*Author: Feng Jingang
Introduction
If NIO and Xpeng are the BBA in the smart electric car market, then what NIO is trying to achieve is to become the Volkswagen or Toyota in this market.
Over the past two years, in response to the new forces that have emerged in the smart electric vehicle market, some traditional domestic automakers have launched new energy vehicle sub-brands, such as Great Wall Ora, Geely Geometry, Dongfeng Aeolus and GAC Aion, etc.
Meanwhile, some internet, real estate and mobile phone companies are also gearing up for the new wave of car-making by new players, leading to the emergence of Baidu Jidu, Evergrande Auto and Xiaomi Auto, as well as Huawei Inside, etc.
From the transformation of traditional domestic automakers’ attitude from contempt to respect for new players, to the entry of other industry giants into the new market, we have to admit that the Chinese car-making new forces that began in 2014 have made a huge leap forward from its “PPT car-making” phase and even grown into a benchmark for new energy in China. Each new force brand has its own unique features, such as NIO making a breakthrough in the luxury car market, XPeng taking the lead in smart technology, and what Li is doing is to open the door to smart electric cars for the mass market, and so on.
Especially for WM Motor(NeZha Auto), its products and brand positioning towards the mainstream market have made it stand firm in the market, with monthly sales ranking just behind the three major internet new car players, making it the strongest new car-making force among traditional players.
What is more remarkable is that NeZha Auto has not been satisfied with its current achievements. At the first batch of Shanghai Auto Show where the new car-making forces were all present, they took the initiative to launch a series of attacks, demonstrating that NeZha Auto is still in a rapid upward development phase, and its future is promising.
Specifically, NeZha Auto first launched the industry’s first intelligent electric vehicle with a hard bar combustion engine, the U Pro, and achieved more than 5,000 orders within a week, becoming an instant hit.
Later, NeZha Auto announced the launch of a CNY 3 billion Series D financing round, with lead investors including internet giant 360. Although it is only an intention to invest at the moment, this is enough to show that the comprehensive strength of NeZha Auto has been recognized by 360. If 360 later becomes the second-largest shareholder of NeZha Auto, with the financial and software technology strength of 360, it will not only make the foundation of NeZha Auto more solid, but also give it the ability to compete head-to-head with the three major players.
From a low-profile traditional new car-making force to gaining the attention of internet giants and becoming a new force with a strong balance of traditional and internet concepts, the development of NeZha Auto has made visible progress. Looking back on the seven-year journey of new car-making forces, after countless failures of new forces such as Future Mobility, Byton, Qidian, and so on, what has enabled NeZha Auto to stand where it is today and even move forward steadily, closing the gap with the leader, NIO?
Our Firm Concept: Make High-Quality Smart Electric Vehicles Accessible to All.# NETA Auto Announces its Entry into the Market with Two New Cars at the 16th Guangzhou Auto Show
In November 2018, on the 49th month of its establishment, NETA Auto announced its entry into the market by launching two new vehicles, N01 and N03, at the 16th Guangzhou Auto Show. NETA Auto officially declared its “quality-price ratio” as the core development route for its intelligent electric vehicle, which encompasses two meanings: quality and cost-effectiveness.
For instance, its first vehicle, N01, brings a “good driving, good riding, good looking, and good playing” experience with easy-to-control and safe driving, comfortable space, young and stylish appearance, and intelligent technology, all at a highly competitive price that dominates the same segment, earning it the title of “king of high-quality-price ratio” in the market.
For electric vehicles, the self-ignition rate is one of the core indicators that determine their quality. However, almost all new energy brands, including Hyundai, Ford, and other international giants, have experienced recalls due to issues with self-ignition. NETA Auto, with accumulated sales approaching 40,000 units, is one of the few new energy brands that have yet to experience any such incidents, reflecting top-notch quality control.
Besides quality, cost-effectiveness is another critical factor for NETA Auto. Unlike NIO and Xpeng that mainly target the high-end market, NETA Auto has always focused on the Volkswagen market below CNY 200,000, similar to that of Changan Ora’s focus on the female market. During the Shanghai Auto Show, Zhang Yong, co-founder and CEO of NETA Auto, reiterated the brand’s positioning that “NETA Auto will most certainly become a mass consumer brand, not a high-end one.”
