Can a calf still be "cowped"?
Text: "Chinese Entrepreneur" reporter Kong Yuexin
Edited by Ma Jiying
Header image source: Respondents
Break through everywhere.
As the CEO of Maverick Electric, Li Yan may have been deeply touched by this in the past two years.
Especially in 2023.
According to the financial report, for the whole year of 2023, Maverick's revenue will be 2.6518 billion yuan, a year-on-year decrease of 16.3%, and the annual net loss will be 271.8 million yuan, compared with the net loss of 49.5 million yuan in the previous year, and the loss margin will expand significantly. Also in a downward trend is sales, with Maverick electric vehicle sales of 709,800 units in 2023, a year-on-year decrease of 14.65%. This is the second consecutive year that the company's sales have declined.
Affected by performance and other aspects, the company's market value also fell from more than $4 billion at the peak to $169 million (as of the close of trading on April 16).
In contrast, peers are gaining momentum. In 2023, Yadeio will sell 16.5 million electric two-wheelers, a year-on-year increase of about 17.9%. is also a latecomer, and the sales volume of electric two-wheelers of No. 9 Company reached 1.4715 million units, which is twice the sales volume of Maverick Electric.
"Internal and external troubles. In an exclusive interview with "Chinese Entrepreneur", Li Yan looked back on the past two years. Li Yan graduated from Stanford University with a Ph.D. in electrical engineering, worked in KKR, McKinsey, Qualcomm and other companies, joined Maverick Electric in January 2016, and led Maverick Electric to go public in the United States in 2018. In Li Yan's view, the sluggish performance in the past two years is the result of various internal and external factors, such as the rise in lithium battery prices, the bankruptcy of overseas dealers, and the unexpectedly unexpected growth of the second curve......
It needs a win to boost confidence.
In the first quarter of 2024, NIU sold 129139 units, of which 110115 units were sold in the Chinese market and 19,024 units were sold in the international market. The company forecasts sales in 2024 to be between 1 million and 1.2 million units. While maintaining the growth momentum of the product, the channel will also be expanded, Li Yan said that this year, the channel of Maverick Electric will increase by another 1000~2000 stores.
However, in order to get out of the downturn, Li Yan needs more achievements.
Rethinking "high-end"
According to statistics, the sales volume of two-wheeled electric vehicles in 2023 will be about 55 million units, with an average price of more than 3,500 yuan for about 16 million units, and sales of more than 5,000 yuan for about several million units, which is a very broad market in Li Yan's view.
Therefore, at the new product launch conference of Maverick on February 29 this year, Li Yan released the electric motorcycle NX, electric self NXT, and off-road electric motorcycle X3 three new products, with an open price of 6299 yuan to 29980 yuan. The industry generally believes that two-wheeled electric vehicles above 4,000 yuan belong to the high-end market.
Photo: Kong Yuexin
Contrary to the external voice of the high-end two-wheeled electric vehicle, Li Yan's actions show that Maverick Electric will continue to adhere to the high-end strategy.
However, for the price of Maverick's new products, several dealers from Guangdong said that it was a bit "high". "Most of our customers are young, and the price range of tens of thousands is unaffordable for many non-white-collar users. After a brief discussion, several people believe that their sales focus will be mainly on products in the 6,000 yuan range.
At first, Li Yan also held a similar view, believing that new products in the mid-to-low-end price range might be more popular, but after the product was launched, he found that the market feedback exceeded expectations.
In an interview with "Chinese Entrepreneur" in early March, Li Yan said that the best selling new products are 6,000 yuan and 12,000 yuan versions, of which the 12,000 yuan version accounts for 45%~50% of the shipments. Due to the inconsistency with the estimate, the early production capacity did not keep up, and the calf was forced to "owe the goods". "A dealer called us and said that the store and warehouse were sold out, and we had to urgently transfer a truckload of goods to him. Li Yan said.
After paying some "tuition", Maverick Electric's internal understanding of "high-end" is also changing.
Affected by factors such as price and regulatory relaxation, the demand for lead-acid electric light motorcycles (electric mopeds, an electric two-wheeled vehicle between electric bicycles and electric motorcycles) has gradually increased in the market since the end of 2021. In the view of Zhou Wenjuan, CFO of Maverick Electric, the battery capacity of this type of (lead-acid) car is relatively high, and a single charge can support users to ride for 1 week, which just meets the needs of some consumers. However, the overall flexibility and organizational ability within Maverick have not kept up, and the upstream and downstream of the entire industrial chain from R&D, production, marketing, sales, distributors, and stores have produced a "blind spot" for this demand.
