Author: Mu Min

In the wave of China’s automobile industry transitioning towards new energy and intelligence, each traditional automaker not only needs to ensure the foundation of fuel vehicles and promote brand upgrading, but also actively expand the new energy vehicle market. The pain of transformation is more intense.

Therefore, we can see their active investment in various aspects of the new energy vehicle industry chain and the pursuit of intelligence. The moment when intelligent electric vehicles really enter the market on a large scale has not yet arrived. We must let the bullets fly for a while.

From the perspective of the capital market, the market value of new forces is now in a state of “taking off”, while the market value of traditional giant automakers is in a “deep squat” posture, ready to take off at any time.

As for when to take off, it depends on who can truly introduce intelligent electric vehicle products with strong competitiveness to the market. There are two factors involved:

• Stabilize the basic market scale during the transformation stage, accelerate the penetration rate of new energy products within its own system, and “stabilize” is actually a reserve of power under the downward pressure of the large market;
• Who has more opportunities to play more cards in intelligence, from the current perspective, if you want to make achievements in intelligence, you must have more self-research capabilities and strengthen product definition capabilities.

The above two factors, one is the “present” and the other is the “future”. This is a typical situation where sales and strategic investment must be grasped at the same time. Among the giant automakers, Great Wall Motors is doing relatively well in these two points. Let’s take a look at Great Wall Motors’ “present” and “future”.

July Sales: The Truth Behind the Numbers

All traditional giant automakers are in the pain of transformation, and Great Wall Motors is no exception. However, the difference is that some are in the pain of transformation, while others are clear in their strategy and are both painful and happy.

From the current performance, in such a chaotic independent brand market, Great Wall Motors will never reach the “hanging by a thread” level that its helmsman Wei Jianjun worried about two years ago.

The most powerful support comes from Great Wall Motors’ sales data.

In the first few months of 2022, China’s automobile industry experienced the “darkest moment”, chip shortages, epidemics, supply chain crises, etc., which caused the entire automobile production and sales to suffer heavy losses. Fortunately, since June, the epidemic has improved, the supply chain has recovered, and the country has also introduced a series of favorable policies to stimulate automobile consumption, allowing the entire automobile industry to usher in a boom in automobile consumption in the off-season of July this year.

In July 2022, Great Wall Motors sold a total of 101,920 new cars, a year-on-year increase of 11.32%, with sales of new energy vehicles reaching 11,000, a year-on-year increase of 51.62%, and the monthly sales ratio of new energy vehicles exceeding 10%.

From January to July this year, Great Wall Motors sold a total of 620,445 new cars, and its historical total overseas sales also exceeded the 1 million mark, which is a remarkable achievement.From the overall data perspective, Great Wall Motors has done a good job in the basic lineup of fuel-efficient vehicles. After all, the country has a great subsidy for new energy vehicles, and many emerging car makers are developing rapidly. Even faced with these fierce challengers, Great Wall Motors remains as stable as Mount Tai.

Specifically, looking at the sales of each brand:

For the whole of July, the Haval brand sold more than 60,000 vehicles, a year-on-year increase of 7.14%. The star model Haval H6 sold 27,638 vehicles, a year-on-year increase of 7.35%, and Haval Dagou sold 10,610 vehicles, a year-on-year increase of 45.36%.

After two years of market honing, Haval Dagou has almost become a new sales spokesperson, and its future growth potential is considerable.

What’s more, Great Wall Motors is not satisfied with its current achievements. Instead, it has doubled down and launched the Haval Kugou model, which caters to both off-road and urban travel demands, becoming an important layout for Great Wall Motors in the compact segment market.

We have reason to believe that Haval Kugou will inevitably bring new market growth.

Moreover, Haval is about to usher in a comprehensive new energy transformation. This SUV brand that created brilliant achievements in its early days will usher in a completely new lifecycle.

In the high-end brand aspect, Tank brand, which was spun off from the Wei brand, continued to be popular in July, selling more than 12,000 vehicles, a year-on-year increase of 128.03%.

Among them, the Tank 300 sold 9,955 vehicles, a year-on-year increase of 81.99%. Since its launch, Tank 300 has been popular in the market as an online celebrity model; Tank 500, as a higher-level existence, is equipped with Great Wall’s self-developed 3.0T V6 engine + 9AT power system, which will deeply attract consumers who pursue performance.

In addition, the Tank brand has also successfully gone abroad, and its subsequent sales performance is worth looking forward to.

Wei brand sold 3,034 vehicles in July, an increase of 5.09% month-on-month. The Latte DHT-PHEV was just launched at the end of July, and at this stage, we have not yet seen its sales performance. However, its goal of understanding users’ travel needs and solving users’ travel anxiety has truly made many people impressed.

