A-pillar hot-stamped steel was 1,500 megapascals, and the roof was bolted to the link, which caused a huge controversy. In particular, one of the company's body leaders mentioned it in the side body structure of the MEGA. "These two pieces are added together, one piece is 1,500 megapascals, and one piece is added to a piece of 3,000 megapascals. This has raised concerns about the safety of the product. These also lay hidden dangers for MEGA to be questioned in the future.
In terms of pricing, too much emphasis is placed on profits, or confidence in brand appeal. In the age of electric vehicles, there are not so many so-called believers. For example, Xiaomi's recent SU7 pricing has a classic network joke. "99,000 is Thor, 149,000 is Lei Zong, 199,000 is Leizi, 299,000 is Lao Lei?" This is not only a ridicule of the price, but also a profound discussion of the positioning of the automobile market. Of course, the same applies to the Ideal MEGA.
Although MGEA is not a failure, it is enough to make the ideal re-examine itself.