After N01, NETA Auto launched NETA U, NETA V, and most recently, NETA U Pro, as well as the mid-to-high-end coupe NETA S that will be released next year. Despite having an increasing number of models, the belief of producing high-quality and cost-effective cars never changes. NETA Auto is not incapable of producing vehicles above CNY 200,000; rather, it has a strong strategic focus and chooses not to do so to remain committed to its principles.
While there have been occasional setbacks in the market response, the overall trend is positive, which reinforces NETA Auto’s determination to stick to its car manufacturing philosophy. Specifically, NETA U had a mediocre debut due to limited product marketing through channels in tier-1 and tier-2 cities, yet NETA N01, NETA V, and NETA U Pro have all achieved remarkable results.On November 3rd last year, as the successor to the N01, the NETA V made a strong impact. Compared to similar products with a starting price of 80,000 yuan, the NETA V’s starting price of less than 60,000 yuan makes it the highest cost-effective A00-level quality intelligent electric SUV. Regarding its market performance, Zhang Yong candidly told the media, “Our NETA V has been on the market for four to five months, with orders exceeding 20,000 units. This speed is already very satisfying for a new product. We estimate that this number will be even higher by the end of the year.”
The NETA U Pro, launched at this year’s auto show, seems to have already locked in a hit product. While publicly initiating Round D financing, NETA also disclosed that the cumulative order volume of the U Pro in the week after the auto show exceeded 5,000 units, which is quite good. Regarding the monthly sales targets for the future, Zhang Yong predicted to the media at the auto show, “I think a monthly sales target of around 3,000 units is a good goal to achieve this year, and maybe more next year.”
Electric Vehicle Insight believes that Zhang Yong’s market expectations for the NETA U Pro are not exaggerated. Firstly, the best-selling compact intelligent electric SUVs on the market are currently the WmAuto EX5 and the XPeng G3, with monthly insurance data maintained at around 2,000 units. Previously, Electric Vehicle Insight compared the three aforementioned models and found that the NETA U Pro’s core competitiveness is fully leading, and by no small margin compared to the other two models. This means that the monthly sales volume of the NETA U Pro is at least 2,000 units or more, a possibility that is not low.
In addition, since its product strength has surpassed that of same-level intelligent electric vehicles, and is enough to compete with same-level gasoline vehicles, the NETA U Pro can even compete with gasoline vehicles in the market. Electric Vehicle Insight has already made a detailed analysis in the previous product analysis article, so I will not repeat it here. If the NETA U Pro can take a piece of the gasoline vehicle market, then Zhang Yong’s expectation of a 3,000-unit sales volume may be conservative.
At the auto show, NETA’s Chief Marketing Officer Jiang Feng said, “As the first smart pure electric SUV to cost-effectively compete with gasoline vehicles, the NETA U Pro not only greatly improves the cost-effectiveness of pure electric vehicles, but also fully compares with gasoline vehicles, giving users more reasons to choose electric vehicles, and becoming the beginning of pure electric vehicles seizing the gasoline vehicle market.” The success of the N01, V, and U Pro one after another allows NETA people to firmly believe in their car-making logic, using a data point to prove their success rate of 3/4 of the products.
In this year’s auto show interview, Zhang Yong was asked the old question of whether NETA has the ambition to do high-end.# Zhang Yong’s reply was a bit too stereotypically “masculine”. He said, “I don’t have the impulse to make high-end cars. The NETA S is our highest-end model, and our pricing won’t be that high.” Additionally, Zhang Yong gave two reasons for this, the first being that, as mentioned previously, “NETA car will definitely become a consumer brand for the masses, not a high-end one.” The second reason is, “It’s a good thing for them to focus on high-end cars, because it gives me more opportunities and space.”
The second response is quite intriguing, and we can elaborate on it. Looking at the development of domestic automobile brands, from Chery, Geely to Great Wall and so on, traditional domestic brands without exception started from the lower end and worked their way up. Though some attempted multiple rounds of high-end cars along the way, overall the results were mediocre. It is only in recent years that new stars like Lynk & Co., WEY, and start-up StarRide have emerged, and domestic brands have achieved phased success in the middle and high-end markets, but their core battleground is still vehicles below 200,000 yuan.