To be honest, Great Wall Motors’ accumulation of hybrid technology is already deep enough, and now consumers need enough time and space to understand and learn about it.

As the current leader in the pure electric vehicle market for Great Wall Motors, the Ora brand achieved sales of 8,829 vehicles in July, an increase of 21.76% compared to the same period last year. The recent growth of the Ora brand has been impressive, especially with the release of the Ballet Cat, its first female-exclusive vehicle, which has been well received by female consumers.

In the pure EV sector, Great Wall Motors has also been working behind the scenes on the Saloon brand, a high-end intelligent electric vehicle manufacturer that has remained low-profile for quite some time. The upcoming Chengdu Auto Show will draw more attention to the Saloon brand and attract more consumers.

In addition to the domestic market, Great Wall Motors also performed well in July in overseas markets, selling more than 14,000 new vehicles, an increase of 18.27% year-on-year. Also, the popular Tank model has already entered the overseas market.

It is worth noting that Great Wall Motors has been deeply involved in overseas markets for more than 20 years and has accumulated sales of more than one million vehicles. Furthermore, Great Wall Motors is actively expanding its overseas sales network and overseas factories to ensure global supply from both sales channels and production capacity.

Based on its performance in overseas markets and intensive actions, it is apparent that Great Wall Motors is seeking to become a global auto company, although it is currently still based on traditional fuel vehicles. This is an important action for Great Wall Motors to maintain its traditional fuel vehicle market share.

In addition to maintaining sales volume, Great Wall Motors is also actively seeking to improve its brand image. A few years ago, the launch of the “WEY” brand was a great hope for Wei Jianjun, the chairman of Great Wall Motors. The company hoped it would lead to a breakthrough in the company’s brand.

Today, “WEY” has evolved into “WEY” and Tank models. The coffee-themed PHEV models of the Wei brand, such as the Mocha, Latte, and Macchiato, have become pioneers in DHT hybrid technology, attracting continuous attention in the market, although sales have yet to take off. The future is expected to be promising.

The ultimate goal of enhancing the brand image is to increase product prices and profitability. Some data can explain this trend:

• In the whole year of 2021, the average unit price exceeded RMB 106,000, an increase of 15.02% year-on-year. In January and February 2012, the proportion of vehicle models priced above RMB 150,000 increased to 15.5%;
• In the first quarter of 2022, the average unit price reached RMB 119,000, a year-on-year increase of 29.12%；
• In July 2022, the percentage of vehicle models priced above RMB 200,000 reached 15.17%.

From these data, it can be seen that Great Wall Motors’ average unit price is continuously increasing, and the sales proportion of high-value vehicle models is also increasing. The road to enhancing the brand image is long, but with the popularity of high-end models such as Tank, Great Wall Motors’ traditionally popular SUV image of less than RMB 100,000 will also shift upwards in the eyes of consumers.

Great Wall Motors has already released a performance forecast for the first half of 2022, with an estimated net profit of RMB 5.3 billion to 5.9 billion, an increase of 50.2%-67.2% year-on-year. The main reason for the increase in net profit is due to the rise in unit prices and the increase in gross profit and gross profit margin.From the sales performance of Great Wall Motors from January to July, to the realization of profits in the first half of the year, and to the satisfactory results of the brand lifting, it is not difficult to see that in the period of pain for the transformation to new energy, Great Wall Motors has stabilized its position and has not directly fallen behind like some traditional fuel car brands, laying a foundation for Great Wall Motors to achieve greater breakthroughs in the field of new energy vehicles in the future.

Full Efforts to Transition to New Energy Vehicles

The determination of Great Wall Motors to transition to a new energy car company was revealed in June 2021 during Wei Jianjun’s speech at the Great Wall 2025 Strategy Conference and the 8th Science and Technology Festival. By 2025, it will have invested a cumulative total of 100 billion yuan in research and development in new energy and other fields.

Before announcing this ambitious goal, Great Wall Motors under Wei Jianjun’s leadership has been somewhat undecided about developing new energy vehicles. In 2016, Wei Jianjun even publicly stated that Great Wall Motors was only a follower of new energy vehicles, and pure electric cars were not the real future. He seems to have more enthusiasm for hydrogen energy, which is why Great Wall has been putting efforts into supporting its hydrogen energy technology company, Weichai Energy.

In the past two years, Wei Jianjun should have realized that electric car companies such as Tesla and BYD are vigorously occupying the market share of fuel cars. Technologies such as hydrogen energy are not yet mature enough to be widely popularized and commercially used. Therefore, Great Wall has embarked on a strong push into the hybrid and pure electric car market.

So we can see that after careful strategic considerations, Great Wall Motors has blossomed in multiple areas in the field of new energy vehicles, and its actions are fast.

