There is evidence that Human Horizons (HiPhi) is not just about the wine.
On September 24th, the HiPhi X was listed for pre-sale, with a NEDC range of 630 kilometers and deliveries starting in the first half of 2021, priced at RMB 680,000 – 800,000.
If we had to describe HiPhi X in one sentence, “it’s a really cool car, but not necessarily an easy sell” would be appropriate.
After its launch, two interesting paradoxes emerged:
First: What are Human Horizons’ expectations for the sales of the HiPhi X? If, like most users, it has low sales visibility, what is the meaning of its release?
Second: With Human Horizons’ three-pronged strategy, which focuses on intelligent vehicles as a basic node, how can it provide support for its business in intelligent transportation and smart cities if it has no sales?
In early 2017, Ding Lei and LeEco’s automotive business parted ways, and Human Horizons was founded in the same year. So, is Human Horizons just bluster, or does it have a plan?
Price Discourages Purchase
Looking solely at the product, the HiPhi X does indeed have some appealing features.
During the launch event, Human Horizons did not follow the traditional approach of presenting vehicle appearance and features in sequence, but rather listed in detail twelve world-first technologies. The resulting 78-page Word document was a show of muscle displaying their products and technology.
For example, the HiPhi X’s NT wing doors allow the user to activate the screen by waving their hand five centimeters from the B-pillar, unlock the vehicle via facial recognition, and enter and exit the vehicle without touching the door. Behind the six doors and electric motors is an intelligent entry and exit system controlled by a complete vehicle body control calculation platform. It is said that the HiPhi X’s wing door system will be continuously optimized through OTA to adjust the opening angle, speed, and personalization.
However, looking at the price will deter most consumers.
There are already relatively many choices for pure electric vehicles in the market, ranging from Tesla to NIO, from XPeng to Li Auto, from Polestar to new car models from major traditional automakers. Consumers in the 200,000-400,000 price range already have a wide range of competitive products to choose from.
At this point, how can consumers justify purchasing a HiPhi X at RMB 680,000 – 800,000? The Audi e-tron, which is similarly priced to the HiPhi X, even with a discount of up to RMB 100,000, has only sold a few dozen units per month in the past few months, and that’s Audi.
Furthermore, at a price point nearing RMB 800,000, the 2021 Tesla Model S Plaid, with a range of over 800 kilometers and a sub-2 second 0-100 km/h time, has already surpassed the HiPhi X in terms of brand and product power. Is it really not worth it?
A detour
The problem now is that the team at Human Horizons (HH) surely knew that the sales of the HiPhi X would not meet expectations. But if they knew it wouldn’t sell well, what was the point of releasing it in the first place?
Some people believe that the main goal of the HiPhi X was to build the brand and promote the next product. But it seems that HH did not do enough in this regard compared to Tesla and NIO, whose first products (Roadster and EP9) were never aimed at ordinary consumers. The first 7 “Founder Series” Roadsters were given to Musk and other founders, and the first 6 EP9s were delivered to Liu Qiangdong, Lei Jun, and other investors. These two vehicles repeatedly broke lap time records at many racetracks, including the Nürburgring-Nordschleife. In contrast, HH’s promotion of the HiPhi X was not as successful.
In fact, from HH’s several press conferences, it can be seen that attendees were left with an “astonishing but incomprehensible” impression.
Most people do not understand what “HOA, HOD, HOV” mean, or what capabilities the “VEA, RSA, CDA” platforms provide for the so-called HOA Hyperdrive Architecture. Nevertheless, these concepts correctly convey one message to the public – that HH is tech-savvy and ahead of its peers in AI, connectivity, and autonomous driving. This time, the HiPhi X, as an important node of the “Triple Smart” ecosystem, was crucial to consolidating this impression.
Why does HH need to do this?
This is where Ding Lei’s background comes in. After graduating from solid-state physics at Fudan University in July 1988, he joined SAIC and became general manager of Shanghai GM in January 2005. In February 2011, he became chairman of Zhangjiang Hi-Tech Park and was appointed deputy district mayor of Pudong New Area in August 2013, until he resigned in June 2015.
Based on this comprehensive background, Ding Lei’s logic for running HH differs from that of other new car manufacturers. He is more likely to combine vehicle production with urban planning.It’s worth noting that the “Three Wisdom Strategies” can exist independently even though they are interconnected. Currently, Hengchi has started projects and generated revenue in the “smart transportation” and “smart city” fields, such as the 7-kilometer smart road project in Yancheng and the integrated “smart city” system in Shanghai’s Zhangjiang Park. Ding Lei once said, “The government was surprised and satisfied when they saw the price of related systems compared to the services provided and their excellent results.”
In the future, even if Hengchi’s strength in the “Three Wisdom” technology field continues to strengthen, the toB business of smart transportation and smart city cooperation with the government is also a very good business model with a huge market, even if they leave aside the toC sales of smart cars.
However, for now, Hengchi can only handle relatively small closed road and park projects that can be replicated in batches. It is not realistic to achieve the volume expansion of a single project, such as turning a 7-kilometer smart road into 70 kilometers or even 700 kilometers.
In Ding Lei’s plan, smart transportation and smart city are a systemic job, and the role that a single enterprise can play is to lead and coordinate. Hengchi hopes to be the leader. However, Hengchi is not the only one who wants to be the leader. In the future, whoever can control the key targets in smart transportation and city will have a greater say.
Undoubtedly, the car is the core element among the key targets. Therefore, in the long run, the greater the sales and user numbers of products under a single brand, the stronger their negotiating power will be.
Hengchi has mentioned Apple on multiple occasions, but it is important to note that, as a business ecological model, Apple initially focused more on hardware. It was only after the success of the iPod that iTunes gradually evolved and after the huge sales of the iPhone that the App Store was incubated.
Anything must start from the first step, right?
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.