Article by Roomy
Editor | Zhou Changxian
On the day of DENZA D9’s pre-sale, I inexplicably thought of a prose from the Northern Song Dynasty called “The Injury of Zhong Yong”. The young man had exceptional talent but was inevitably forgotten by the masses.
Years later, looking back at DENZA, it seems like a sign.
Twelve years ago, DENZA was “born with a silver spoon” and a high-end new energy brand jointly created by BYD’s battery technology and Daimler’s luxury heritage. At the beginning of its birth, it could also be called “a young man with exceptional talent.”
However, time is sharp as a knife. The young man’s talent did not show its sharpness and was old prematurely with a hurried twelve-year journey. Only two models have been launched and the advantage of being the first in the market was non-existent. It was even rated as “the least noticeable electric car brand”.
The “ideal country” is full of sorrows and from a business perspective, DENZA is a failed brand.
But as a brand that was born in 2010, earlier than Voyah and Zeekr, DENZA means more than just sales. When we see DENZA, we sometimes think of what Yin Tongyue of Chery said about GAC, “GAC taught us how to make cars.” DENZA, with respect to BYD, may be the same. Its significance lies in the exploration of the road to high-end, the pitfalls and rivers it has crossed.
The reason why Daimler is so willing to give up its controlling rights of DENZA is mostly because, during the years of cooperation with BYD to build DENZA, Daimler has gradually mastered the technology of electric vehicles. The birth of the Mercedes-Benz EQ series makes the continuously losing DENZA no longer a necessity for Daimler.
From these perspectives, DENZA is the same as GAC, but also different from GAC, “better than GAC.” After BYD took control of 90% of DENZA’s shares, they decided not to let DENZA take a backseat anymore.
Reboot.
Under the new brand plan, DENZA’s first high-end MPV, the D9, starts pre-sale. Wang Chuanfu, the head of BYD, seems confident.
“We believe that DENZA, which has entered a new development stage, will create new achievements with the joint support of BYD and Mercedes-Benz and stabilize in the global new energy vehicle market.”
I never deny any “inspiring language” because brands and markets need it. However, beyond the inspiration, there is an unavoidable reality.
Twelve years ago, DENZA failed to take advantage. Now, how can DENZA, who has been forgotten by the masses, take advantage?
Has power, but also lacks power# DENZA: When Opportunity Meets Challenges
In 2015, during an interview on “Cheng Yuan’s Guesthouse,” Yin Tongyue made a blunt remark. “Working in a joint venture is like attending a secondary school; you will never be able to graduate from college.”
At that time, some criticized him for sweeping a large area, while others agreed, believing that Chinese automakers must independently complete the path to the high-end. He also pointed out that one must not just have the ability to write “short stories,” but also the ability to write “Dream of Red Mansions.”
That year happened to be a turning point for independent brands and joint venture brands. The nearly 20-month negative growth was successfully reversed, and independent brands, who were full of energy, became the leader in the high-speed growth of the industry. A sudden emission gate event also led to unprecedented cracks in the traditional faith in fuel vehicles held by European and American giants.
The advancement and replacement of Chinese automakers have become critical issues. The Volkswagen emission gate incident has also enlightened the global automotive industry.
Europe and America have released a timetable for the discontinuation of the sale of fuel vehicles, and the topic of new energy is on the rise. From this, many people believed that DENZA’s opportunity had arrived.
This was the fifth year since the founding of DENZA and the second year after the launch of its first EV model. At that time, other new forces were still in the stage of PPT concept cars. People like Li Bin and He XPeng had discussed behind closed doors how much money they needed to build cars. Even Musk was harshly criticized by Detroit’s giants.
However, DENZA held the “opportunity” in its hands. The then-CEO of DENZA, Lian Yubo, also believed that “DENZA caught the best time; it’s neither too early nor too late.”
At that time, there was no clear answer as to what an EV should be. The industry hoped that DENZA, which was expected to be a leader, could give the answer through its first-mover advantage and write a short story in the field of electric vehicles.
However, things didn’t go as expected.
As we all know, DENZA failed to grasp the redemptive period of the new energy vehicle market for various reasons. One of the reasons, which seems insignificant now, dealt a severe blow to DENZA at the time.
That reason was pricing. Entering the mainstream market too early, DENZA did not consider the process of user acceptance for such a new brand with a price exceeding RMB 260,000 after subsidies. At that time, BYD, Geely, and Great Wall were still striving to break the RMB 150,000 ceiling. The market above RMB 150,000 was still dominated by joint venture brands’ fuel vehicles.At that time, DENZA had both potential and powerlessness.
When Wang Chuanfu founded BYD, his ultimate dream was “from batteries to electric cars.” Just like Yin Tongyue made the brand high-end and assigned it to GAC, at that time DENZA also carried Wang Chuanfu’s wish for electric cars.
