Chery will invest 400 million euros to set up factories overseas and sell all new energy vehicles

Chery Automobile has made frequent moves in the field of new energy, but its current performance is not as expected

"China Science and Technology Investment", Long Min, Li Wanting

On April 19, Chery Automobile Co., Ltd. (hereinafter referred to as "Chery Automobile") signed an agreement with Ebro-EV Motors, a Spanish automotive company, to establish a joint venture in Barcelona, Spain, to produce new electric vehicles. Chery Automobile has thus become a major player in BYD (002594. SZ) is the second Chinese automaker to set up a plant in Europe. According to the agreement, Chery Automobile will take the lead in the production of Omenda and other models in the third and fourth quarters of this year, and is expected to produce 50,000 units annually by 2027 and 150,000 units in 2029.

This is another major move by Chery Automobile in the field of new energy vehicles since April. Previously, on April 11, at the Hongmeng Ecological Spring Communication Conference, Chery Automobile and Huawei Terminal Co., Ltd. (hereinafter referred to as "Huawei") cooperated with the first smart car Zhijie S7 was re-launched after a price reduction.

From April 15th to 19th, Chery Automobile successively released the second model of the Epoch of Epoch Epoch ET and the mid-size electric hybrid SUV Fengyun T9, in addition to the first new energy MPV Xingtu E08.

In just 10 days, Chery Automobile's new energy models announced and launched have covered all categories of sedans, SUVs and MPVs. However, in the second half of the increasingly fierce competition in new energy, Chery Automobile still faces many challenges.

The performance of new energy vehicles was less than expected

According to the sales data released by Chery Automobile, from 2020 to 2023, Chery Automobile's domestic sales have steadily increased from 730,000 to 1.881 million units, with a growth rate of 157.67%. However, in terms of new energy vehicles, Chery Automobile's performance is not satisfactory.

According to the data released by Chery Automobile, in 2022, Chery Automobile will sell a total of 1,232,700 vehicles, of which 232,800 will be new energy vehicles, and the penetration rate of new energy vehicles will be about 19%; in 2023, Chery Automobile will not announce its new energy vehicle sales; in the first quarter of 2024, Chery Automobile will sell a total of 529,600 vehicles, of which 60,100 new energy vehicles will be sold, and the penetration rate of new energy vehicles will be about 11%. In more than a year, Chery Automobile's new energy vehicle penetration rate is close to halving.

Not only that, in terms of the proportion of new energy vehicle sales, Chery Automobile has long relied on mini vehicles, and the two micro models of Chery Little Ant and Chery QQ Ice Cream have become responsible for sales. So far, this situation has not been fundamentally reversed. Taking the sales data in March 2024 as an example, the sales of Chery QQ ice cream and Chery Little Ant are 3,186 and 1,479 respectively, while the sales of Xingtu Yaoguang C-DM and Fengyun A8 are 1,592 and 1,191 units, and the sales of Xingtu C-DM are only 66 units.

Previously, Yin Tongyue, chairman of Chery Automobile, said at the "2023 Chery Technology Day": "Chery will no longer be as 'polite' in the field of new energy next year as before, and we will enter the top position of the new energy vehicle ranking and achieve the latecomer." ”

But in fact, Chery Automobile is not a "latecomer" in the true sense. As early as 1999, Chery Automobile began to carry out research and development of energy-saving and new energy vehicles, and in April 2010, Chery New Energy Vehicle Technology Co., Ltd. was formally established. However, after the launch of the first pure electric vehicle Riich M1 EV and the first extended-range pure electric vehicle Riich S18D in 2010, Chery Automobile continued to launch the pure electric vehicle Chery EQ1 in 2016, and during this period, BYD (01211.HK) has basically completed the full coverage of pure electric products in the mainstream market segment.

As for the reason for the long launch cycle of Chery Automobile's new energy vehicle products, Zheng Lei, chief economist of Samoyed Cloud Technology Group, told the reporter of "China Science and Technology Investment": "Compared with competitors, Chery Automobile may have insufficient overall planning in the field of new energy, resulting in a slower pace of new product launches. ”

Because of this, Chery Automobile, which wants to become the head of new energy vehicles in China, has begun to further optimize its planning in the field of new energy and continuously improve its competitiveness in the field of new energy vehicles.

