Article by: Zelin Leng, Xianzhi Wu
Edited by: Wang Pan
In 2022, as New Energy Vehicles (NEVs) gain popularity, related companies are gradually taking over the top spot from internet companies.
When an industry is being watched and expected by the public, it can be both good and bad. On one hand, people’s determination can act as a whip, encouraging companies to run faster. On the other hand, any small mistake can be amplified by public opinion.
Taking up the crown means taking up the burden. However, if one cannot handle the attention from the outside world, there will be a situation where the one who kills the king’s horse will be on the sidelines. NIO is a very typical case right now.
On June 22nd, at around 17:20, a NIO test car fell from the third floor of a parking lot, causing the death of two Digital Cockpit test personnel. The words “life”, “new energy vehicles”, and “NIO” have all attracted more attention. In this process, NIO’s response quickly sparked public opinion.
“Based on the analysis of the scene, it can be preliminarily confirmed that this is an accidental incident and has nothing to do with the vehicle itself.” This statement was generally considered to be “callous.” If it ain’t broke, don’t fix it. Some NIO owners also believe that the semantics of “has nothing to do with the vehicle” itself are problematic. It was a car that fell, how could it have nothing to do with the vehicle? The person believed that the text could simply read “accidental incident.”
After seeing the criticism, NIO changed the wording half an hour later, deleting the last paragraph. However, people were still not buying it. This is NIO’s second time this month being pushed to the top of public opinion due to public relations issues. Earlier, NIO’s Senior Director of Corporate Communications, Ma Lin, attracted attention when he commented on NIO’s cooperation with AMD. The crash incident was also pushed to the forefront because of the inadequate official response.
In fact, this year, there have been numerous public opinion incidents in the NEV industry, including the drama of BYD and Geely’s million-dollar game of cat-and-mouse with black PR; the incident of XPeng’s shoes hitting Yu Chengdong’s face in thoughts; and the NIO test car incident, which “had nothing to do with the vehicle.”
Behind all this hustle and bustle, perhaps the industry landscape is quietly changing.
Smartphone Manufacturers Enter the Game, Car Companies are Neglecting and Following
Where there is prosperity, there is the most intense competition.
In the past few years, no matter how much NIO’s car owners and fans stirred up public opinion, most of the time it was still “fighting within the family” and couldn’t break out of the circle. Examples include the early NIO car owners vs. No. 38’s trash talk, XPeng’s lawsuit against Tesla, and the confrontation between Li Xiang and Volkswagen. The parties involved mainly included the manufacturers, car owners, and car reviewers.
To say that the public opinion landscape in the NEV industry has begun to undergo qualitative changes, we should start with the entry of smartphone manufacturers.Last year, Xiaomi CEO Lei Jun rallied one last time with billions of dollars to enter the market; Huawei released its first Hi version and first intelligent car model. Due to the two companies’ shipments of mobile phones being among the highest in China, the attention brought to the new energy market has reached a new peak.
While this new wave of attention brings some benefits to the major automotive manufacturers, it also has its drawbacks. The advantages of new energy’s surge is the attention from the majority of consumers who were once unfamiliar with vehicle information. However, even with this increase, it does not immediately drive sales or earnings for manufacturers. This, in turn, causes automakers to be more cautious in their communication strategies as the mobile phone and automotive industries operate in different scales.
Although Li Bin, Li Xiang, and He XPeng (CEOs of WM Motor, Li Auto, and XPeng, respectively) all have a background in the media industry, when it comes to generating topics, they are still far less adept than phone manufacturers who have their unique “insights” in educating consumers.
Taking Yu Chengdong, who has had a long-standing relationship with Lei Jun and his favored “comparison method,” for example, praised his partner, Saic Motor, complimenting them on their 20 years of experience researching and manufacturing cars, the leading smart factory, and being among the first to master core electric drive technology.
If Saic Motor’s sales of the SF5 are poor, it doesn’t affect Yu Chengdong much. Instead, he shifts the spotlight to the WM Motor M5, claiming that the vehicle is designed with the appearance, interior, performance, and quality standards of a million-dollar luxury car.
