There have been many recent topics in the automotive industry, from brake assist system failures and spontaneous combustion incidents to the “broken axle gate” event. Except for the spontaneous combustion incident, which has not yet been officially declared, the other two incidents can be considered to have been preliminarily resolved.
This reminds me of NIO and even WM Motors from a year ago when they were the talk of the town.
Crisis public relations has become the top priority for every new car maker. In the midst of crisis public relations, how to communicate with the group of car owners has also become crucial.
In addition to the hot topics, I noticed a small event that was not reported. This event made me realize that the user strategy of new car companies is not only a communication issue, but also closely related to product development.
The Dilemma of Hybrid Mode
On April 26th, Ideal Car officially released the V1.1.9 OTA instructions, stating that Ideal ONE energy mode has been adjusted to “pure electric priority” and “fuel priority”.
Less than 12 hours later, Zhang Xiao, the product director of Ideal Car, released another statement on the Ideal App, stating that the hybrid mode will be added back to Ideal ONE in the next OTA version.
In the statement, Zhang Xiao stated that we made a mistake and ignored the users who charge without poles, when in fact they are the differentiating advantage of Ideal ONE.
For a time, the “hybrid mode incident” caused heated discussion among users.
From the users’ feedback, we can see that they are not understanding of this measure.
On April 30th, at an Ideal communication meeting, I raised my question: When Ideal is iterating its products, is it based on user feedback or their own judgement?
Li Xiang’s response was: “Facing user feedback, we look at the data. We need to solve actual problems for users, or solve problems in value, rather than satisfying everyone’s experiences because of different preferences.We have an internal reputation system, which sorts all the information we collect according to level order and quantity. This is because we focus on sample size, which reflects the reality. Therefore, I will sort this information and then let the development team address the top 10 issues.
But this issue still troubles me. Since we sort the feedback data from users, why does the operation of adding back the function before OTA still occur?
My speculation is that ideally, the use frequency of hybrid mode was judged by data to be low, and then the hybrid mode was removed. However, after its removal, through user feedback, it was found that there were many non-station users who still needed hybrid mode, which led to the addition of hybrid mode again.
Because the hybrid mode itself is meaningful, it provides intermittent charging for non-station users while also requiring higher fuel consumption and NVH.
Thus, a data contradiction occurred. If we only focus on data, it indicates that although there are many non-station users, the use frequency of hybrid mode is low. So, how should we make decisions?
The fact is, after IDEAL became aware of user feedback, they quickly made adjustments and added the hybrid mode back. Let’s take a look at how the user feedback was after adding the hybrid mode back.
From the user feedback, some users believe that IDEAL did not truly understand the users’ needs and that the decision-making process was too hasty. However, most users expressed satisfaction since they received the results they wanted. Therefore, the entire incident was controlled within a small dissemination range.
As of the writing of this article, there has been no media attention given to this issue. This indicates that IDEAL’s quick solution was in basic agreement with the users’ needs.
In simpler terms, although there may be errors in IDEAL’s individual decision-making processes within their product iteration mechanism, the quick feedback and correction mechanism means that errors are quickly fixed.
However, this incident is not over, and it reflects a problem: maintaining the absolute objectivity of data in usage of hybrid mode is indeed low frequency, but without the proper use of data, it is unreasonable.
In other words, user feedback data and objective data are both necessary, and decision-makers’ understanding of data is particularly critical.
So, what is the logic behind IDEAL’s decision-makers’ understanding of data?
Software + Hardware Upgrade# IDEAL Automotive’s Software and Hardware Upgrades
Looking back to the communication meeting on April 30th, IDEAL announced not only software upgrades but also hardware upgrades.
The software upgrades mainly include: re-adding the hybrid mode (upgraded at the end of May), adding an off-road mode, optimizing the display of range, adding WeChat in-car version, adding a wheel hub perspective, optimizing the distance/active follow of automatic driver assistance systems, and improving the rate of automatic parking recognition.
While the software upgrades were expected, the hardware upgrades were not. This is because no car manufacturer has ever initiated hardware upgrades for users, except for recalls.
IDEAL ONE’s hardware upgrade includes free and paid categories. The free part consists of upgrading the seat and rear suspension upright assembly, and the paid part is that users can purchase fixed pedals.
About the hardware upgrades, Li Xiang had already revealed it in a live broadcast before the communication meeting.
After the news came out, there were two voices on the internet regarding the suspension upgrade: One voice is positive, mostly agreeing that IDEAL is reliable, and that those who chose to trust Li Xiang initially weren’t wrong. They’re more at ease if they buy the car after the upgrade.
One IDEAL ONE owner stated that “As an early owner, I feel that my choice is right. IDEAL has indeed fulfilled its promise of not shortchanging its owners. Rationally speaking, the product power of IDEAL ONE has improved. The hardware update is something I’ve never heard of before. The car was worth 328,000 yuan initially, and now it feels even more valuable.”
Another voice expresses doubts about IDEAL’s product quality and sees IDEAL ONE’s hardware upgrade as a recall. They wonder if there is a major deficiency in IDEAL ONE.
