Text by Jiang Xiaohua

A few days ago, after completing a round of global price cuts starting from the Chinese market, Tesla released another “future” price reduction. Thanks to the key breakthrough of Tesla’s large cylindrical cells production technology, the production cost of Tesla is expected to further reduce by 54% in the future.

This means that if Tesla’s pricing adjustment strategy remains unchanged, the selling prices of the main models Model 3 and Model Y will definitely drop to below 200,000 RMB (roughly 30,000 USD) in the near future, even approaching the level of 150,000 RMB (roughly 23,000 USD).

Earlier this year, Tesla’s price reduction had already become the biggest wave in the EV market in China. Throughout last year, it seemed that Tesla and numerous Chinese brands between 300,000-400,000 RMB (roughly 45,000-60,000 USD) had become used to the mode of “you earn yours and I roll mine” thereby maintaining a stable environment.

However, Tesla’s price cut wave in early 2021, which took advantage of the subsidy withdrawal, instantly broke this unsustainable calm. The company reportedly received 30,000 orders in just three days of price reduction, showing a momentum of “selling ten thousand units after the price cut”. As a result, the public’s attention has shifted from domestic champions like BYD to Tesla, a brand that was once intentionally ignored by the domestic media.

It is understandable that the media favors Chinese EV brands during the national prioritization of domestic automobile industries, hence Tesla’s high exposure rate seems inappropriate. However, the challenges must be faced head on.

As with Henry Ford’s assembly line T-model car over a hundred years ago, the United States always seems to produce some industrial disruptors during eras of division. Just as old Ford had tinkered with the engine of the car, Tesla’s fundamental pursuit is also the ultimate optimization of costs, achieved mainly through innovative technology rather than the common efficiency improvements favored by Japanese and European enterprises.

This cost advantage will make rivals feel helpless during the establishment stage, because the barriers constructed by technological breakthroughs and innovations seem harder to bridge than management. As a result, many enterprises are now permeated with a sense of pessimism. During my communications with high-level personnel of various organizations at the end of last year, many expressed their concern for the lack of employee confidence within their respective companies.

This is normal. When the Ford Model T was bullying North America, Carl Benz and Gottlieb Daimler were also trembling with fear. However, as the later development told us, Ford did not surpass and eliminate Mercedes-Benz and BMW, and the industry was diversified even in the same price range. One generation of innovative technology has its limits. In fact, there has been no similar structural upgrade in the automotive industry in the hundred years since the birth of the assembly line. This round of technological innovation, represented by Tesla and some excellent Chinese companies, will also tend to develop steadily after redefining the new product value system of electric vehicles. And the cost advantage of self-developed and self-supplied components from companies like Tesla and BYD will be erased after new technologies are popularized.

However, the significance of trends lies in strengthening confidence, not erasing the pain of reality. The bright prospects of trends do not mean that there are no hardships on the road to success. How can we carry glory and dreams to keep up with Tesla in the new era with their advantages like what Ford had on the first assembly line?

We need to be tough and unyielding.

Wu Bing, the CEO of Xpeng Motors who just took over as the General Manager of SAIC passenger car, is a football enthusiast and still maintains the habit of playing football. When I talked to him about how to head the ball, he shared his experience: “When you see a ball falling from a high place, most people’s first reaction is to courageously meet the ball and at the same time, the neck subconsciously shrinks to discharge energy. But the result is often a twisted neck and a very weak ball. The correct way to do this is to jump up and concentrate the force on the shoulder and neck through your core strength and head the ball out with force. This way, you won’t get hurt and the header will be very effective.”

This is being tough and unyielding.

In fact, since Tesla was acquired by Musk in 2003 and the launch of electric vehicle products one after another until around 2015, we have seen some clues. In Tesla’s advantageous areas, there are no rivals who can compete with them yet. But every player that is currently in a good position, whether it’s foreign or Chinese companies, are tough and unyielding.

For example, BMW, which develops electric vehicles relatively well among BBA, Volkswagen that let outsider Diess mess around for four years, and some excellent Chinese companies represented by BYD.Let’s talk about RisingAuto’s headstrong leadership, led by Wu Bing, again today.

