Author: Zhang Yi

On the afternoon of May 13th, Chery held a Chery Youth League May 4th Commendation Conference and the establishment ceremony of the Youth Strike Team in the conference hall of the Automotive Research Institute.

At the meeting, Yin Tongyue delivered a speech to 13,000 Chery young people and put forward his wishes and hopes for them. Yin Tongyue said, “Innovation is the soul of Chery. Today, Chery must have the idea of ‘breaking the circle’ and innovation.”

Chery has opened the door to reform.

Reform is imminent

In fact, Chery has been walking on the road of breaking the circle and striving forward all the time.

Or, to survive in the current automotive industry, innovation is a self-revolution and a necessity for survival.

From the new forces of car making started in 2014, internet companies crossing over to car-making, major capital entering the new energy vehicle market, traditional car companies seeking self-evolution of new energy and intelligence, competition between new and old brands, this is bound to be a fierce competition.

Chery has been trying to find its market breakthrough.

But fortunately, Chery is good at creating explosive models and can always find its own market entrance.

From the national god car QQ that dominated the world in the early years, to eQ and eQ1 (little ant) that transformed into the new energy market, they all expected Chery to replicate QQ.

By June 2021, Chery’s cumulative sales of eQ1 had exceeded 200,000, and it had helped Chery rank first in the sales of A00-class new energy vehicles.

However, since the launch of another national god car, Wuling Hongguang MINIEV, little ant’s market share has rapidly declined and was quickly replaced by the sales champion position of MINIEV. The latter’s ultra-low price and ultra-high cost performance have further intensified the price war in the A00-class new energy vehicle market.

Little ant’s market price is positioned as “a 60,000 yuan-level high-quality pure electric small car”, with an official guide price of 73,900 to 94,000 yuan. MINIEV’s official guided price is 32,800 to 69,800 yuan, almost halving the price.

Feeling the pressure, Chery quickly launched its second A00-class pure electric small car, QQ Ice Cream, which not only looks quite similar to MINIEV, but also has a similar official guidance price to MINIEV, with a price range of only 39,900 to 49,900 yuan.

Chery had high expectations for this car and pre-sale volume was claimed to be over 70,000. However, as of March 2022 sales data, its market feedback did not meet expectations.

The combined sales volume of Little Ant and QQ Ice Cream is still inferior to MINIEV. It can be said that at present, MINIEV is far ahead in the A00-class new energy vehicle market, and no one can surpass it.

From the sales data, except for the two models of Xiaomayi and QQ ice cream, Chery’s other models have mediocre sales.

According to Chery’s financial report in 2020, the single-car profit is only 16 yuan. With weak development in the mid-to-high-end market, if they can only respond by engaging in price wars and cannot increase brand value, achieve systematic innovation and upgrades, Chery can only repeat old paths.

Therefore, a thorough reform of the new energy business has become the top priority for Chery’s transformation. And the key to transformation is to activate the 13,000 Chery young people. Chery’s young people are no worse than young people from other car companies, they just need an opportunity.

Yin Tongyue chose to address Chery’s young people on May 4th, behind the message was his sincere hope and concern.

Let the flower of innovation bloom in Wuhu again

Yin Tongyue said, “Chery has the mission of building a world-class brand, and Chery’s young people should strive to be top-notch craftsmen, engineers and scientists.”

Indeed, not to be mediocre, and actively innovate, this is the gene of Chery.

Looking back in history, China’s automobile market has long been dominated by foreign and joint-venture brands, and China lacks core technologies. At the age of 33, Yin Tongyue came to Wuhu from First Automobile Works with the passion and vigor of youth to build good quality Chinese cars.

In 1996, Chery introduced a used Ford engine production line from Wales, UK. Due to the lack of assembly line production technology, they had to reach an agreement with the British side called the “turnkey project”, where British technicians were sent to assemble the production line and Chery was not allowed to participate throughout.

Due to the lack of technology, they were restricted by the British technicians throughout the process of debugging the production line. The debugging process was slow, and the British technicians took advantage of them, dragging on for several months.

At Yin Tongyue’s proposal, Chery made a bold decision. They terminated their contract with DP Company, and with the courage of “if we can’t do it, we will jump into the Yangtze River,” they decided to assemble the engine production line themselves, develop their own engine, and produce Chery’s first car.

