This article is reproduced from autocarweekly official account.
Author: Jiang Xiaohua
Yesterday, Geely Auto launched its power brand, “Lex Myth Power”, covering all powertrain systems at the Geely Research Institute in Longwan, along with the intelligent Geely 2021-2025 development plan.
This is an unprecedentedly large automotive enterprise technology and development plan release, with the number and level of core information points even surpassing that of Volkswagen and General Motors, companies that love to hold large-scale strategic release events.
Let’s briefly summarize.
Regarding powertrain: Geely started mass production of its high-performance, fuel-efficient, NVH silent, powertrain lightening and downsizing, and cost-effective Hi-X hybrid power systems under the Leixia Myth Power brand in the second half of this year. Key indicators such as thermal efficiency, fuel economy, NVH silence, powertrain lightweight and downsizing, and OTA horizontal integration are all leading the world. The thermal efficiency is as high as 43.32%, and fuel consumption is as low as 3.6 liters per 100 kilometers.
In addition, the comprehensive performance of this hybrid system based on this god-level data will continue to be rapidly improved. The laboratory has already achieved 52.5% of the target thermal efficiency, with the ultimate goal of 57%, and fuel consumption will be reduced by 50%.
Furthermore, with the improvement of battery capacity, this hybrid system will also give birth to pure electric vehicles with a range of more than 200 kilometers and plug-in hybrid products that are the most fuel-efficient after the battery is depleted.
Geely is ready to provide powertrains to the world.
Regarding new energy routes, charging and energy storage: two basic new energy routes with high-efficiency pure electric and methanol. The battery cell density of the pure electric vehicle reaches 350 Wh/kg, achieving a range of more than 1,000 kilometers and 200,000 kilometers without attenuation. The driving cost of methanol cars will be 0.3 yuan per kilometer in 2022 and reduced to 0.2 yuan in 2025.
From the B to C-class, the construction of charging and energy storage stations will be promoted comprehensively. Based on more than a thousand technical patents, more than 5,000 charging stations will be built, and each car will be able to complete charging in 60 seconds. The daily charging capacity of each station is 1,000 cars, solving the daily charging problem for one million car owners overall.
**Regarding intelligence: creating three major intelligent systems of intelligent energy, intelligent manufacturing, and intelligent services. Self-developing core intelligent links such as chip design and testing, operating system and software, big data collection and analysis. The Chinese 7-nanometer automotive-grade SOC chip, the first-ever self-developed by its affiliate company, CenTech, was lit up all at once a few days ago, with 87 layers of circuitry and 8.8 billion transistors integrated on an 83-square-millimeter substrate.After passing the vehicle regulations certification, mass production will take place next year. By 2025, self-developed 5-nanometer integrated automotive computing platform chips and high-computing autopilot chips with combined computing capacity of 256 TOPS will be achieved.
Realizing full-stack self-developed intelligent autopilot, commercializing L4 autopilot by 2025 and mastering L5 autopilot completely, as well as building a low-orbit satellite-based high-precision navigation system to achieve global communication and centimeter-level high-precision positioning coverage.
A continuously evolving industrial Internet platform, Geega, with zero water discharge, zero waste landfill, zero harmful emissions, and carbon-neutrality. Like a sci-fi Chinese Star Black Lamp factory, it will be built into a giant photovoltaic panel of 400,000 square meters generating 66 million kWh of power annually.
More than 2,000 digital smart stores will be established and reaching over 10 million APP users, providing direct connection to all users with feedback within 24 hours.
In terms of key sales data, sales are expected to reach 3.65 million units by 2025, including 1.3 million for Geely, 0.65 million for Zeekr, 0.6 million for Lynk & Co, 0.3 million for Geometry, 0.2 million for battery swap brand, and 0.6 million by exporting.
On the basis of an R&D investment of CNY 135.4 billion over the past decade, CNY 150 billion will be allocated for R&D by 2025, gradually shifting towards intelligent development.
25 new intelligent energy products will be launched in the next five years. By 2025, the proportion of new energy product sales except Zeekr will reach 30%, totaling 900,000 units.
Achieving EBIT (Earnings before interest and taxes) of 8%.
Reducing emissions by over 25%, laying a solid foundation for achieving carbon neutrality by 2045.
From a brand enterprise perspective, it aims to be a respected Chinese car company.
