Author: Su Qin

In Trout’s “Positioning,” Deng Delong, Chairman of Trout China, wrote in the preface: Determine the most advantageous position in the customer’s mind against competitors, thereby helping the company win the competition and achieve priority selection.

Yes, a clearer positioning can often enable users to quickly understand the message that the brand wants to convey, thereby generating a first impression in the user’s mind and winning a greater opportunity for the brand to occupy a place in the user’s mind first.

“Sibling Fight”

In terms of entering the market with precision positioning, it is undoubtedly Ideal that is ahead of many other new forces brands.

“Family,” “Dad,” “Space.” Once these tags appear, Ideal’s appearance gradually emerges. This is also an important reason why Ideal has been dominating the new forces market with just one model, the Ideal ONE.

Clear positioning combined with a single model greatly reduces users’ decision-making difficulties and solves their choice paralysis. However, with the outbreak of the Ideal ONE “discontinued” storm, the release of the Ideal L9 on June 21, and the release of the Ideal L8 and Ideal L7 on September 30, the situation has gradually undergone subtle changes.

As can be seen from the figure above, from L7 to L9, Ideal continued to position itself as a family car, with prices ranging from 300,000 to 500,000 yuan, and four versions of the L8 and L7 models are concentrated in the price range of 300,000 to 400,000 yuan.

In addition, it is not difficult to see that the appearance of L7, L8, and L9 is basically the same. Although L8 is an upgraded version of the Ideal ONE, it is more closely related to L7 and L9. Perhaps the most obvious difference between the three models is the size of the space.

For example, between L7 MAX and L8 MAX, except for the difference between five seats and six seats, in intelligent space, intelligent driving, chips, lidar, and other points that are usually highly valued in new force brands, they are completely the same. And the price difference between the two is only two yuan.

For most Ideal users, the price difference of two thousand yuan can be said to be negligible. Then, if you have to choose between L7 MAX and L8 MAX, why not choose the latter which is a bit more expensive but clearly has a larger space and makes your family more comfortable?Since the easing of the epidemic in May, the sales of Ideal Automobile have remained stable at more than 10,000 units. However, in August, due to the news that Ideal ONE was suspended, sales were cut off. At the same time, President Shen Yanan’s consecutive stock sales have caused a public uproar. For a while, Ideal Automobile fell into a trough.

Therefore, Ideal Automobile released L7 without warning after introducing L8 at the press conference, with similar configuration functions and closely arranged prices, which showed a trend of being better than others in the price range of 300-400 thousand.

However, from the perspective of users, since the prices are so close and I don’t care about the extra money, why not buy a better model directly?

Therefore, with the official delivery of L9, L8, and L7, although it may save Ideal Automobile’s sales, there is a high possibility of bloodsucking between sibling models, ultimately resulting in a zero-sum game where sales are polarized.

Although Ideal Automobile’s positioning in the overall market has been very successful, the positioning within the family has become a “mixed bag”.

Similar situations have also occurred with NIO’s ES7. ES7 and ES8 are both mid-to-large SUVs, priced at around 500,000 yuan, with the former being a 5-seater and the latter being a 6/7-seater. Although the former has a greater advantage in the outdoor scene because it can tow a caravan, for most NIO users whose driving scenes occur in the city, for the same price, why not buy the ES8 with more spacious and comfortable space?

Admittedly, the cockpit system of ES7 uses the more advanced Banyan system from NIO, which is more advanced than the ES8. But everyone knows that intelligent cockpit system is strictly speaking only a seasoning during the driving process. At the level of 500,000 yuan, the intelligent cockpit system with different systems added doesn’t have a very intuitive difference in experience. On the contrary, the difference in space gives a stronger sense of difference, which makes users feel more tangible where their money is spent.

In addition, according to surveys, the penetration rate of boutique camping (Glamping, a camping style that focuses more on equipment and overall atmosphere, which fits in with NIO’s style) in China is still less than 1%. In a situation where the user base is already small, the number of users willing to buy ES7 for fine camping is even less optimistic.

The fact proves that both models did not sell well, and ES7 performed even worse, which must be reflected upon.## Reasons for Infighting

Why did the new powerful brand, which rose through the internet, produce such a haphazard and lacking-in-Internet-thinking product strategy?

In the eyes of the Electrek reporter, there may be three reasons:

Firstly, the deviation between product enterprise positioning and market positioning. To lay out the product reasonably and satisfy user preferences, a product requires accurate and consistent enterprise positioning and market positioning. However, as the internal personnel of the enterprise often focus more on the product and lean towards a professional perspective, the positioning is likely to deviate from the user group with more diversified concerns and receiving more diversified information.

