Jinrong Street Lao Li
On the first three days of each month, it is the day for the second-level market automobile researchers and new energy vehicle researchers to “draw lots”. In the recent two “lottery” rounds, GAC Aion has exceeded everyone’s expectations. As the car companies successively released their sales performance for May, Aion once again surpassed all new car players.
As of yesterday, there are five car companies with sales exceeding 10,000 units in May, namely GAC Aion, Ideal Automobile, NIO, XPeng Motors, and Leapmotor. Among them, GAC Aion ranked first with 21,056 units, leading Ideal Automobile, which ranked second, by nearly 10,000 units, and far ahead of XPeng and NIO.
It should be noted that GAC Aion’s high sales are not just a flash in the pan. In March of this year, Aion sales exceeded 20,000 units, and in April, it delivered more than 10,000 units in an extremely challenging market. From the overall performance of this year, GAC Aion’s accumulated sales from January to May were 76,100 units, a year-on-year increase of 122%. During the same period, XPeng Motors delivered 53,700 units, Ideal Automobile delivered 47,400 units, and NIO delivered 37,900 units.
Although there is still a big gap compared to the two giants, Tesla and BYD, GAC Aion’s performance is outstanding compared with new car players. Even compared with traditional vehicle brands, GAC Aion’s sales far exceed Volkswagen’s ID series and FAW’s Besturn brand. Looking at this year’s market, GAC Aion has exceeded expectations in both the industrial and capital aspects. Looking back at Aion’s actions in the past three years, it is not accidental but inevitable. After three years, Aion’s market value will be a more convincing answer than sales.
Since GAC Aion became independent, Lao Li has always paid attention to its development and has indirectly participated in some of Aion’s financing business. Today, Lao Li and everyone will talk about why GAC Aion, an unknown brand, can leapfrog over “Xiao Wei, Xiaoli”.
Regarding sales, Lao Li believes that GAC Aion has done three things right:
First, GAC Aion has a clear market positioning. Although Aion positions itself as a high-end brand in the field of new energy vehicles and does not make models priced below 100,000 yuan, it is not excessively “high-end” in terms of price. So far, GAC Aion’s products cover the price range of 100,000 to 300,000 yuan, which overlaps with BYD to some extent. The main price range of Aion’s sales is actually between 100,000 to 200,000 yuan, and the main selling models are the Aion S and the Aion Y, cleverly avoiding competitors in the market of 200,000 to 300,000 yuan—Tesla and XPeng—whose market capacity is exceeded by GAC Aion.The Aion V priced at 180,000-270,000 yuan and the high-end Aion LX priced at over 250,000 yuan have not achieved outstanding sales results. Lao Li believes that Weixiaoli’s performance is not poor but it is because GAC Aion has positioned itself too accurately.
Secondly, GAC Aion has excellent product strength. When it comes to GAC Aion’s technology and products, everyone thinks of Gu Jun’s witty remarks. Honestly, GAC Aion does not have its own tagged technology like Tesla, BYD, XPeng, and Nio, but the hidden potential skills of people cannot be ignored. Since becoming an independent brand, GAC Aion has successively launched three original battery core technologies: the magazine battery system safety technology, the super rapid battery technology, and the sponge silicon negative electrode battery technology, as well as new autonomous driving and intelligent cockpit technologies, etc.
Therefore, Lao Li believes that GAC Aion is really a company that produces products seriously – inheriting all the advantageous resources of GAC and performing outstandingly in mechanical quality and electrification. Although during the period of GAC New Energy (predecessor of GAC Aion), it successively launched oil-to-electric vehicle models such as GE3, GAC Aion switched to a pure electric platform quickly from Aion S. When Aion S was first introduced to everyone in April 2019, there was no shadow of any fuel vehicle. Since then, GAC Aion has maintained its product advantage.
Thirdly, GAC Aion has a reasonable sales strategy. Aion’s sales channels have always been “grounded”, and Lao Li’s friend often uses the phrase “White cat black cat, catch mice is a good cat” to describe Aion. In Aion’s sales system, there are both new forces’ innovative brands (direct stores, user operations) and practical strategies of traditional dealers (online sales, telephone sales), which is an important reason for driving GAC’s sales volume.
At the same time, GAC Aion accurately targeted the ride-hailing and taxi markets, driving the sales of Aion S. Although it is generally believed that ride-hailing may affect the brand image, Lao Li believes that it was ride-hailing that allowed everyone to get to know and experience this brand at the beginning of GAC Aion’s establishment. Whether it is driving or riding, it effectively spreads the word-of-mouth of GAC Aion. I remember taking an Aion S ride-hailing car a year ago, my friend was impressed by the space and comfort of Aion S after entering the car, and even chatted with the driver. I found that the driver knew GAC Aion’s products very well and spoke very eloquently. I think this to a certain extent has maintained a good reputation for GAC Aion.Speaking of which, Old Li recalls a small episode. When a certain new force was recruiting people, they often hired salespeople from Apple and even luxury brands. Nobody knew anything about online and telephone sales in the automobile industry, and they did not understand why they were needed, as luxury brands did not need them. Interestingly, Tesla learned online and telephone sales. Old Li wants to say that not everything new is necessarily right, and not everything traditional is necessarily wrong.
After talking about appearances, let’s talk about internal driving forces. In fact, it is not easy to build a brand like GAC Aion within the state-owned enterprise system. The driving force for GAC Aion’s high sales volume and rapid development is its daring innovation and pioneering spirit.
From its birth to the present, GAC Aion has always maintained relatively independent development. In the early stage of development, GAC Aion inherited core technology resources from GAC R&D Institute, and GAC R&D Institute and other sectors of GAC provided a lot of manpower support for GAC Aion.
It seems to have sailed smoothly, but as Old Li understands, there were many obstacles within GAC Aion in the early stages of development. There were significant differences regarding the operating and management model of GAC Aion, such as whether Aion would conduct mixed ownership reform or be wholly-owned by GAC, and whether Aion would focus only on manufacturing and sales like GAC Trumpchi or integrate research and development capabilities to create an integrated company. However, GAC’s senior management team persisted in the face of opposition and consistently provided Aion with a relatively independent environment for innovation and development. In the past three years or more, GAC Aion has explored a lot of new technologies and models, which is not easy within the state-owned system.
In addition to senior management support, GAC Aion has also maintained good employee motivation, and employee shareholding has been realized. In the first quarter of this year, GAC Aion carried out a new round of capital increase, introducing an employee share incentive platform and GAC R&D Institute technology personnel “top support bottom” shareholding platform. The total shareholding was about 4.55%, including 679 employees incentivized by shareholding, and 115 GAC R&D Institute technology personnel, with a lock-up period of five years. It is rare to see such major incentives within the state-owned enterprise system, and Aion has also completed the binding of employees and core scientific research personnel before going public independently.
According to GAC’s announced goal in April this year, Aion plans to carry out Series A financing this year, releasing 30% of equity financing of CNY 50 billion. In the past two months, Old Li has contacted many industrial investment institutions, and their biggest impression is that the competition is too fierce, and they cannot invest. This also demonstrates the capital market’s expectations for GAC Aion. Based on the released equity calculation, GAC Aion’s valuation after Series A financing is CNY 166 billion. Some first-tier institutions have given a PE of 15-20 times, corresponding to a valuation of CNY 180-250 billion.
The sales volume in May is just a milestone for GAC Aion, and independent listing is the ultimate goal.
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.