However, waves wash away heroes. These two brands, both with the meaning of “beginning,” rode on the winds of fate, but became a “dream that cannot be carried by the times.” They were out of step with the times and completely missed a product cycle.
Since the first model was launched in 2014, DENZA has only sold 30,000 units in seven years, with losses of over 4 billion yuan. Both DENZA’s pure electric version and DENZA X, which includes pure electric and PHEV versions, did not cause much of a ripple when they were introduced…
DENZA is also considered one of Wang Chuanfu’s few unsuccessful attempts, like his failure to supply batteries to others and lost the crown of the battery king. DENZA, with “mines and technology” in its house, was briefly sold and operated by Mercedes-Benz, but it never caught on. Its seemingly grand goals were shattered in the face of reality.
The times rage on, and the story is hidden in the crowd. Some foreshadowing has long been planted.
“My name is Zhao Changjiang, the Yangtze River of the Yellow River and the Yangtze River.”
Zhao Changjiang liked to introduce himself in this way, and aspired to become a “big person.” Because of his outstanding performance in the northwest market, he was promoted to the marketing director of BYD Automobile’s Beijing-Tianjin region in 2015. Standing at the starting point of fate, he was about to experience a stunning “triple jump” in his life, rising to the general manager of BYD’s sales company.
The fetters of time have silently serialized short stories. One of them belongs to Zhao Changjiang and DENZA.
Write the short story first
In “Cheng Yuan’s Reception Room,” Cheng Yuan asked Yin Tongyue if the route of GAC’s vision was a bit circuitous. Would it be better if all of GAC’s investment was put into Chery?
Yin Tongyue replied, “No.”
If the same question were asked of Wang Chuanfu, would it be better if the money invested in DENZA were put into BYD to create a high-end brand? Wang Chuanfu’s answer would probably be these two words.
Although DENZA could not shake off the blood transfusions from both Daimler and BYD after 12 years of hard work, all joint ventures cannot do without the words “getting what each needs.” The joint venture between Daimler and BYD to establish DENZA was also no exception.
DENZA was BYD’s attempt to create a high-end brand and Daimler’s attempt to electrify.Daimler did not have accumulated experience in new energy technologies at the beginning, and now it has the Mercedes EQ series. BYD, who had no experience in high-end brands, has completed its own brand’s upward breakthrough after more than ten years of operation with Tang. However, the long-term loss-making status has kept Tang always on the verge of collapse. For Mercedes, which is still hesitating about its electric vehicle business, the burden of Tang’s losses is great, and it is “no longer necessary”. Therefore, Daimler withdrew.
From Daimler’s “generous” attitude, it can be seen that Tang’s situation is embarrassing. Although it is impossible to measure how much BYD and Mercedes have learned from each other, Tang may need it more than BYD does.
In the mid-to-low-end new energy market, after many years of hard work, BYD has been firmly seated in the leading position by hybrid and pure electric dual-line parallel development, years of precipitation, and continuous research and development, with a comprehensive self-developed system in batteries, electric control, and even chips. In the high-end new energy market that Voyah and Zeekr have just entered, BYD also needs a pioneer.
High-end products can improve brand positioning and achieve better profits, which is the current gap for BYD. Although BYD will also launch a new energy high-end brand in the future, Geely has Ji Ke, Great Wall has Salon, Changan has released Avita. The competition is fierce, and time is running out for BYD, standing with an annual sales of one million vehicles, high-endization has become an inevitable topic. Restarting Tang is imperative. To some extent, this is the fastest way to occupy the high-end market.
Last year, BYD and Daimler signed a share transfer agreement. After the transfer is completed, BYD’s shareholding ratio in Tang will increase from 50% to 90%, and Daimler’s shareholding ratio in Tang will decrease from 50% to 10%.
Controlling Tang is seen as “asking for advice” by the industry, and the person who holds the stone is Zhao Changjiang.
“On February 15th of this year, the DENZA Automotive Sales and Service Co., Ltd. business license was officially issued, and the reconstruction of high-end service and experience is about to begin,” Zhao Changjiang wrote on Weibo. As the head of the sales company, Zhao Changjiang was reassigned to be responsible for the high-end brand. Tang, which has been silent for a long time, has a new voice.
At the same time, Zhao Changjiang’s Weibo certification was updated from “Director of BYD High-end Brand Preparation Office” to “General Manager of DENZA Sales Department,” which means that DENZA has a new role in the BYD system.”In BYD’s automotive business sector, the DENZA brand will take over and be compatible with the Dynasty and Ocean series, and will also connect to a high-end brand that has not yet been released. Wang Chuanfu stated that BYD will be responsible for DENZA’s strategic planning and provide comprehensive support in product planning, technology research and development.
This is a new beginning. Zhao Changjiang has already been eagerly planning for DENZA’s restart.