Huawei’s entry into the new energy car market has caused significant changes in the automotive industry’s public perception. Last year, the launch of ARCFOXx Alpha S Hi’s automatic driving impressed many people who had previously paid no attention to automatic driving. They were left with an impression that Huawei’s autonomous driving technology is “good.” Although afterward, experts analyzed the technology and even a former Huawei employee “refuted” the rumors, the impact wasn’t as powerful as the initial impression that had been left on people’s minds.
The identity of phone manufacturers combined with their “exaggerated” advertising creates an awkward atmosphere for both emerging and traditional car companies in the eyes of the consumers. In response to this, car companies have appeared to have split into two factions when it comes to external communication. The traditional car makers, such as BYD and Geely, lack experience in rebuilding relationships with consumers regarding the new forces, resulting in reduced publicity and investing in responding to “negative public relations.”Another group is the once new force, rising to the challenge. As shown by the new model L9 recently released by Li Xiang’s Ideal Auto, it has been dubbed as the most luxurious SUV under 5 million RMB, benchmarking against models such as the Koleos, BMW X7, Mercedes-Benz GLS, and Maybach. It is obvious that Li Xiang knows more about cars than Yu Chengdong.
Of course, some car companies are unwilling to be influenced. Wei Jianjun once drunkenly stated “they know nothing,” and He XPeng went on a forum and threw a shoe at Yu Chengdong. Li Bin seemed to realize the power of public opinion at the beginning of the year, stating that he would “speak carefully” from then on.
Sales volume is both an aphrodisiac and a poison
At the beginning of 2020, Wang Xing gave a forecast of a “3+3+3+3” pattern.
The three state-owned enterprises, FAW Group, Dongfeng Motor Corporation, and Changan Automobile, unfortunately did not stand out. Among the three state-owned enterprises, SAIC Motor, Guangzhou Automobile Group (including the Ehang brand), and BAIC Group are doing well. Among the three private enterprises, Geely, Great Wall Motors, and BYD, the situation is very different. BYD has taken the lead, Geely is in a period of transition, and Great Wall Motors is “raising cats.” Among the three new forces, NIO, XPeng Motors, and IDEAL Auto, IDEAL Auto has caught up and currently has the most impressive sales volume and financial report, and the mid-sized forces are also rapidly rising.
Two car companies that have excelled among private enterprises and new forces, BYD and IDEAL Auto, have turned their sales volumes into “aphrodisiacs” this month, and their stock prices have entered a sharp upward trend.
On the same day, June 10th, BYD sat on the throne of ten trillion yuan, and the market value of IDEAL Auto once surpassed NIO’s.
However, whether sales volume and stock price are absolute factors for judging the quality of a company is worth careful consideration. The growth rate of Seagate’s mother company, Xiaokang Co., Ltd., during the same period can far exceed the former two. From the lowest point in April to June 24th, its highest growth rate exceeded 160%.
Undeniably, the on-sale models of BYD and IDEAL Auto both have their strong product power, but in terms of external publicity, the two are also representatives of two extremes. In the current situation of continuously high penetration rate of new energy, galloping sales data can easily make companies addicted and unable to see the truth and direction.
Just a few days before and after BYD’s challenge to ten trillion yuan market value, two BYD fires broke out in Guigang, Guangxi, and Zhuhai, Guangdong. From the beginning of this year to now, BYD has experienced multiple spontaneous combustion accidents, involving many models such as the Tang, Song, Qin, Han, and Dolphin, and the BYD official almost always adopts the method of only refuting rumors, claiming compensation but not responding.
The only recall response was on April 29, this year, involving 9663 Tang DM vehicles produced from September 2, 2021, to March 14, 2022. The reason was that the battery pack tray ventilation valve installation surface was uneven, which could cause water to enter and potentially cause a fault in the power battery system’s electrical circuit or even the risk of battery thermal runaway in extreme cases.
Interestingly, two years ago, at the press conference for the blade battery, BYD Chairman Wang Chuanfu also claimed that he wanted to completely erase the term “self-ignition” from the dictionary of new energy vehicles.