"At that time, we subjectively despised the lead-acid car, and always had the inherent impression that the lead-acid car was a cheap car (1000~2000 yuan), so we did not invest large resources in it. Zhou Wenjuan told "Chinese Entrepreneur".
In contrast, peers are very sensitive to this market, "but also developed a mass and not low-end (3000 ~ 5000 yuan) market". In April 2021, Emma A500 was launched, and in July 2021, Yadea M3 was officially launched.
Li Yan believes that compared with its competitors, Maverick Electric carries a heavier burden. "We want to open the era of intelligent lithium batteries, and others do not have this burden. Li Yan said.
Until mid-2022, Mavericks internally reversed its thinking and also wanted to fight for this part of the lead-acid car market. However, after the development and launch of relevant models, it has reached the sales off-season in the fourth quarter of 2022, and the first quarter of 2023 is still the off-season.
The sale of Maverick's mid-to-high-end lead-acid cars is equivalent to officially starting in the second quarter of 2023, which is almost 1 year later than other peers. The misalignment of products and market opportunities has directly affected the sales of Mavericks. In the first quarter of 2023, Maverick electric sales were 94,407 units, a year-on-year decrease of 42.3%. Sales in the second quarter were 211996 units, up 1.5% year-on-year.
From the perspective of the whole year of 2023, the sales of lead-acid vehicles account for 20%~25% of Maverick's total domestic total. "In 2024, the sales volume of our lead-acid cars may be between 20%~40%, no less than 20% is to cater to the market, and no more than 40% is because we want to ensure our own differentiation. Zhou Wenjuan said.
In terms of market segment coverage, Mavericks are also a little sluggish. "For example, female users will also spend 4,000 yuan to buy two-wheeled electric vehicles, but we don't have a particularly good 4,000 yuan product designed for female users. Li Yan said. In contrast, Nine, Emma, etc., have launched products specifically aimed at female users.
Li Yan said that since last year, the company has studied and adjusted the high-end market segment. For example, due to the needs of work, the electric vehicle used by the delivery person must meet the conditions of long battery life, large space (put the takeaway box), keyless Bluetooth start, etc., so the price of the electric car of the delivery person is tens of thousands of yuan.
For Maverick Electric, these are market opportunities to be tried.
Reopening overseas markets
In August 2023, Li Yan realized that Maverick Electric's overseas market "can't wait".
Maverick Electric's overseas business is mainly in the European market, which accounts for nearly half of Maverick Electric's overseas sales. However, Maverick's largest distributor in Europe fell into the dilemma of cash flow shortage during the epidemic, and business almost came to a standstill in early 2023. Until August 2023, when the dealer entered the stage of bankruptcy and reorganization, Li Yan found that there was no hope of a short-term solution, and decided to no longer rely entirely on the strength of the dealer, and began to build the company's own operation team, find local partners, and directly participate in the C-end sales of the store.
Photo: Xiao Li
However, it took time to build a team and set up a local offline store, and it wasn't until this year that the first results were achieved. During this period, Maverick had almost no products to sell in some markets in Europe, including Italy and France, resulting in a decline in sales in overseas markets in 2023.
In November 2023, Maverick Electric participated in the Milan International Two-Wheeler Show in Italy, and the stores invited to participate complained to Li Yan that there were no cars for sale. "I think this has been the main challenge of overseas business in the past two years. "We didn't do well because of competition, but because of operational problems." "Taking the French market as an example, the 100CC version of the 100CC version launched by Spain's SEAT company is priced at 6,000 or 7,000 euros, and the 125CC version launched by Maverick Electric is only 5,000 euros, but it is not available in the local market.
As the second business line launched by Maverick Electric at the end of 2021, the sales growth of short travel (scooters, Ebike) is also slower than expected. In 2022, Maverick Electric will sell about 100,000 scooters and less than a few thousand Ebikes, and in 2023, the sales of scooters will also be about 100,000 and five or six thousand Ebikes. "Slower than we thought. Li Yan said. One of the main reasons is that the sales channels of short-term travel products in overseas markets are mainly offline, and the distribution speed is slow, and they also need to adapt to completely different business rules from online.
