*Author: Feng Jingang
Introduction
Despite not yet launching any products, Evergrande’s patent pool has dominated the industry and their acceleration cannot be ignored.
Baidu’s car manufacturing, Xiaomi’s car manufacturing, 360’s car manufacturing… The rise of new car manufacturing since 2014 has been over seven years, and although the majority of new car manufacturing companies have disappeared except for NIO, XPeng, Li ONE, and WM Motor, among others, the influx of many internet-based car manufacturers indicates the potential resurgence of a new round of new car manufacturing.
Only those who have value can be followed.
Yes, the new car manufacturing industry is still in turmoil. Who dares to pick up the crown without walking to the very end?
What about NIO? Although NIO has achieved great results in the high-end market, their car manufacturing model, which focuses more on service than on products, still has questionable sustainability. Evergrande, on the other hand, has obtained achievements that cannot be ignored, despite their products not being launched until next year.
Starting in 2018 with the intention of car manufacturing, and after more than three years of hard work, factories, qualifications, products, and patent pools have all fallen into place. Evergrande Motor has once again demonstrated the “Evergrande speed” in new energy vehicles.
Moreover, Evergrande Motor, led by legendary entrepreneur Xu Jiayin, a successful entrepreneur who has achieved significant success in both real estate and football, is naturally the best in the new car manufacturing industry.
The same goes for Evergrande.
Fearless of questioning, bravely act on your own.
What truly constitutes new car manufacturing?
Most people believe that only launching a product can be considered true car manufacturing. If not, it will be regarded as ‘PPT car manufacturing.’ However, this topic must be seen dialectically. For those new start-ups, this might be true. But for those new car manufacturing companies supported by group business, this argument is completely untenable.
Regarding Evergrande Motors, there is always ridicule in the industry that “they have everything except cars.” It is little known that each new startup has a different car manufacturing logic. NIO emphasizes service, XPeng emphasizes intelligence, and Evergrande emphasizes comprehensiveness with a longer strategic cycle.
Therefore, for Evergrande, all aspects of their layout need to be made in advance to avoid any future shortcomings.
For example, in terms of talent recruitment, while most new startups recruit dozens or hundreds of people, Evergrande, although their cars have not yet been launched, already have 3,500 engineers, ranking among the top in new startup companies.
In the current frenzied battle for new energy talent, the cost of having such a large pool of qualified talent as Evergrande’s reserve is high, proving how much they want to manufacture cars.
Therefore, what is Evergrande’s plan? Yesterday, Evergrande announced the answer. Evergrande Motor released an announcement that they have applied for a total of 3012 patents in China and abroad, of which 1355 have already been granted patents.
In the 2020 ranking of patents held by China’s new energy vehicle companies released by Qichacha, Evergrande ranks seventh with 1,355 patents, ahead of NIO Holdings.
As is well known, patents are a direct proof of a company’s mastery of technology. In the three years since entering the automobile manufacturing industry, Evergrande has applied for a total of 3,012 patents, putting it in the top tier among new energy vehicle companies. Clearly, this is the fruit of the huge engineering team at Evergrande and its forward-looking strategy.
By mastering technology, Evergrande’s products are endowed with stronger competitiveness. For example, in the first half of intelligent electric vehicles – intelligent connected vehicles, Evergrande has already mastered advanced technologies such as “V2X car-road cooperation”, “customizable holographic projection virtual assistant”, and “seamless experience”.
True, what happens if a product is not launched in the market? Should it be evaluated as a PPT car? Haven’t they built a car? Obviously not. For Evergrande, it does not need to rely on PPT to attract financing, because at the moment it announced its entry into the automotive industry, it already knew that it needed to lay a solid foundation for strategic deployment and preparation for the huge new energy market in five or even ten years.
Without a system, there is no car manufacturing.
Why is Tesla the best-selling new energy brand globally? Why are new energy brands such as NIO, XPeng, and Ideal performing better? Why are traditional brands such as Mercedes-Benz, BMW, Lexus, and Volkswagen not as popular with electric vehicles? Why is Wuling selling like hotcakes?
The strange and bewildering new energy market has tested the thinking of those traditional automotive professionals time and again. They do not understand why these century-old enterprises cannot compete with such new forces that have only been established for a dozen or even a few years. Are they not working hard enough?
No, they are working hard, but their direction and methods do not match market demand.
Objectively speaking, the electric vehicle market is not yet mature, which means that we need to find ways to cultivate it and respond to its various pain points with corresponding strategies, such as addressing range anxiety with a supplementary energy system and consumer confidence to a corresponding user operation system.
From the success of Tesla, NIO, XPeng, and Ideal, we can clearly see that corresponding strategies can be found for each pain point. As for Wuling, it is aimed at replacing the low-speed vehicle market. Strictly speaking, as long as the price is low enough, the brand power of Wuling ensures that it will sell well.
Clearly, Evergrande needs to learn not from Wuling, but from high-end market pioneers such as Tesla and NIO.
On the other hand, traditional enterprises such as Mercedes-Benz, Volkswagen, and others still adhere to their traditional manufacturing concepts in their new energy products. Their supplementary energy systems, user operations, and existing marketing methods do not match, and it is difficult to turn a large ship quickly in a new direction. Products born under such a system naturally cannot attract consumers.
As General Douglas MacArthur said, “In war, there is no substitute for victory.”Simply put, the key to unlocking the new energy vehicle market is to build a brand-new system of car-making, rather than just dip your toes in the water. Particularly for a heavyweight like Evergrande Auto, which has a strategic shift as its focus, it should build a complete system to tackle the future new energy war.
Thankfully, that’s exactly what Evergrande has been doing over the past three years on the road of car-making. Evergrande purchased a pure electric platform, laying the foundation for the research and development of dozens of vehicles; it insisted on self-developed batteries and will start production at the end of this year, escaping the restraint of battery cells; it developed the H-SMART OS Hengchi Intelligent Network System, laying the foundation for software-defined cars, among other strategic reserves.
Of course, a wide layout means more investment. As of last year, Evergrande has invested 47.4 billion yuan, comparable to NIO. Although Evergrande Auto has invested a lot of money, its R&D investment accounted for as much as 52.5% at 24.9 billion yuan, which yielded 3,012 patents and several dozen products, proving it is worth the investment.
Capital investors have a clear view of Evergrande Auto’s layout and planning level, given their investment. The data backs it up; in September last year, the shares’ issue price was HKD 22.65; in January this year, the issue price rose to HKD 27.3; according to today’s announcement, the issue price has directly jumped to HKD 40.92. Looking at the gradual increase in the issue price, the capital side is increasingly confident in Evergrande Auto.
After more than three years of car-making, Evergrande Auto has achieved a very good beginning for its layout, paving the way for the transformation of “New Evergrande.” Although the product has not yet landed, from a development perspective, this is not a problem; smart investors always build positions in advance.
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.