It is unclear whether it was BYD’s tough attitude that kept people away, or the impressive sales growth that made the incidents of self-ignition and factory incidents quickly disappear, far less powerful than those of other car companies.
If the starting point of the “BYD Empire” was the Han EV, then the starting point of the Ideal One was the Ideal ONE, with a sales record of over ten thousand units in the 300,000-RMB market with just one model, dispelling doubts about extended-range electric vehicles and the family market positioning. And Li Xiang himself has become much more confident, daring to compete with a 5 million-RMB model.
The day after the Ideal L9 launch event, He XPeng couldn’t help throwing out the second “shoe” this month.
Some media interpreted this as a “verbal spat” with Li Xiang, who responded with a heart emoji. He XPeng then sent his blessings, and both parties reached an understanding and moved on.
In Wang Xing’s “3+3+3+3” theory, the only variable not mentioned is the entry of tech companies.
Since delivery of the WM Motor M5 in March, it set a new record for the fastest delivery time for a new brand, with 87 days of delivery. In May alone, the delivery volume reached 5006 units, while NIO’s best-selling model this year, the ES6, only reached delivery volumes of over 5000 in March and May.
If last year’s Huawei was only well-known, combined with this year’s sales of the WM Motor M5, it is easy to see how other automakers may feel a sense of illusion and pressure.
The industry experience that new car makers and traditional automakers have been exploring for many years has been shattered overnight by the sales strategy of “decreasing prices tenfold with an old phone” by Yu Chengdong. It seems that all the sluggish sales are just a matter of “communication skills” and neglecting Huawei’s progress from the Seres SF5 to the WM Motor M5 in front of traditional automakers.
Huawei is neither a pure original equipment manufacturer nor simply a Tier1 supplier. Instead, considering Huawei as a Tier1 + marketing company is more sensible. In fact, in front of traditional automakers, the new forces are also a mainframe manufacturer + marketing company, but Huawei has more experience and a longer history.
Consumers often don’t make rational judgments, but rather accumulate grievances until they explode. At that time, only focusing on products or “bragging” to surpass Huawei could easily turn the rushing sales into a “poison.”## To Wear the Crown, One Must Bear Its Weight
As one of the domestic brands that have successfully opened up the high-end market, NIO will undoubtedly face more demanding requirements, especially considering that the “user-centered” concept is essentially about people and human nature.
Since the beginning of this year, NIO has faced significant challenges in passive public opinion and market competitiveness. Their response to AMD was both immature and unreasonable. The car crash on June 22nd indicated that NIO lacked sufficient response capabilities in the increasingly competitive landscape.
Zooming out to the entire industry, different verbal and operational styles of multiple circles and linguistic systems have made car design a swirling vortex. Regardless of whether they are phone manufacturers entering the industry or traditional car companies vying for position, the fundamental differences in cultural and production approaches have created an industry in flux.
Industries in their growth stage always attract tremendous attention. With users paying attention to all aspects of the industry, car companies will face even greater tests. Many people apply the development trajectory of the mobile phone industry to automobiles, and there are indeed similarities between the two. However, the essential difference between phones and cars lies in safety.
When Xiaomi 1 was launched in 2011, its lack of experience led to phone batteries falling out without causing much negative impact on subsequent Xiaomi products. But imagine if the power battery of a car regularly slipped during driving; this brand would probably have no hope of a comeback.
Users have different safety expectations for phones and cars, which makes it essential for car products to communicate their safety value.
The NIO incident should remind all car companies that cars are not just products, but the bearer of safety and trust. Even if there was no malicious intent, under the spotlight, companies must always respond in the most universal way they can. People are unhappy with expressions that distance the company from a nonvehicle-related issue because they cannot accept any disregard for life from a car company.
Also, it serves as a warning to other car companies, whether it’s traditional car companies chasing black public relations or Yu Chengdong setting off repeated benchmarking waves, or the waist-level commanders obsessed with sales. Here’s a basic common sense reminder: cars are not balloons to be inflated but machines to be driven.
History tells us that, when the flood of traffic surges, only those who maintain their original intention can navigate the inevitable ebb.
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.