On his personal social platform, he has repeatedly announced DENZA’s progress, such as publishing a manuscript for a high-end MPV, exposing spy photos, and seeking a name for DENZA’s first high-end MPV… The atmosphere is just right. “Zhao Changjiang almost plays half the role of product manager for DENZA,” and this is a common view among his friends.
From Zhao Changjiang’s approach, the way DENZA is making a comeback is very similar to the rise of new energy vehicles. However, times are changing, and complex issues continue to arise.
In Wang Chuanfu’s brand positioning for DENZA, there is an inevitable issue. Connecting the past and the future is both a wish and a hardship. DENZA’s survival space is wrapped up in BYD’s product line and is also within the hunting range of competitors like WmAuto Auto.
Zhao Changjiang’s first short story steering DENZA is to make DENZA “stand in the court”.
Starting from scratch and participating in the midfield battle
DENZA’s story is like a revelation. Having high-end models does not necessarily mean you are in the game. Although DENZA and Zhao Changjiang both want to participate in this battle.
On May 16th, it was a day worth writing about. Wang Chuanfu shouted out a new slogan for the reopening of DENZA, “only providing new energy luxury cars.”
Zhao Changjiang stated that DENZA will become a “smart and safe new luxury brand,” creating a luxurious and superior travel experience for users, exploring new energy and safety technology, intelligent luxury product quality, and user ecological service system.
There was no surprise in the official language, but the industry is still looking forward and seeking guidance. Who’s road is it anyway?
Everyone is waiting for Zhao Changjiang to lead DENZA’s first step. Is there pressure on Zhao Changjiang? The answer is yes. For DENZA to release its first car in the niche MPV market after the restart was unexpected by many.
Looking at Zhao Changjiang confidently talking on stage, he suddenly remembered a scene from the movie “American Dreams in China”.
The teacher said to a generation in the classroom: Disappointment is everywhere, that’s reality. So what should we do? If you fall into the water, you won’t drown. You only drown if you stay in the water. You need to keep swimming forward.
The dawn of technology, the shadow of the epidemic, the rotation of the economy, the present and future intertwined, and the pressure of the times is overwhelming. The story framework is narrow, but for Zhao Changjiang, everything is just a starting point. He must “keep swimming forward”.”“`
This is the only choice that there is.
For the past 12 years, there was no market reputation or brand accumulation left to Zhao Changjiang from the Tencent EV brand. Products, brands, marketing, channels… can be said to have failed altogether. It wasn’t until the past two years, with the increasing domestic production of Tesla and the boost from models such as the BYD Han and XPeng P7, that the market for electric cars priced over 200,000 yuan was opened up. However, Tencent’s EV series failed to capitalize on this trend because they had already stopped production.
In short, Tencent’s brand operation could be considered starting from scratch. Many of the cards that Zhao Changjiang held also came from BYD’s technology.
The e-platform 3.0, DM-i super hybrid, “sandwich” structure of blade batteries and more, these technologies mean that the Tencent D9 has strong support. Tencent’s product planning will introduce three models in the next year, including a medium to large SUV and a medium-sized SUV, that will also leverage the “BYD technology pool.”
However, the key is how to let the newcomer Tencent D9 stand out in the electric vehicle battle, which has already gone halfway through.
The Tencent D9 has two types of power, EV and DM-i, with presale prices ranging from 3.35 million to 4.6 million yuan. There is also a four-seater founder’s edition with a presale price of 6.6 million yuan.
Zhao Changjiang is full of confidence in the D9, “No one in this world will remember the second, so we will be the first; based on recent user feedback, preparations and final product comparisons, I am confident that we will make Tencent’s high-end MPV.”
According to the current performance of BYD’s DM-i series in the market, future sales of the Tencent D9 are expected to be heavily weighted toward the DM-i version. The opening day of presales brought in more than 5,600 orders, providing some confidence for Zhao Changjiang.
In addition, Tencent will no longer be awkwardly placed in Mercedes-Benz 4S stores as before, but will rebuild its offline channels and adopt a direct sales model like other new forces. Everything is like a new beginning, waiting for Zhao Changjiang’s pen to drop.
However, due to the lack of complete brand segmentation, continuous “internal competition” may bring challenges to BYD. This is an old problem.
Conclusion
The high-end MPV market of 2022 looks lively and bustling, with new and old forces sharpening their knives and a large number of models ready to enter the market. “Who will be the best and surpass all”? remains to be seen.
The D9, a high-end new energy MPV and Tencent’s first salvo, brings new variables to this market.
“`However, in the current situation, the DENZA D9 is both powerful and powerless. Standing out from its strong competitors is a great challenge.
At present, Zhao Changjiang’s confidence can only be regarded as a wonderful story that he tells himself, rather than a successful plan for DENZA’s future direction.
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.