On November 9, 2023, at the 2023 Chery Fengyun New Energy Night held in Beijing, the Chery brand new energy sequence "Fengyun" was officially released, and at the same time, the two concept models of Chery Fengyun A9 and Fengyun T11 ushered in their world premieres. According to the plan, the "Fengyun Sequence" will fully cover the hybrid, extended range and pure electric markets, and launch 11 new models within two years, covering SUVs, SD and MPV categories, to fully meet the different market needs of A0-C class.

In addition, Chery Automobile's sub-brand Xingtu has also continued to launch new energy vehicles focusing on mid-to-high-end new energy vehicles. On December 20, 2023, Chery Automobile launched the first model of Xingtu Star Era, the Star Era ES, which is positioned as an ultra-comfortable and long-range smart sedan. On April 15, 2024, the second model of Xingtu Epoch Epoch officially opened pre-sale, with the goal of "becoming the best electric large SUV within 500,000 yuan and refreshing the value of China's high-end new energy SUV to a new height".

But in reality, the market performance of Star Era ES is not ideal. According to the data of Knowing Chedi, from December 2023 to March 2024, the sales of Star Era ES will be 740, 504, 482 and 490 respectively, showing an overall downward trend. In comparison, the Geely Galaxy E8, which goes on sale on January 5, 2024, sold 3,058, 2,089 and 2,541 units from January to March, respectively.

We hope that Huawei's in-depth intelligent cooperation will be carried out

In order to reverse the poor sales of new energy vehicles, Chery Automobile has launched a number of sub-brands to stimulate sales. Chery Automobile not only lays out the new energy vehicle track through the four brands of Chery New Energy, Xingtu, Jietu and iCAR, in addition, according to the query of China Trademark Network, Chery Automobile has successively applied for the registration of the "Yueji" trademark since September 2023, and has applied for 6 trademarks so far, which is expected to be released in the third quarter of this year, and its first model will be officially launched at the end of the year.

From the current point of view, Chery Automobile's multi-brand strategy has achieved certain results, but there is still a big gap between Yin Tongyue's goal of "entering the top three in the new energy vehicle industry in June and becoming the second by the end of the year". According to the data of the Passenger Association, Chery's new energy vehicle sales in March were 17,800, up 184.1% year-on-year, compared with Changan Automobile (000625. SZ) sold 47,000 units, while second-place Tesla (TSLA) sold 62,400 units. Chery Automobile still needs to make a lot of efforts to enter the top three in the new energy vehicle industry.

In addition to the successive sales of new energy models such as the Epoch ES, Fengyun A8, Epoch ET and Fengyun T9, Chery Automobile also pinned its hopes on cooperation with Huawei for the development of new energy vehicles.

On April 11, Yin Tongyue bluntly said at Huawei's Hongmeng Ecosystem Spring Communication Conference that cooperation with Huawei is Chery's core strategy and first priority strategy, and Chery Automobile's top leaders in charge of R&D and manufacturing will participate in it. Yin Tongyue also said that China can't do without Huawei if it wants to build a good car, and if China's car wants to become a world power, it needs the blessing and empowerment of Huawei's Hongmeng system.

However, the cooperation between Chery Automobile and Huawei has been slow to advance. As early as December 6, 2020, Chery Automobile signed a comprehensive cooperation framework agreement with Huawei. The agreement stipulates that the two parties will cooperate in the fields of cloud computing, big data, and intelligent vehicle solutions to jointly promote the development of both businesses. However, the first model jointly built by the two parties, the Zhijie S7, was only completed on November 28, 2023.

Not only that, although the Zhijie S7 has received more than 20,000 pre-sales orders in 20 days since the pre-sale opened on November 9, 2023, due to problems such as factory relocation and shortage of core components, the Zhijie S7 has experienced delivery difficulties. Affected by this, from November 2023 to February 2024, the monthly sales of Zhijie S7 will only be 115 units, 784 units, 604 units and 794 units respectively.

At this communication meeting, Yu Chengdong, executive director of Huawei, CEO of Device BG, and chairman of Intelligent Vehicle Solution BU, re-released the Zhijie S7, and reduced the price by 20,000 yuan on the basis of increased configuration, with a price of 249,800 to 349,800 yuan. Hongmeng Zhixing officially announced on April 15 that from April 13th to April 14th, Zhijie S7 Dading has exceeded 2,000 vehicles. Whether the Zhijie S7, which overcomes many difficulties and is listed for the second time, can succeed may become the key to whether Chery Automobile can enter the "first camp of new energy" in China.

The reporter sent a letter to Chery Automobile on the sales of new energy vehicles, transformation and development, and multi-brand strategy, but has not received a reply so far.