In Europe, the booth of the relevant shopping mall can only place 6 or 7 products, which means that only 6 or 7 brands can be displayed. Only by achieving differentiation can we gain the recognition of the channel side and replace other brands.
Due to the lack of products in the past year, other Chinese brands such as Xiaomi and Nine have achieved full coverage of products from 299 to 1,000 euros. Li Yan said that the company made a pure carbon fiber electric scooter last year, priced at 1,799 euros, to seek a breakthrough with differentiation. "Although the sales volume is not high, Maverick did beat the brand out with this high-end car, and then successfully entered the store with a low- and medium-priced car. Li Yan said.
This process has been long and has exceeded the expectations of the Mavericks team. "At first, we thought that this kind of thing could not be done in six months or one year, but in many places it took a year and a half. Li Yan recalled.
Take Best Buy, a retailer with about 850 stores in the U.S., for example, and Maverick Electric began to engage with it in May and June 2022, and it wasn't until January this year that Maverick's products entered all of its stores. "Because he opened it for you in batches, at first let you into more than 30 stores, and then let you into some stores, not all at once. ”
According to public data, in 2021, Maverick Electric sold 49,891 vehicles in overseas markets, and 121053 units in 2022. In 2023, the total sales volume in overseas markets will be 108,800 units, a year-on-year decrease of 10.12%.
Unknown future
At the beginning of 2022, Li Yan could not have foreseen that the next two years would be so difficult.
"In 2021, the entire new energy track may not have foreseen that lithium batteries, which have fallen for several consecutive years, will suddenly increase in price by 70% in 2022. Li Yan said.
Photo: Deng Pan
Due to the increase in the price of lithium batteries, on March 11, 2022, Maverick Electric announced that it would raise the price of all lithium battery products from April 1 of that year, with an increase of 200~1000 yuan.
"Batteries account for 40% of the entire cost of Mavericks, and after the cost rises, companies have only two solutions, one is to sacrifice profits to maintain scale, and the other is to ensure product gross profit and give up part of the scale. Li Yan explained. Maverick chose the latter.
As a result of this choice, Mavericks did not meet the expected sales in early 2022 and were gradually thrown out of a position by their peers. The Nine sold 820,000 units in 2022, and the Maverick Electric sold 831593 units. In 2023, Maverick electric sales will decline to 709,800 units, while the sales of the Nine will be 1.47 million units.
There is also a gap in R&D investment. The financial report shows that in 2019~2023, Maverick's R&D expenses will total 634 million yuan, and the R&D expense rate will be 4.52%. Nine's R&D investment in 2019~2023 will be 2.482 billion yuan, and the R&D expense rate will be 6.19%.
In this regard, Zhou Wenjuan replied that the company's R&D investment is far more than that. Because Maverick is a U.S. listed company, the financial report is calculated according to the US accounting standards, and the billing for R&D is strict, so in addition to the data reflected in the financial report, there are some R&D expenditures that are not included in the financial report. In the past three years, Mavericks has invested nearly 100 million US dollars in research and development.
In order to expand its scale, Maverick has also laid out the low-end market through different product series. The results have made Li Yan mixed. The worry is that some product series have not "run out", such as the G series, which focuses on cost performance, but the performance of the F series in 2023 is remarkable, accounting for about 40% of Maverick's annual sales.
Judging from the overall sales scale, Li Yan believes that Mavericks still need to be cautious in the layout of the sinking market.
"Maybe we have to sell two or three million units a year before we can think about sinking. Li Yan said. His explanation is that Maverick currently does not have enough manpower and material resources to study the products needed in the sinking market, and he does not have the confidence to use existing products to enter the sinking market. Even with the same (lead-acid) products, the scale effect and cost structure of Mavericks cannot compete with Yadea and Emma, which sell tens of millions of units annually. In his opinion, this strategy of "attacking the strengths of others with one's own shortcomings" is not advisable.
At the 2021 global new product strategy conference, Maverick Electric once put forward a strategic goal of annual sales of 6 million units.
"I haven't figured out whether I want to reach 3 million or 6 million units in the Chinese market. Li Yan admitted, "In other words, the value created by 2 million units to Mavericks is not the same as that of making 6 million units? Apple's mobile phone only accounts for more than 10 percent of the market share, but it takes away 50% of the profits of the entire industry." ”
In his opinion, high-end and intelligence are still labels attached to Maverick Electric, but how to master the balance between survival and ideals is the test he faces.