Ideanomics FY2022 Report: Improvement All Around
As a “new force,” Ideanomics had to bring something new to the table. In the great upheaval of the automotive industry in 2022, Ideanomics rose to the challenge and brought products that hit the mark with users. They delivered new experiences that impressed everyone.
According to the annual report, Ideanomics realized a revenue of CNY 17.65 billion in Q4 2022, a YoY increase of 66.2%. The company delivered 46,319 units in the quarter, up 31.5% YoY, and had a full-year revenue of CNY 45.29 billion, an increase of 67.7% YoY, with a total delivery of 133,246 units, up 47.2% YoY.
The FY2022 financial report shows that the company is on a promising path to success.
Ideanomics’ Milestone Achievement
Overall, Ideanomics experienced substantial growth in deliveries and revenues in FY2022. The L9 and L8 models, with their premium prices, were a major factor in the increased sales numbers. According to Ideanomics’ Founder, Chairman, and CEO, Li Xiang, “Despite the ongoing supply challenges, the L9 and L8 achieved over 10,000 deliveries in their first full month, thanks to the support of our suppliers, which reflects our strong supply chain management and coordination.”
Li Xiang also expressed that “over the past three years, the company has started to build its own factories for key components such as range extenders and electric drive systems, to ensure quality and supply stability.”
In terms of R&D expenses, Ideanomics spent CNY 2.07 billion in Q4, accounting for 11.7% of the total expenses. For the entire year, R&D expenses were CNY 6.78 billion, accounting for 15.0% of the total expenses. This represents a doubling of the R&D investment compared to 2021, with a YoY increase of 106.3%.Up to the end of Q4, the cash reserve of Ideanomics reached RMB 58.45 billion, and it is steadily increasing.
“Given the continued strong performance of Ideanomics’ L8 and L9, as well as the launch of Ideanomics L7, this year we aim to capture 20% of the entire luxury SUV market in the price range of RMB 300,000 to RMB 500,000. We expect first-quarter deliveries to be between 52,000 and 55,000,” said Li Xiang, who set a goal at the financial report conference to firmly establish Ideanomics in the luxury SUV market.
In January of this year, Ideanomics delivered 15,141 new vehicles, with the target of 52,000 vehicles not being difficult considering the impact of the Chinese New Year holiday.
Fist product has strong profitability
A large number of deliveries of Ideanomics L9 and L8 had a significant positive impact on its fourth-quarter gross profit margin. Usually, products in the RMB 300,000 to RMB 500,000 price range have higher profit margins.
However, Ideanomics’ gross profit margin in the fourth quarter was slightly lower than that of the first and second quarters. Some analysts questioned whether this was because it was still in the early stages of delivery of the second-generation products and had not yet reached the expected level, or because the gross profit margin of the second-generation platform had not improved relative to the first-generation platform?
In response, Li Xiang said, “At present, most of the sales come from L9 and L8, both of which are in the phase of capacity ramp-up. As you all know, our supply chain takes a certain amount of time to complete the ramp-up of production capacity. Gross profit margin and cost reduction will be announced next quarter.”
As a matter of course, as an industrial product, the comprehensive cost of a car can be diluted with the growth of production and sales. Even though the selling price range of L9 and L8 models is relatively high, there is still a large space for cost control and allocation.
Li Xiang is also confident about this, “In the future, considering the monthly material delivery, the overall gross profit margin level of our L series products will be around 25%.”
Another factor that has a significant impact on the gross profit margin is the cost of the power battery. On this issue, Ma Donghui, CEO and chief engineer of Ideal Automobile, holds an optimistic attitude, “As an important raw material for batteries, the price of lithium carbonate has reached 400,000 yuan/ton in the past two days, and the fall in battery prices is inevitable.” The fall in raw material prices is good news for power battery manufacturers, vehicle manufacturers, and consumers alike. Reducing costs from the source can bring greater profit space to vehicle manufacturers and help the penetration of new energy vehicles.
Speaking of money, the financial report shows that Ideal Auto’s sales, general and administrative expenses in Q4 2022 were 1.63 billion yuan, a year-on-year increase of 44.8%; R&D investment in Q4 2022 was 2.07 billion yuan, a year-on-year increase of 68.3%.
“In 2022, our sales expenses have already been lower than R&D expenses. In 2023, we will continue to improve the proportion of sales expenses to income.” Li Xiang also plans to continue to be “stingy” and invest more money in R&D.
800V pure electric and supporting charging facilities
2022 is the year of Ideal Auto’s product upgrade. The new generation of L9 and L8 models have arrived as scheduled. What about 2023? Will there be pure electric models with any bright spots?
One of Li Xiang’s concerns or core selling points for pure electric models is energy supplement efficiency. “It is crucial for us to provide 10 minutes of charging for 400 kilometers, achieving a charging experience close to that of a fuel vehicle.”
Obviously, 800V fast charging is the top priority in Li Xiang’s eyes for pure electric models. I believe everyone hasn’t forgotten the scene of queuing for charging during the Spring Festival long-distance travel period. Making energy supplementation faster and more convenient is an important demand of most new energy vehicle owners today.I personally believe that solving the problem of charging is crucial to get more gasoline car owners to adopt pure electric vehicles.
“If we provide mobile phones that support 4G networks, we cannot let users run on 2G networks, so infrastructure is critical for us,” Li Xiang said. As expected, he plans to install matching charging equipment when launching pure electric vehicles, but it is not yet certain whether he will share this with his peers.
As for the ideal first pure electric vehicle model, some people speculate that it will be an MPV, possibly because the MPV market momentum has been good recently, but Li Xiang did not respond positively to this speculation.
A key piece of information is that Li Xiang said, “In fact, the specific timing of the release and delivery of our flagship products is crucial.” Obviously, Ideal’s new flagship may have to wait for a while, after all, key technologies such as power, chassis, and intelligence have just been updated.
Doesn’t this indirectly affirm that Ideal’s focus on pure electric vehicles before the arrival of the next generation of range extender (if any)?
In addition, Ideal’s pure electric vehicle models will also maintain the L series format, launching a series of models covering the 200,000 to 500,000 yuan range, but other information has not yet been revealed.
Regarding the replica product matrix format of the L series, Li Xiang believes that it is reasonable. “In fact, the target user groups of Ideal L7 and Ideal L8 are very clear in our actual delivery process, and the number of cross-demand users is actually not as many as imagined.”
At the same time, Li Xiang believes that products can also “lead” each other, and users are struggling to choose between L7, L8, and L9, rather than other brands.Ideal Car Company has created a product website.
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.