With the development of electric vehicles, traditional car companies are launching new brands to enter the electrification market, and technology companies have also realized that this is the next era of opportunity and have entered the market one after another. This has also created a situation where the sudden appearance of a new brand in the electric vehicle industry is no longer a novelty.
On August 12, Chongqing Xinte Automobile held a press conference in Chongqing to officially announce its corporate strategy. However, unlike other players, Chongqing Xinte Automobile does not have a huge cash flow like new forces in car manufacturing or technology companies, nor does it have the huge scale of traditional car companies.
So where is the way out for such a brand?
At the press conference, Hu Jun, the general manager of Chongqing Xinte Automobile, candidly talked about Xinte Automobile’s past entrepreneurial experience, saying that Xinte Automobile had launched two cars on the market in 2018, but ultimately withdrew from the market due to product pricing and business operations.
After reviewing Xinte Automobile’s entrepreneurial experience after the reorganization, they believed that the heavy asset operation method was not suitable for themselves. On the contrary, they wanted to improve capital utilization as much as possible through changes in the business model, which they named the “DOCK model.”
DOCK mode mentioned by Chongqing Xinte is a mode that includes four interfaces: research and development, manufacturing, service, and user. In terms of research and development, Chongqing Xinte mainly focuses on electronic and electrical architecture, autonomous driving, and big data application development, while other areas will be developed through cooperation with the industry chain.
The manufacturing interface will be developed by cooperating with Heavy Truck Chongqing Auto to reduce investment costs. In terms of channels, it will mainly rely on the quick-acting shops of supermarkets, hoping to rapidly expand the channel scale by lowering the entrance threshold for investors. The user side will adopt a direct-to-consumer model, combining online operation of social platforms, e-commerce platforms and brand-built platforms with offline experiences.
Overall, I think the reason why Chongqing Xinte is doing this is to focus enterprise funds on electronic and electrical architecture, autonomous driving, and user operations, excluding heavy investment in factory construction and channel deployment.
This approach is really simple, but it is also a kind of “gamble.” Some people in the industry believe that with the development of the electric vehicle industry’s OEM model and intelligence, in the future, the ability of intelligent technology and enterprise user operation will become increasingly important for car companies.
However, no matter how new the model is, it ultimately reflects on the product. So what kind of product has Chongqing Xinte brought?Chongqing Xintec has launched its new electric car brand “Dian Dong Wu” (Electric House), with its first model being the “YOUNG Guang Xiao Xin”. Two versions are available, the S400 and the L400, with recommended prices of RMB 59,800 and RMB 65,800 respectively. The car is positioned as a 5-door, 4-seat pure electric small car, with a standard range of 402 km according to NEDC standards. This may currently be the cheapest electric car with a 400 km NEDC range available on the market.
Currently, the sales of electric cars in the Chinese market is in a barbell-shaped trend. High-end pure electric cars require a large investment and are not suitable for a company like Chongqing Xintec operating with low capital. However, the A00 market for cars priced below RMB 100,000 is a good choice. The best way to tap into this market is to offer products with the best value for money.
The battery pack of the YOUNG Guang Xiao Xin uses a 38.54kWh lithium-ion battery from CATL with an energy density of 160 Wh/kg. The electric motor is a permanent magnet synchronous motor (PMSM) with a maximum power of 35 kW, a peak torque of 125 Nm, and a maximum speed of 10,000 rpm. The trunk volume is 230 liters, but can be expanded to 540 liters by folding down the back seats, which can accommodate 4 pieces of carry-on luggage.
Combining performance, space and price, it is clear that Chongqing Xintec is targeting the down-market cities in tier 3, 4, and 5 with this car. During the press conference, President Hu Jun mentioned that according to data from the China Passenger Car Association (CPCA), EV retail sales in the first half of this year were 1.001 million units, an increase of 218.9% compared to the same period last year. The sales of A0 and A00 level pure electric cars grew by 126% YoY, and the sales structure of new energy vehicles in different city levels showed that the proportion of new energy vehicle sales in first- and second-tier cities exceeded 35%, with most being high-end products. However, in the third-tier cities and down-market cities, the proportion was less than 10%, which is a larger market for Chongqing Xintec.
Overall, due to its DOCK model, Chongqing Xintec has more flexibility in its entire operational approach. However, whether this new business model can go further depends on how Chongqing Xintec can push this pure electric small car towards large-scale production and sales.
For Chongqing Xintec to be successful with their new electric car, they must first address the pinch point of the market. In my opinion, the biggest pain point for the A00 market is value for money. Therefore, I believe that Chongqing Xintec has a certain degree of competitiveness in terms of product pricing.🔗Source: Chongqing Xinte Automobile Press Conference
However, this is not enough. As we are targeting the sinking market, I believe that car companies will face higher demands on their channel capabilities. Can Chongqing Xinte Automobile rise to the challenge? We wait and see.
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.