The situation is different for new players in the auto market. Whether it is NIO, Li Xiang, Voyah, or JEET, as long as they feel financially secure, they almost all target the high-end market. Although many are enthusiastic, we still need to pour some cold water: there are plenty of empty promises. Nonetheless, NIO has broken through the 400,000 yuan interval, Li Xiang and JEET are beginning to stabilize in the 300,000 yuan market, and so on. All of this still gives us a great deal of surprise: China can also create high-end automobile brands.
This forces us to consider the core logic behind this phenomenon, and we believe there are the following four points:
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Smart EV users don’t have particularly strong brand loyalty to old or new powers, but instead lean toward a preference for ultimate product strength and complete services.
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China’s new energy industry chain is quite complete, and in core power battery technology, we maintain our lead. For example, top-tier suppliers like CATL make it relatively easy for us to create ultimate product strength without falling too far behind gasoline-powered cars.
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After nearly 40 years of accumulation, China’s automobile industry, including the new energy vehicle industry, has an abundance of talent, particularly in the field of software engineering and product management that became important again with the rise of smart EVs and the Internet.
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Modern management: Traditional domestic brands, born more than 20 years ago, have obvious familial characteristics. But start-ups that have existed for seven years are basically insulated from this familial environment, and instead employ modern partnership management mechanisms, which are more efficient and practical in decision-making and execution.
Therefore, based on the robust industrial environment of China’s new energy sector, making high-end vehicles now can’t be simply described as an “impulse”; it’s already a thing of the past.
But does this mean that everyone is suited to play in the high-end market? Obviously not. This is closely related to the background, resources, and mechanisms of each company, that is, whether they have enough soft and hard strengths. If they lack even one of these, it is unlikely that they can stabilize in the high-end market.For NETA Auto, there is a gap in both enterprise resource depth and traditional corporate mechanisms compared to new forces like We Xiaoli who are backed by Internet giants. Such strengths and weaknesses make it difficult for NETA to support the high-end market, and the rash upward move of NETA U is already a typical case. If 360 confirms its investment in the future, it is believed that the strengths and weaknesses of NETA Auto will be significantly improved. However, that is another matter, and at least now, the attempt to accelerate into the high-end market still seems challenging.
On April 20th, Zhang Yong candidly said on social media, “Many times we encounter similar questions: what do you have to compete with so-and-so. I believe that as a new start-up company, anchoring a segmented market, making good products, maintaining good rhythms, working hard with our heads down, not looking around, not being anxious, not being upset and sleeping badly, building a solid fort and fighting a dull war, maybe you will win after fighting.” Zhang Yong is very clear that for NETA Auto now, the top priority is to maintain strategic determination, consolidate the foundation, and then make surprising attacks.
Looking at Zhang Yong’s second argument in response, although he did not acknowledge that NETA Auto is unable to support the high-end market at present, he emphasized the opportunities and space within the market in which NETA Auto currently operates. Zhang Yong’s answer is quite cunning but still enough to grab our attention: where are the opportunities and space within the market?
Let’s look at some data. According to the China Passenger Car Association’s statistics, the national cumulative retail sales of passenger cars last year were 19.288 million, of which the cumulative sales of luxury cars were about 2.529 million, accounting for 13%. This means that the market share of non-luxury cars, that is, the mass market share, amounts to a staggering 87%, which is the market where brands like Volkswagen and Toyota operate. For both the fuel vehicle market and the new energy vehicle market, this is the case.
Regarding NETA Auto’s mission, Zhang Yong has repeatedly emphasized in public occasions that “NETA Auto aims to popularize intelligent, safe and pure electric vehicles, intelligentize mass-produced vehicles, and serve the mass consumer population.” If NIO and Jidu are the BBA in the intelligent electric vehicle market, then what NETA needs to do is become the Volkswagen and Toyota of the intelligent electric vehicle market.
The new forces have already unstoppable dominance in the automotive industry. For Chinese new forces, we not only need luxury intelligent electric vehicle brands like NIO but also mass market intelligent electric vehicle brands like NETA.
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.