According to the users’ feedback we’ve collected, IDEAL ONE’s suspension has a slightly weaker ability to filter out small bumps, and the seat is slightly hard.
If there were significant safety deficiencies, recalls would have to be issued by the General Administration of Market Supervision.
However, in any case, there will still be some explanation costs for hardware iteration for non-core users.
Why is IDEAL doing this when the software and hardware upgrades have caused so much controversy?
The answer is to enhance product power and bring a better user experience.
But the cars have already been sold, so why bother with the user experience?
There are two reasons. One is in dealing with old car owners. Li Xiang once gave a figure: As of today, 50% of IDEAL ONE users are recommended by old car owners.
The other one is the new users in the future, because only by optimizing the car better can we attract more new users to place orders. In other words, the ultimate goal is to achieve higher sales.
However, the risk of hardware upgrade is much higher than that of software upgrade. Take the “hybrid mode incident” as an example. If a similar problem occurs with hardware upgrade, how can it be remedied? Tell the user to send the car back and take it apart again?
I think most users will definitely refuse such an occurrence.
Because such things have happened before, the cancellation of the double-armrest design by Li Xiang in the early stage caused internal disputes among car owners, and later Li Xiang explained that it was accepted by users out of concern for their safety.
So, why is Li Xiang still willing to pay such a high price to do hardware iteration? Because hardware upgrade has not only high cost but also higher user explanation cost.
Looking at the hardware upgrade history of the Ideal ONE, the last hardware upgrade was half a year ago, in October 2019.
That was the largest adjustment before the delivery of Ideal ONE, which added a variable intake grille, secondary double-layer soundproof and privacy glass for the second row, four silent tires and cancellation of the outer armrests of the second row.
Since the delivery of the Ideal ONE in December, in just four or five months, Ideal has carried out 2 hardware iterations and 3 software iterations. Another problem arises. Why is the upgrade frequency of the Ideal so frequent?
To trace the root cause, we need to start with Li Xiang’s statement of “manufacturing only one car within three years.”
Why manufacture only one car within three years?
The question of why Ideal only produces one car within three years still goes back to the first principle – what does Li Xiang want to do?
The answer is to make a car model that satisfies the actual scene needs of users. Because only by solving the actual scene usage needs of users can we solve the problem of sales increase.
But why only one model, not multiple models?
This is because there are not many car models that users can choose from in the current market of new energy and intelligent cars. If Ideal launches multiple models, there will be internal competition and conflicts.
For example, after Tesla launched Model 3, the sales of Model S significantly decreased. After NIO launched ES6, the sales of ES8 also significantly decreased.
Therefore, Ideal is easier to concentrate on polishing a car model at the current stage instead of launching multiple models.## Again, funding is also a problem.
Li Xiang once frankly admitted that the financing channels in 2018 and 2019 were very poor. In fact, only NIO, XPeng, and IDEAL managed to raise funds in 2019.
“I met many VCs and PEs who thought we were pretty good, and after meeting more than 100 of them, none of them actually invested.” Later, Li Xiang was able to obtain investment through a visit to his close friends, Wang Xing of Meituan and Zhang Yiming of ByteDance.
The result was that IDEAL Car raised $500 million.
Later, in an interview, Li Xiang said, “I was sick for three months and my entire immune system collapsed.”
Therefore, before finding the actual scenario demands of the next user, under limited funding conditions, focusing on polishing a car model is a more clear choice.
The degree of risk in making only one type of car can be imagined. For a three-year old enterprise, this single pivot point is everything. If it fails, the abyss is behind.
Regarding this issue, we can get the answer by looking back at the positioning of IDEAL ONE and the OTA details of IDEAL ONE.
For Li Xiang and IDEAL Car, they don’t have many trials and errors, and the entire market environment doesn’t allow them to have trial and error opportunities. Therefore, Li Xiang must choose a market that has a concrete demand and growth potential.
After six months of research, IDEAL Car came to the conclusion: The market is dads and moms. This is also why later in the minds of consumers, IDEAL ONE was positioned as a dad and mom car.
As for why they chose this positioning, it still comes down to the two factors mentioned above. First, in the current car market, the actual scenario demands of dads and moms have not been met. Second, Li Xiang believes that this is a growing market.
We won’t comment on whether this market is good or bad, but IDEAL took the first shot at this market.
In a market that targets specific demands, products need to be customized and developed.
In general, IDEAL ONE’s customized development lies in: Using extended range electric drive to meet the demand for comfort from dads and moms, and extended range technology eliminates range anxiety. Secondly, it meets the actual scenario demands of dads and moms who need a large, six-seat space.
Choosing an extended range has greater sales ambitions and seemingly more user-friendly, more convenient decisions; but in terms of financing, it is actually more difficult.
However, whether or not it can meet the actual scenario demands of users is not up to the manufacturer to decide; users are the ultimate experience.
If you know anything about traditional car companies, you would understand that a car model is always accompanied by some problems and deficiencies from its development to production and delivery to users. These issues and deficiencies can be big or small.The traditional solution for car companies is to launch the next generation of cars or use other car models to make up for these deficiencies, quickly creating a large fleet of cars. The fleet defense strategy is mostly aimed at competitors, while the successful products strategy requires targeting the user and clarifying their real needs.