Almost at the same time as Tesla announced the price reduction, RisingAuto found Focus Media and released a poster like this in more than 40,000 buildings in Shanghai, as well as some high-end buildings in major markets such as Beijing and Chengdu.

Regardless of other information, the main advertising slogan “Choose RisingAuto R7 instead of WHY” is obviously aimed directly at the just-reduced Tesla Model Y. The expression is quite clever with a style of Shanghai.

Just launched, R7 has delivered more than 3,000 vehicles in the last two months of the year. If it follows the way most smart electric brands lured in experts in internal management last year, it should have made a more lightweight play with Zeekry, Yuxiao Li, etc. or hitched a spring breeze with BYD. In terms of short-term market strategies, this would be more cost-effective.

However, I still appreciate RisingAuto’s approach. Staring at the headstrong approach of the leading Tesla brand is the foundation for a smart electric vehicle company to ultimately catch up with Tesla’s development temperament. For leaders who represent the future, there is no way to avoid the walking path to eternal freedom. The previous generation of independent brands, which is now dominating the world, has made it clear to new companies today that they cannot be afraid. Whether it is Wang Chuanfu, who once said he would surpass Toyota in 20 years, or Li Shufu, who makes good cars that ordinary people can afford, the gap between our fuel cars and world-leading cars was much greater than the gap between us and Tesla today. These former car makers who were once mocked for speaking big words were able to stand out in the independent brand, as can they only be achieved with a headstrong approach?

New forces among today’s best, besides their own advantages, isn’t the common characteristic also the headstrong temperament of founders and businesses? Today, we see the same headstrong temperament in RisingAuto, which was established just one year ago.

Of course, don’t misunderstand the headstrong approach as being invincible; Shanghai’s enterprises certainly cannot throw “justice and fists” like Reading did in the last few days.

First of all, it is necessary to have self-advantages that meet the needs of the times. In the industry-changing era, simply talking about long-termism is incomplete. Although making cars is a long-distance running sport at any time, the long-termism of the era of change must add new trends in industries. Even Toyota, the most long-term brand, is worried about whether it is going against the times in the face of electrification.# Flyinno’s Bottom Color is of course SAIC Group

SAIC Group, which just won the sales championship among Chinese auto companies in the difficult year 2022, is one of the enterprises with the most complete industry chain, highest supply chain security and convenience, and strongest independent core technology control ability. Industry insiders should know that these sentences, which violate advertising laws, are by no means false. This is SAIC, which started as a joint venture with strong self-advantages compared to other car companies of the same level.

On the one hand, SAIC’s emphasis on the industry chain enables it to have the strongest ability to emulate the wise, although it has no cost advantage over Tesla and BYD at present. On the other hand, independent core technology is also SAIC’s basic culture, which is also true in the era of intelligent electrification.

We can see that SAIC’s industrial layout ideas in the past five years are complete in new core technology fields such as “three-electricity”, “smart driving”, “smart cabin”, as well as new core supporting areas such as replenishment and replacement. It starts with industrialization and bases itself on long-termism.

Meanwhile, progress is also being made quickly. For example, in the field of intelligent assisted driving, SAIC’s landing technology is leading the industry, alongside Huawei, the new upstart, and Tesla 15 years ahead.

Earlier, Chen Hong, Chairman of SAIC Group, said at a forum that SAIC could not entrust its soul to others. At that time, these words were still lightly ridiculed, taken out of context. However, the industry connotations and values of these words are self-evident from the already launched Tesla and BYD in the era of electric vehicles. This sentence means to establish advantages in the era of electrification as early as possible and maintain long-termism.

Flyinno’s long-termism is inherited from SAIC Group, which is pragmatic and has a certain forward-looking nature. This is the stubbornness of Flyinno, and also the stubbornness that many mature car companies with DNA in key areas such as technological strength, industry chain construction, and innovation drive should have.

Of course, as mentioned earlier, the confidence of long-termism sometimes does not solve short-term pain. If a company in the major changes of the industry keeps talking about long-termism, but the current situation is helpless, then such an expression of long-termism can not be trusted. Faced with the pioneers of industrial revolution, car companies should of course not delay.Speaking of WM Motor, it wasn’t until the end of September last year that WM Motor released its first product, representing the brand’s new line, the R7. During November and December, approximately 1500 units were delivered at an average transaction price over 320,000 yuan, ranking fourth among domestic large pure-electric SUVs in December.