For example, in the case of Ideal car, although every car from L7 to L9 has a clearly defined position of “5 seats / 6 seats” and “PRO / MAX” from the perspective of Ideal car, they are all just a large family car from the perspective of the user.

Secondly, too much emphasis on the family user group. Research shows that among people who buy cars that cost over 200,000 yuan in the Chinese market, up to 89% of consumers are family users. As the fuel car market gradually shifts from an incremental era to a stock era, high-end new-energy vehicles that have more policy benefits (such as exemption from purchase tax), richer technological experience (such as intelligent interaction), and more traditional luxury elements (such as Nappa leather seats) are bound to become the fans of these 89% family users. Therefore, in the early stage of the development of new energy market, whoever first reaches more family users will become the market leader and have long-term corporate interests.

Thus, we can see that Ideal, NIO, and AITO, the three new energy brands with outstanding sales, have more or less focused on the pursuit of family users. Therefore, under the multiple contests and endless upgrading, there is no time to consider whether the product is homogeneous. The one who runs the market first laughs last.

Thirdly, standardized production and sharing enormous costs. As everyone knows, car-making is an extremely costly business. Tesla was established in 2003, but it did not turn a profit until 2020, and still under the premise of selling carbon emission quotas.

In China, except for Ideal car, which briefly achieved profitability in the fourth quarter of 2021, other brands have been in the quagmire of huge losses for a long time.

Up until the first half of this year, Ideal had a net loss of 652 million yuan, which was still optimistic. In contrast, NIO reached 4.54 billion yuan, and everyone is waiting to see NIO’s joke. Under huge financial pressures, it is urgent to achieve profitability as soon as possible. Therefore, reducing the differences between products and standardizing production can reduce short-term costs and alleviate the financial pressure of enterprises to a certain extent.

Based on the above three points, it is not surprising that Ideal and other high-end new energy brands are caught in a situation of infighting. However, is this a cure worse than the disease? Only time can reveal the answer.## The Resolution of Brotherly Conflict

Currently, many new energy vehicle brands, such as Li Auto and XPeng Motors, are following Apple’s naming conventions. Why not look to Apple for brotherly conflict resolution?

Apple has a total of 6 main product lines including Mac, iPad, iPhone, Watch, AirPods, and Home. Each product in each line has an accurate positioning both internally and in the market.

Take the latest iPhone 14 for example. Users can decide which one they want based on their first preference for the most intuitive appearance and screen size. Afterwards, they can choose color, storage space, and other purchase policies in a very linear manner. There is a straight-forward thought process guiding users to choose their favorite product in the simplest way possible.

Of course, for cars, it is not practical to distinguish different products based on screen size. In today’s world where screen size is an important consideration factor for a car, making the screen smaller may cater to some users’ preferences, but operability and visual experience would be greatly reduced.

As Steve Jobs said, “Good artists copy, great artists steal.” We cannot simply follow the doctrine of unoriginality, but rather to dig deep and discover something more essential.

In fact, the core feature that distinguishes different iPhone products is “simplicity”. Using Li Auto as an example, when viewed from the perspective of “simplicity”, differences in space size among different products can be adjusted accordingly.

According to the latest data from China’s seventh national population census, the current household size is fluctuating at around 2.5 people, with the number of 1-person and 2-person households on the rise. For these users, Li Auto’s 6/7 seat large space is actually an unnecessary burden that consumes electricity and fuel. Unless Li Auto does not care, releasing models tailored to fit these users’ preferences is necessary.

Therefore, to escape the situation of brotherly conflict, we should think of going “small” on the basis of the original space feeling, and consider launching a “mini” version.

Electric Impetus Speaks Up

Finally, let’s return to Trout’s “Positioning”. He states that modern marketing is actually a war for winning the user’s mental image, and a winning finishing weapon is “positioning”.

In the initial stage of the development of new energy vehicle brands, there are inevitable problems such as barbaric growth and extensive operation. Therefore, Li Auto and NIO’s product positioning issues are not strange, and we should still look at these new energy vehicle brands with an open mind and long-term vision.As new energy brands grow, they are increasingly driven by their own value to users, rather than subsidies and policies.

By 2023, many cities will officially cancel the issuance of green license plates for plug-in hybrids, range extender cars, and other hybrid vehicles. At that time, new energy brands like NIO that focus on range extender cars will see how much their value is truly appreciated.

Similarly, before the policy dividends for pure electric vehicles disappear, it is always a challenge for brands such as NIO to demonstrate their value to users.

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.