However, an ideal approach does not require fleet defense at this stage, as mentioned above. Therefore, the ideal approach is to upgrade only one car model and continue to carry out minor improvements during the product’s lifecycle, so as to make this car reach a sufficiently differentiated state.
Looking at the OTA history of the Ideal ONE car, you can also see this point.
- The first OTA for the Ideal ONE was the hardware upgrade mentioned above, adding a variable intake grille, second-row double-layer soundproof privacy glass, four silent tires, and canceling the second-row outer armrest, etc.
- The second time was a software OTA, which also occurred in December when the Ideal ONE was delivered. The V 1.0.4 version was pushed, fixing some false alarm issues and optimizing the display of some alarms.
- The third time occurred on January 13, just over 20 days after the last upgrade. The V 1.0.6 version was pushed, adding a reservation charging function, Hi-Fi mode and surround mode to the stereo, optimizing power consumption during vehicle parking, optimizing fuel consumption under some working conditions, and optimizing the performance of the auxiliary driving system.
- The V 1.0.7 version was pushed on February 23, optimizing the display method of remaining mileage when the power/oil is low on the instrument screen, optimizing the reminder method of some alarms, and optimizing the battery charging strategy.
- Before that, Ideal was set to conduct one OTA update per month at the end of February, March, and April. Due to the epidemic, Ideal directly released the OTA for March and April at the end of April.
- On April 30th, the fifth OTA was officially released, which was a more significant upgrade in Ideal OTA history. It added an off-road rescue mode, optimized the display method of endurance, added WeChat in-car version, added wheel hub perspective, optimized the following distance/active following, and improved the automatic parking recognition rate. At the same time, the seat and rear suspension arm assembly can be replaced for free.
To this point, the reason why Li Xiang said he would only make one car in the next three years has basically emerged. It is to continuously improve the product and enhance user experience, making it more competitive among cars of the same level.
Behind all this hidden underwater is that Li Xiang wants to make a hit car product. No one does not want to make a hit product, but the growth logic behind it is what we really care about.
Belonging of New Era Cars: Hit Product
First of all, we need to understand what a hit product is.
A popular science: A hit product is a word-of-mouth product that hits the market, even if it is just a single product. If a product can sell $1 billion in one year, it is a hit product.
Let’s take two examples, iPhone and Xiaomi mobile phones.
The reason why iPhone succeeded mainly has three key factors: Killer multi-touch hardware experience, killer software experience, and fan economy. The biggest change is that multi-touch is applied to the interaction interface.
On the other hand, iPhone’s innovations are based on the user level, innovating from the user’s value chain, and creating killer applications for users, rather than innovating on the company’s value chain.
The benefit of this is that an explosion-level effect can be produced through strong word-of-mouth from users.
Looking at Xiaomi, the biggest change in its success has created a business model of “free hardware”.
Note that the word “free” here is not truly free. It means that Xiaomi does not make money from its products, but rather makes money from the added value of users, which can be charged through software and content.
How can user value be increased? The answer is driving strong connections through “free hardware”, and the key to driving strong connections is word-of-mouth.
Lei Jun, co-founder of Xiaomi, once said: “Doing a good job in word-of-mouth is not only the belief of the company’s boss, but also the belief of Xiaomi’s business model.”If we take Xiaomi and iPhone as examples, we’ll find that their innovations are centered around the user, creating hardware and software experiences with significant differentiation based on user needs, even turning users into fans.
Looking at companies such as Xpeng, even including other new automakers, we can see that they share a similar focus on the user.
Where does XPeng’s user-centric approach manifest? It starts with making all configurations standard and iterating hardware and software based on frequent user feedback until the product is sufficiently differentiated.
Moreover, as we saw at the beginning of the article, neither objective nor user feedback data can be missing in the decision-making process.
Decision-makers need to analyze objective data and combine it with user feedback to make more accurate judgments. This is particularly important for the later stages of enterprise development.
So, why conduct hardware iterations alongside software ones? The answer lies in creating genuine value for users. Building user reputation allows for better sales, and more sales enable blockbuster products to be created step by step.
It’s worth noting that while software iterations are encouraged, XPeng’s hardware iteration strategy is based on their own circumstances. This strategy carries considerable risk, so we don’t recommend blind imitation for new automakers without a mature customer feedback mechanism.
In conclusion, XPeng’s logic behind its software and hardware upgrades is to innovate through “free software and hardware upgrades” along the user value chain, achieve faster improvements in user experience, build a strong connection with users by improving the user feedback loop, and bring in higher sales through user referrals.
However, opportunities also carry risks, and XPeng currently only has one car model. The company’s success or failure depends entirely on the performance of this car.
We naturally hope that new automakers can continue to innovate and offer higher value products to users, but reality can be harsh. In the end, only those who truly create value for users will remain in the market.
We will continue to follow up with XPeng’s strategies in the future to verify whether their approach is right or wrong.
This article is a translation by ChatGPT of a Chinese report from 42HOW. If you have any questions about it, please email bd@42how.com.