The above is the summary of the core information of this press conference, presented in a reduced form.It has to be said that this is the most thrilling strategic press conference of a Chinese automobile enterprise that I have ever attended in my many years in this industry, according to Li Shufu, CEO of Geely Auto Group.
At the event last night, Geely Auto stood at a crossroads, as Li Shufu put it.
What crossroads? Sitting on the scene, I truly felt that a Chinese automobile enterprise had the real capability to comprehensively compete with leading international enterprises in all key indicators measuring the development level of global large-scale manufacturing enterprises, including real-world capabilities, completeness and sustainability of systems, future industry strategic abilities, openness and width of technology and philosophy, height of culture and vision, global standard adaptability of technological capabilities and products, enterprise strategic determination, and corporate social responsibility. And this enterprise is still in a state of continuous broadening and accelerated development.
By 2025, we will witness a Chinese automobile enterprise that is respected worldwide. This is the crossroads that Li Shufu referred to.
Some people may ask: with so many PPT cars and so many press conferences selling endless technology futures, why do you think that this event of Geely is not just another valuation conference?
The simple answer is based on the information we have just presented. If you lack those systems capabilities and have not completed most technological breakthroughs or entered mass production periods with a large amount of technological equipment, not to mention being able to set clear schedules or provide complete data reports, your public relations department cannot make up these things out of thin air. There was no science fiction in this press conference, only science from technology showcases to data releases.
Let us take a look at the more engaging and exciting messages hidden behind these content elements.
Firstly, the core component released by LEADINGTECH at this event was the Hi-X hybrid system. This hybrid system, which directly outperforms that of Japanese automakers Toyota and Honda in critical indicators, reveals too many implications.
Firstly, the era of primarily internal combustion engine automobiles may represent an end to technology dominance;the hybrid system is the system with the highest technological content, the greatest difficulty, and the hardest implementation of low fuel consumption and high performance. The absolute leading Japanese hybrid product on the mass production market still falls short in terms of performance, NVH not meeting expectations, and only being a general energy-saving type in the middle-to-high revolution range.
However, even on a global scale, under the prospect of electrification reform, the vast majority of enterprises have taken an attitude of abandonment or semi-abandonment towards hybrid technology that will at least continue to dominate for the next ten years. This was what Wang Ruiping, Geely Auto Group’s senior vice president, proudly proclaimed at the event: from now on, LEADINGTECH will provide global supply of electric power.When Geely released the Hi-X hybrid system and firmly declared their resolution to fully squeeze the potential of internal combustion engines, we saw a hint of pride and a grand vision.
The hint of pride came from the fact that Chinese auto companies did not fall behind on the straightaway that many experts considered impossible to catch up, but instead approached the global leading level, and the potential for surpassing it is high. For Chinese auto professionals, this is a very encouraging state.
The grand vision is that Chinese auto firms, represented by Geely, and Japanese auto firms, represented by Toyota, will have a positive competition for internal combustion engine automobiles in the next 10 to 30 years, while other auto factions will most likely purchase, cooperate, and other forms of partnerships to reach the ultimate goal of hybrid-driven internal combustion engines.
If this prediction comes true, then Geely’s 3.65 million production and sales target by 2025 is not a blind prediction, but rather very realistic. In fact, as soon as Geely’s hybrid army lands next year, immense pressure will be placed on multiple brands, including independent and joint-venture brands.
Furthermore, Geely is examining its relation to Chinese autos from the perspective of Toyota in Japan and Volkswagen in Germany.
In our minds, independent brands have survived and prospered in the midst of adversity. Although there are many excellent businesses, they are often utilitarian in character, radical in style, emphasize vehicle models rather than brands, and prioritize opportunities over sustainability.
However, as such a significant market, such a large industry, and amidst such a critical period of development, Geely, as China’s leading auto company, has chosen to remain steady.
During his interview with Ganya Yue, the question about the pace of Geely’s new energy advancement was asked the most, as well as the inquiry regarding why Geely has less “creative competition” than other firms.
The answer given by Ganya Yue that impacted me the most was, “We must make the most popular products and must first satisfy the public’s demands for high-intelligence, high-performance, and high-quality products. This is the only way to consolidate and upgrade China’s auto supply chain.”
Geely puts a lot of effort into hybrid technology, does not approach pure electric products with an overly radical or impatient market attitude, but has absolute command of advanced pure electric technology. Furthermore, they are committed to the use of the methanol route which has gone long undervalued but is clearly very green, cost-effective, and suitable for promotion.