First, in the plug-in hybrid market, Great Wall Motors has quickly implemented its DHT-PHEV technology on its Wei brand SUV models, because this new energy technology can achieve a good balance in terms of market maturity, consumer acceptance, and cost control.

Taking the Wei brand Nescafe DHT-PHEV as an example, this plug-in hybrid technology can achieve four different types of driving modes: pure electric, series, parallel, and engine direct drive, to meet different needs in different scenarios.

In addition to the Wei brand SUV, the company’s hybrid technology will also be installed on models of the national SUV brand Haval, which will be an important move for Great Wall Motors to fully exert itself in the field of new energy vehicles and take on the responsibility of sales in the transition to new energy.

In terms of pure electric vehicles, the current brand on sale is ORA, which has three models: Good Cat, Good Cat GT, and Ballet Cat, with a price range between 150,000 and 250,000 yuan, belonging to the mid-range electric vehicle market and mainly targeting female consumers. The retro styling has indeed attracted a large number of fans.The upcoming new models from ORA such as Punk Cat and Lightning Cat will further enhance the influence of Great Wall Motors’s electric vehicles.

In contrast, Salon, a high-end smart electric car brand, with its “tough male mech” style, primarily attracts male consumers with its high-end positioning, occupying an entirely different market than ORA.

Its first model “Mechanical Dragon” is highly anticipated and will enter the brand’s period of exertion and intensive product distribution in the future.

In addition to the above, Great Wall Motors has also nurtured a direct supplier in the power battery field, “Honeycomb Energy,” whose main products include battery cells, modules, battery packs, energy storage battery systems, and is currently continuously developing power battery production capacity.

In 2021, Honeycomb Energy’s sales volume ranked as the global 10th and domestic 6th among the annual automobile sales volume. Its momentum is still robust, and its strength is not to be underestimated.

Undoubtedly, Honeycomb Energy will be the main power battery supplier for Great Wall Motors’ future pure electric vehicle models. This type of automaker that firmly controls battery supply in its own hands is rare globally.

Previously some suggested that automakers were helping battery companies to do their job; at least not in the case of Great Wall Motors because they are a family.

In the new energy vehicle field, the ORA is currently the main sales force for Great Wall Motors, with the newly launched DHT hybrid models. The total sales can be steadily maintained at over 10,000 units.

This is just the beginning of Great Wall Motors’ advancing into new energy. In the future, the Haval hybrid, Salon pure electric and others will have the opportunity to stand out and become the important propelling force for Great Wall Motors’ new energy transformation. We are not only looking at the current stage but also considering the potential in the future.

It’s worth noting that the global new energy vehicle market is still relatively small, with enormous market space, exhibiting a large enough stage for Great Wall Motors’ new energy display.

In particular, Great Wall Motors has already mastered hybrid technology, power battery supply chains, and hydrogen energy technology supply chains, giving it a more significant initiative in the future competition.

In addition, to promote the development of electric vehicles and new energy vehicles, Great Wall Motors is also in the layout of third-generation semiconductors’ production. Just this August, the Great Wall Motors Group signed a strategic cooperation agreement with the Xishan Economic and Technological Development Zone of Jiangsu Province, and the project “JiDian GuangNeng Global Headquarters and CaTiO3 Innovation Industrial Base” and “Honeycomb YiChuang Third Generation Semiconductor Module Encapsulation and Testing Manufacturing Base” with total investment of RMB 3.8 billion were launched in Xishan Economic and Technological Development Zone.As an important part of the whole project, the completion of the third generation semiconductor module testing and manufacturing base project will have a capacity of 1.2 million sets of vehicle-level modules, which will greatly promote the development of Great Wall Motors’ electrification. Nowadays, it is a general trend for car companies to directly engage in semiconductor production, especially for car companies that have aspirations for the future. BYD also has its own semiconductor company.

Grasping Intelligence Tightly in One’s Hands

In the next 10-20 years, the field of intelligent vehicles will be the next important battlefield of consumer electronics. The trend of mobile phone manufacturers entering the automotive industry has emerged, and the layout of the intelligent automotive industrial chain by mobile phone companies is also an important direction. Apple, Huawei, Xiaomi, OPPO, etc. have already taken important steps.

Moreover, car manufacturing companies are also constantly laying out the smartphone ecosystem. For example, NIO plans to make phones, and Geely acquired Meizu. In fact, the integration of car and smartphone ecosystems has become a new trend.

If traditional car companies do not make changes and do not transform from mechanical and hardware production to electronic and software development, it is very likely that they will follow in the footsteps of Nokia. Intelligent vehicles will inevitably eliminate traditional vehicles.

Intelligent cabins, intelligent driving, automotive operating systems, automotive software, underlying electronic and electrical architectures, etc. have become the “souls” that a car company with ideals and pursuits must hold. This is exactly what Great Wall Motors is doing now.

