On the day of the Chengdu Auto Show on August 26th, we were invited to interview Chen Jia, Vice President of Integrated Marketing and Operations of Gaohe Automobile and General Manager of the Sales Company, and summarized related questions.
How do you view the HiPhi Z?
Chen: As you can see, our car’s price is above 600,000 yuan, which is basically comparable to the HiPhi X, except for the difference between the coupe and SUV models. In other words, our original intention in the luxury car market remains unchanged. We don’t just move from one place to another, which is the first point.
First of all, there are differences and distinctions in terms of positioning. Our first product, HiPhi X, is called an evolutionary supercar SUV, with the shape of an electric car. Because it doesn’t have an engine or exhaust pipe, we move the A-pillar forward to form a futuristic shape. Therefore, its appearance is stylish, in line with the sense of the future, and in line with what an electric car should look like. This is a major feature of Gaohe.
On the HiPhi Z, we adhere to this design philosophy. We continue to explore what an electric car in the digital age should look like. Therefore, we believe that the HiPhi Z is a further interpretation and differentiation based on the HiPhi X. This differentiation is mainly defined as a gift to the “young” creators of the present era. At the same time, HiPhi Z’s users are also pioneers. Its car owners have the above two user portraits. Gaohe adheres to the spirit of pioneers and has created the first product on the market. Many new technologies have also been introduced for the first time, including our PML programmable intelligent headlights that we promote, as well as our promoted scene card function, which is the so-called atomic force. It can call multiple instructions at once to reach with one button. Previously, none of these were available on the market. But with HiPhi Z, it is a kind of iteration.
Because it has good customer stickiness, just like what I said at the previous press conference, scene cards have many applications in the car. 90% of our HiPhi X owners have used scene cards, and 10% of them have made scene cards. Currently, we only have seven or eight thousand car owners, but we have five thousand scene cards, and users have used them more than 1.7 million times. We have saved users more than 14,000 hours of time. This is a new intelligent scene experience brought by HiPhi Z.
The HiPhi Z not only inherits these experiences but also has some distinctions from the existing traditional car cognition and some expectations for the future. The existing distinctions refer to what the electronic era’s control is like. In the past, we said that adding a spoiler to the back looks very beautiful, but an electric tail is even rarer. Including active rear-wheel steering, IVC whole-vehicle dynamic control system, which is a forward-looking safety control, and the use of the low center of gravity of the battery distribution, all of which have greatly changed the entire control.- The second point is our unique digital lifeform HiPhi Bot, which further develops the immersive in-car atmosphere and surround cockpit exploration we had before. It’s not just inside the car, but also outside of it. Everyone says we have a lot of lights, and I really want to give an example from the movie Avatar. The scenes in Avatar give you a sense of the future. And the whole digital cockpit and light effects brought by HiPhi Bot is meant to give you that feeling that the future should be science fiction, and science fiction can be achieved today. So, HiPhi Z will attract more young people and more creative young people, which is related to the brand evolution we proposed in March this year “Liking to Create.” Therefore, I think combining products and brands, expanding user profiles, is the difference between the two cars.
To add more, the current users of HiPhi X mainly comprise young families with strong family attributes.
About new products
Chen: In the following process, obviously we need to continue to develop in the luxury EV market and strengthen our brand power and brand image here. So, in the future, products will definitely continue to be launched. Future products will continue to uphold this brand spirit and the initial concept of brand building to enrich our product line, and our product launch rhythm will be relatively fast.
We still hope to maintain the rhythm of launching one new product per year.
Sales summary and expectations
Chen Jia: First, let’s talk about sales. We have delivered over 7,000 orders, and I would like to answer this from two perspectives. I am both satisfied and have high expectations.