From this point on, technical breakthroughs and innovations have become the genes imprinted in Chery’s bones.

The system’s upgrade again

Chery sniffed the prospects of the new energy market very early on. As early as 1999, Chery began to lay out related technologies for new energy.

It’s hard to imagine, Chery established the clean energy project group and tackled the research project of all-aluminum body technology in 1999, preparing for Chery’s all-aluminum platform LFS today.During the Thirteenth Five-Year Plan period, Chery undertook two national key R&D projects. One of them is the “Development and Integration of New High-Performance and Low-Cost Hybrid Passenger Cars”, namely the first generation Kunpeng hybrid transmission 3DHT125, which completed national acceptance on February 25th, 2022. The first generation Kunpeng hybrid transmission 3DHT125 was mounted on Chery’s Tiggo 8 PLUS Kunpeng e+ and Arrizo GXi Plus.

In April 2021, Chery released the “Chery 4.0 Era Global Powertrain Architecture.” The architecture covers the development of powertrain systems for traditional engines, hybrid engines, hybrid transmissions and pure electric products, and includes various forms of energy such as fuel, hybrid, pure electric and hydrogen power.

Chery’s technical experts claim that their powertrain development technology reserves essentially cover the automotive powertrain technology route for at least the next 30 years.

Chery has always had a great foresight in technology reserve. These technological innovations have helped Chery to develop and grow rapidly for the past 25 years and achieve a successful transformation from traditional internal combustion engine vehicles to new energy vehicles.

However, Chery’s lack of emphasis on marketing and systematic upgrading and innovation has prevented the company from breaking into the A00 market and achieving brand recognition. Despite having many technological advantages, Chery has always been associated with affordability and small cars in the public’s mind.

Chery realized this issue early on. They once asked themselves: What are the fundamental differences between us and joint venture brands when it comes to comprehensive competition? The answer is system capability.

In his message to 13,000 Chery employees, Chairman Yin Tongyue also mentioned that “young people are very sensitive to new trends in consumption, aesthetic tastes, and internet application scenarios. However, sensitive antennas and innovative enthusiasm do not necessarily turn into innovative results. They require a lot of knowledge and experience accumulation and platform-based and systematic development and transformation.”

This passage also seems more like a reflection and summary of Yin Tongyue’s own youth and Chery’s journey.

For the past 25 years, Chery has accumulated many technical reserves and gained a lot of experience while exploring. Today, instead of solely focusing on technology, Chery needs a systematic and platform-based approach to innovation and improvement.

Therefore, starting from 2016, Chery began to actively implement the 2.0 stage of strategic transformation, aimed at improving system capability, solving the “good or not good” problem, and forming a marketing-centered overall system strategic upgrade.

Embracing New Ecologies

Afterwards, Chery actively cooperated with technology companies and internet giants.In June 2021, Chery launched the iCar ecosystem and entered into a strategic partnership with Alibaba Cloud, committed to systematic innovation. It has been claimed that this is the first-ever cross-industry automotive ecosystem brand, dedicated to creating an all-in-one “one-thousand people and one-thousand cars” solution and proposed the concept of “boundaryless cars”.

On May 18, 2022, nearly one year after the launch of the iCar ecosystem, Chery iCar ecosystem officially signed a strategic cooperation agreement with JD.com.

On that day, Chery also released its new flagship model of iCar ecosystem brand – the QQ Unbounded Pro. This intelligent vehicle is claimed to have super-intelligent features.

The car is currently being sold through crowdfunding, with a crowdfunding price ranging from 79,900 to 101,900 RMB. As the performance monster QQ Unbounded Pro, it remains to be seen whether it will become Chery’s next hot-selling new energy vehicle, which is worth looking forward to.

Chery’s strategic cooperation with JD.com is a project that builds a closed-loop of the entire vehicle transaction and a full-chain of new car e-commerce. Both parties will cooperate on model, efficiency, and security innovation at the brand, dealer, and consumer ends.

With the support of Internet technology companies such as Alibaba Cloud and JD.com, it remains to be seen whether Chery can achieve a breakthrough and improve its brand.

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.