The CTO of a certain large company once commented on Great Wall’s layout in intelligent technology:

“I don’t know if they will ultimately succeed, but Great Wall’s decision on intelligence is wise. As long as there are no tactical mistakes, I personally think Great Wall will have the most potential among traditional domestic brands.”

Currently, the deep investment of Great Wall Motors in intelligent technology will bring it the most flexible strategy in developing intelligent car products in the future.

Under the banner of Great Wall Motors are companies like Hao Ma Zhixing, Technology Center, Jinggong Auto, Nobo Auto, and Noe Creation Technology, which focus on the intelligent field. These companies give the company independent research and development capabilities in full-stack technologies such as intelligent driving, intelligent cabins, and intelligent services, including electronic and electrical architectures, autonomous driving, intelligent line control chassis, and intelligent cabins.

Meanwhile, Great Wall’s Kafai Intelligence 2.0 is a new autonomous driving computing platform that controls self-researched electronic and electrical architectures, self-developed cockpit systems and intelligent ecosystems, and self-researched IDC 3.0, which has the highest global production efficiency. It has comprehensive R&D capabilities from bottom-up hardware to top-level software.

Great Wall Motors’ intelligence achievements are very outstanding. In July, the sales proportion of intelligent models accounted for 88.32% of the total sales, and the sales proportion of models built based on three major technology brands, Lemon, Tank, and Kafai Intelligence, reached 75.8%.In the field of autonomous driving, Huawei’s HiPhi serves as the company’s core proprietary supplier, providing Great Wall Motors with the confidence to compete with Tesla in the vital smart module segment.

Huawei’s assisted driving system HPilot has already been installed in multiple models, and the third-generation HPilot products have been iterated and scaled up in six passenger car models. From January to May 2022, the monthly installation volume of HPilot averaged a growth rate of more than 200%, and the total mileage of the assisted driving system exceeded 10 million kilometers.

At the advanced level of assisted driving, Huawei’s NOH function has been installed in the WeiPai Mocha model, and the city NOH function was also released at the Huawei AI Day in 2022. Sources say that the laser radar version of the WeiPai Mocha DHT-PHEV will make its first appearance at the 2022 Chengdu Auto Show, and related functions will be implemented soon.

With Huawei’s support, Great Wall Motors will not fall behind the emerging automakers that have attracted so much attention in the field of autonomous driving.

To be more competitive in the area of intelligence, Great Wall Motors is also increasing its investment in research and development. Currently, it has built a global research and development network covering Europe, Asia, and North America, and plans to increase its research and development personnel to 30,000 by 2023, with a software team of over 10,000 people. By 2025, the cumulative research and development investment will reach 100 billion yuan.

In 2021, Great Wall Motors invested 9.07 billion yuan in research and development. By 2025, it aims to increase its investment in research and development 10 times, demonstrating its ambitious plans.

In addition to self-reliance, Great Wall Motors is also actively cultivating external suppliers, and has deployed the self-driving chip company Horizon in the field of intelligence. It has also established deep cooperation with self-driving chip companies such as Qualcomm and Huawei, including the use Qualcom’s self-driving chip in Great Wall’s branded vehicles, and the use of Huawei’s MDC self-driving computing platform in salon brand’s new vehicles.

This internal (self-reliance) and external (cultivate suppliers) combination of soft (self-driving algorithm) and hard (chip, computing platform) supply chain control mode will undoubtedly bring more flexible strategies to Great Wall Motors in the future.

Great Wall Motors is expecting a breakthrough

From January to July of this year, Great Wall Motors’ total sales volume was 6.20445 million units, which was not as good as Guangzhou Automobile Group (1.15 million), Changan Automobile (1.12 million), and BYD (640,000). Moreover, the sales of new energy vehicles (74,600) were unremarkable.

However, Great Wall Motors is currently going through a period of transition pains. The heavy burden of its fuel vehicle history cannot be easily removed, and the fuel vehicle business is still generating revenue and profit for Great Wall Motors. Especially for the Haval and Tank brands, the overall sales volume is also stable and improving.The following is how the DHT hybrid models can win more consumers’ favor and market share, especially whether Haval’s hybrid can replicate its success. How can ORA expand the penetration rate of pure electric vehicles by continuously introducing explosive models? And whether the enigmatic Salon Automobile can raise the banner for Great Wall Motors to enter the high-end electric vehicle market?

In terms of intelligence, especially intelligent driving, Great Wall Motors is one of the few traditional car companies that have a subsidiary like Haomo Zhixing, an autonomous driving company. It is undoubtedly an important force for Great Wall Motors to transform intelligence.

With its focus on going global, enhancing brand strength, shifting towards new energy vehicle companies, and firmly grasping the “soul” of intelligence, Great Wall Motors is expected to squat and jump, accelerating its transformation into a “global intelligent technology company”.

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.