We have heard similar sentiments from Toyota before. This is the self-cultivation that leading enterprises in a big country and big market must possess.# The Essential of Intelligence in the Automotive Industry Transformation
In the core area of the intelligence transformation of the automotive industry, which is also considered by Ganjiayue as a big transformation, Geely has chosen to develop its own technology in almost all the core areas and is committed to achieving industry leadership. On the one hand, it is undoubtedly due to the gene of Geely’s core technology that must achieve independent leading, and on the other hand, Ganjiayue believes that only companies like Geely that form independent research and development can possibly cultivate core technology talents and propagate them to the entire supply chain, enabling the centralization of the entire Chinese automotive industry in the wave of intelligence.
It is worth noting that Geely’s self-development does not mean that Geely wants to do everything by itself. It means that Geely continuously controls leading core technologies, maintains the leading research and development capabilities and talent echelons of enterprises. In fact, Geely is very open in building an intelligent architecture. The end-to-end underlying system of one domain it builds reserves thousands of openings and can be open-minded to accommodate the vast majority of applications that can make the system more perfect and powerful.
With the power of the entire vehicle system, the stronger the self-development ability, the higher the degree of user demand realization and the greater the support for supplier development in professional fields, which Apple has given a very clear answer in the field of smartphones.
Only when an enterprise considers problems from the perspective of the most popular user and the most complete industrial chain can it become a true leader of a great nation. Enterprises that only consider market reality cannot grasp the great opportunities of the times.
Again, intelligence needs a rational and accurate judgment. In the description of this auto industry revolution in the public opinion circle, new energy and intelligence are the most important two poles, but there are two misleading points in the habitual description.
The first is that the mention rate of new energy is much higher, and the mention of intelligence is even ignored in many descriptions. The second is that new energy and intelligence are misunderstood as concepts that must be bundled together.
Ganjiayue clearly stated that the essence of this auto industry revolution is intelligence, and almost all vehicles are compatible with intelligence.
This is a very important judgment, which can lead to several key judgments.
For example, the intelligence of fuel vehicles can be fully realized with the assistance of limited power, including the whole vehicle OTA, intelligent driving systems that require large computing power, and rich software applications. The basic and equivalent intelligence of combustion engine vehicles is realized on the premise that hybrid products with internal combustion engine can continue to meet user needs in the long term.
Another example is that software-defined vehicles are certainly the future, but highly intelligent hardware is the basis for expanding the development boundary of in-car application type software. The degree of liberation of hardware perception determines the realization of the characteristics of the third space such as entertainment, work and enjoyment.# So, Geely’s investment of 150 billion in R&D over the next five years prioritizes investment in chips, intelligent software and hardware, and data capabilities, which will be resolutely self-developed.
The prioritization of self-developed capabilities in intelligence and new energy will, in my opinion, determine the survival of many companies in the next decade, even large companies. Perhaps the automotive industry’s Nokia will arise from the answer to this question.
Finally, Geely’s profit philosophy is in line with contemporary industrial logic.
From a data perspective, Geely’s target EBIT for 2025 is 8%, which is not low when compared to the reference point of 2000-2010. Today, certainly, there are not many automakers that can surpass a 5% margin.
How did Geely achieve this data, and with good reason, not afraid of being criticized by people who are uncomfortable with corporate profits?
First, it is about improving efficiency. Based on Geely’s intelligent plan, by 2025, Geely’s R&D efficiency will improve by 30%, and production efficiency will improve by 22%.
It should be noted here that synchronous efficiency improvements across the industry will not generate profits, only efficiency improvements that exceed industry standards can do so.
Geely’s fundamental philosophy of corporate development is to win-win with customers and supply chains. When Gan Jiaye explained this philosophy to suppliers, he said, “Don’t think of me as your A-party, we have only one A-party in this industry, which is the customer, and we are all secondary parties to the customer.”
Therefore, the core of Geely’s product concept is to provide users with the best products at the lowest price.
This seemingly cliche statement can be illustrated with an example. Take, for instance, the popular Xingyue L, which was difficult to purchase. The car was supposed to be launched half a year ago. When Gan conducted interviews with many dealers and suppliers, asking for the estimated sales for this car, the consensus answer given by the industry’s veterans was 5,000.
Gan immediately halted the launch and required a restructuring of Xingyue L based on the goal of monthly sales of 20,000. Compared with 5,000, 20,000 sales per month mean a significant cost reduction.