Among all intelligent electric products of mature automakers and their sub-brands, this startup and climbing speed is already at the forefront. The speed comes from two strategies within WM Motor.

The first is to closely follow the leader. Closely following the leader not only means having the determination, patience, and confidence to catch up and surpass the leader in the leader’s advantageous areas, but also having the courage to play with the existing advantages immediately. Headstrong people must be tough enough. WM Motor’s internal tracking and benchmarking of Tesla’s existing products is not merely benchmarking to get traffic but benchmarking comprehensively, including the degree of implementation of available technology and hardware redundancy reserves, such as industry-first full-integration smart driving algorithm, “3 + 1 tyrant cabin-style giant screen” composed of a 43-inch wide full-color triple screen and Huawei Vision Enhancement AR-HUD flat-viewing system, and product appearance and interior configuration, as well as infinitely adjustable driving control and luxury comfort. This is the nearly stubborn product language of the R7.

In terms of marketing, we have also said that in fact, the increase of the penetration rate of electric vehicles in recent years has allowed many brands to survive relatively vaguely and even gain some sales, so many brands choose to avoid Tesla in marketing. However, in the marketing end, R7 chooses to closely follow Tesla, which seems to be unprofitable. This is the headstrong corporate temperament chasing the first place. Establishing this sense of urgency is engrained into the brand culture just like Ren Zhengfei’s “coldness.”

I cannot assert that enterprises that closely follow the leader can survive, but in this era of major change, enterprises that do not closely follow the leaders will definitely fail. This judgment is not difficult. You can tell if there are still batch-type automobile companies that do not use assembly lines to produce.The second factor is time. The death of big companies in change is often caused by sluggishness and difficulty turning around. The emergence of companies like Flying Element is to shed some bureaucratic burdens and move nimbly. For example, in terms of products, Flying Element R7 is the latest model of smart electric products on the market, but it has the best delivery performance. In terms of marketing, the Flying Element brand was outlined and enriched from scratch, with the fastest rhythm among peers.

You can imagine what new smart electric brands have experienced. Almost no new companies have a smooth delivery process for their first model of a new platform of smart electric vehicles. Many brands have faded after selling for one or two years, with a blurred brand image. Many brands with a promising start have plummeted after half a year, due to their unclear positioning and poor execution.

Flying Element has maintained a low-key and practical brand positioning for rational consumers. It can be seen that Flying Element is sincere towards its later competitors, and the internecine among competitors is intense, but R7 is still the company’s representative model.

Flying Element has a good and long-term brand positioning. Being flashy does not last long and is not reasonable. Rational users accurately assess product value, and they expect resonance with the brand’s connotation and their own spirit. They value the practical worth of the product in travel, rather than just piling on features.

Flying Element and “movie fanatic” actor Liao Fan joined hands with team leader Xie Hui, who shouted “keep pressing!” to illustrate the brand’s persistence. Neither of them are internet celebrities in traffic, but they are both hard-headed rationalists.

To put it simply, regardless of whether new independent vehicle brands are profitable or not, hyped up or restrained, they will not last long without sticking to brand positioning. There is hardly an exception. If you are stubborn, you cannot survive like an animal. Many independent brands that have reached one million units sold have also retreated because their brand building could not keep up with their development speed.

General Motors veteran Wu Bing will not overlook this, so Flying Element’s first-year efforts in configuration and brand promotion have been synchronized.It’s heartening to see that confident and pragmatic players, who are methodical instead of haphazard, are not uncommon in China’s auto industry, regardless of whether they belong to new forces or new powers. Recognizing trends, taking a long-term perspective, seizing the moment, and moving forward in the dark are all part of the self-cultivation of latecomers in terms of confidence and action. In addition, being unyielding and united top to bottom will increase the likelihood of navigating the fog of the uncertain era and entering a beautiful new world in an automotive industry where the winner doesn’t necessarily take all.

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.