Although the suppliers were excited, they clearly felt that the risk was high. Gan promised that if they were unable to sell 20,000 in six months, he would compensate the supplier according to the actual situation.
As it turned out, Xingyue L was launched for more than two months, and cumulative sales reached 26,263 units, with orders exceeding 60,000 units, only constrained by the shortage of chips.By the end of October, due to the shortage of chips, the delivery gap of Geely Automobile, including the Chinese star series products, reached about 150,000. However, the vast majority of users choose to continue to wait.
Another example comes from Geometry. In 2021, Geometry’s sales skyrocketed by nearly 200%, and the number of orders in September has exceeded 10,000.
Gean Jiayue invested a lot of manpower to completely separate the R&D system of Geometry from Geely, and completely de-commercialize Geometry C. Even 500 units of operational vehicle orders did not move them.
In order to retain outstanding salespeople, Gean Jiayue specially approved the cost to provide them with a guaranteed salary, so that they can maintain their income level even when sales are not high. This unprecedented approach greatly improves the enthusiasm of salespeople.
Once the problems of products, brands, and sales are solved, Geometry, like a rising star, immediately rebounds.
Asking for profits from sales, products not good enough, marketing services not good enough, and low sales will lead to no business profits, and suppliers and distributors will not cooperate. If the sales are good enough and users are satisfied and loyal, profits will naturally come.
Gean Jiayue said that Geely’s profits cannot be calculated, they must be sold. How to sell them? It is to ensure that Geely’s products are the highest quality cars that ordinary people can buy at the lowest price.
Recently, Geely had a big deal, which was to distribute 350 million shares, which, according to the current market price of HKD 27, is about HKD 9.45 billion. The first phase is to benefit 10,000 employees, and the second phase is to establish a long-term distribution mechanism.
This is the most “generous” equity incentive action by a Chinese car company other than the new forces.
This is a distinctive attitude of Geely’s core employee partnership, but of course not all.
For scientists, high-ability talents, Geely adopts a budget support and salary incentive system based on contribution regardless of levels. The income level of a laboratory leader even exceeds that of the CEO. In the transformation of Geely into a technology company, this is not a problem.
Salary is certainly one of the key factors for enterprises to recruit, employ and retain people. But Gean Jiayue believes that maintaining an open attitude on the basis of Geely culture is the key to upgrading Geely’s human resource synchronization with the times.
Geely has never recognized the logic of taking shortcuts such as “we can’t do this” and “they are much worse than us” when facing difficulties. As long as it is a core technology and ability that needs to be mastered in the automotive industry, Geely will not consider retreating.An example is the acquisition of Volvo by Geely. The public’s reaction to this event ranged from criticism to admiration. However, the essence of this matter is that Geely, relying on this acquisition, has integrated and developed Volvo’s technological expertise through two generations of employees.
Otherwise, even if Volvo recognizes Geely, what Geely has bought is just a shooting star.
The development of intelligence today is the same. In the fields of chips, software operating systems and data, which are considered to be areas that traditional car manufacturers are not good at, Geely has no hesitation. As Gan Jiayue said, if you don’t do it, you don’t even know why you can’t do it. After two or three generations of employees, human resources will emerge. There is nothing difficult or miraculous about it.
Working for Geely or as a Geely supplier, you will always have the opportunity to do the most core and challenging work in related business sectors. This is the fundamental reason why Geely attracts talent.
And whether it is 2025 or 2030, no matter how grand the plan is, it is accomplished by people.
Regarding the press conference last night, I would like to repeat a few important words that I think are important.
First, Raytheon Power supplies the world;
Second, Geely solves world-class problems;
Third, intelligence is the core of the future, and Geely has independently developed the entire stack;
Fourth, Geely has reached a critical point;
Fifth, and most importantly, Geely wants to become a respected automotive company.
Data and technology are constantly evolving, and success and low points will always come unexpectedly. Only temperament and persistence cannot be easily given or taken away.
There was no internet celebrity or media-friendly “golden sentence” at last night’s press conference. Some of the local data released even made people who are used to internet celebrity press conferences feel that the rhythm was slow. But it was magnificent, solid, meticulous, and inspiring, just like the movie “Mountain” that can make people cry when watching its beautiful images. The director who can shoot a movie like this deserves respect. Geely, which can hold such a strategic press conference, deserves respect.
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.