Regarding satisfaction, as a brand, I am now able to stand in the first place in the submarket, occupying more than a 25\% market share, and I am satisfied with this data. Basically, when it reaches 30\%, pricing power is achieved, and the influence of the power in this market will be very strong. Moreover, there are more and more players in this market, not just five or six brands. There will be more than ten products soon. HiPhi is not the first to enter. However, HiPhi is the only brand that has had continuous average selling price increase in the past 12 months, which made me happy when I saw this number in July. Taycan, EQS, RX, E-tron have all decreased in sales price in the past 12 months. HiPhi has increased from an average sales price of 650,000 yuan to 670,000 yuan. Why? There are two reasons: I sell fewer low-end models, and more high-end models priced at 800,000 yuan. At the same time, as the average selling price rises, my customer value group is also rising, and people will get to know you better over time and trust you more. This is the part that satisfies me.My disappointment lies in the gap between our mission and reality. Objectively speaking, because our mission is in the luxury new energy vehicle market, we need to enlarge it and make ourselves stronger. However, in the process of our own development, expanding this market is an even bigger mission for us. Like Tesla promoting Model S and X, or NIO’s ES8 upon its launch, their mission is to sell new energy vehicles. In the past, everyone bought fuel cars and nobody bought new energy vehicles. Now, some people do buy new energy vehicles, but it’s still not enough. My main task as a salesperson is to get people who buy fuel cars to buy new energy cars, and I feel that this is not enough. Why buy a new energy car? Is it better than a fuel car? I don’t think it’s that simple.
I believe that new energy vehicles, especially intelligent electric vehicles, bring more value to customers, making driving more convenient, cost-effective, and enjoyable. Because we need to tell our customers that they can get more than what they pay for, they will naturally choose it. However, this message is still not enough, so we are working hard to expand our sales channels, expand our marketing team, and most importantly, continuously improve our products and the user experience, which is the area where I am dissatisfied. I think there is still a long way to go, and of course, important things are not so easy to do.
As for our sales plan, including how to provide an experience for female drivers, my understanding is this. We are reactive to feedback data, and our first priority is to leverage the growth of the market while enriching our product line. After all, the new energy vehicle market has been growing in China for so long, and now the entire market is booming, so I think this is a good opportunity. We are not doing what everyone else is doing, but rather what everyone desires. The two things people want are, first, to have future-oriented intelligent vehicles, so the design of the car needs to be different from what it is now. Second, we should have a brand that makes the Chinese proud, so we need to stand out.
On the B-side and C-side, I’ll give you two statistics. About 48\% of our users on the B-side issue invoices, and 52\% of our users on the C-side issue invoices. The reality reflected is that most of our car owners are private business owners, with the rest being senior executives in companies. Private business owners have more of their own companies in this data, which is quite high. This is very similar to the image of X’s pioneers. They are decisive but rational. We always thought that X’s car owners were impulsive at first, but they’re not at all. Today’s car owners include Netease executives, engineering and technical personnel, and many lawyers.Chen: Currently, in the luxury electric vehicle market with prices above 500,000 RMB, the monthly sales volume is not large. We occupy more than 25% of the market share, while the rest is divided between Mercedes-Benz EQC, EQS, Porsche, Hongqi, Audi, BMW, etc.
During the first 7 months of this year, we had the highest sales volume for 6 months. Last year, we only had one month of being number one. This year, we quickly rose to number one in the same level of the market. It seems that our brand has achieved some success in the market, but in fact, this market is quite large. The sales volume of products in the automotive market with prices above 500,000 RMB is close to one million.
Why is the increase in sales of luxury cars relatively slow, even with the rapid increase in the penetration rate of new energy vehicles in the first half of the year?
We believe that it is still because there is a lack of products in this level of the market. There needs to be more products in this market to provide consumers with more choices. In this price range, consumers are looking for an experience because they have driven many cars and own various luxury car models. They know what they are looking for. Our mission and the products we’ve introduced in the field of luxury new energy is to develop the entire market segment together with everyone, rather than going it alone. We hope everyone can work together to transform the concept of consumers in the 500,000 RMB and above luxury electric vehicle market.
In fact, we can already see that after 2030, almost all luxury brands have clearly stated that they will not produce fuel-powered vehicles and will instead produce electric vehicles. There are only a few more years left. This new product has just launched, and according to the general rule of products being replaced after six years, the fuel-powered cars that are purchased now should be the last generation, indicating that it is the “last emperor.” In this situation, HiPhi will further accelerate its investment in this market and bring in more users. This is also our mission.
The average age of HiPhi X owners is between 36 to 38 years old. The Z model is about five years younger.
Our oldest HiPhi X owner is in their 70s from Beijing and Guangzhou, which is quite interesting. There is an old man and an old lady from Guangdong, and the old lady likes to drive the X to fetch her grandson. She said that her grandson is only willing to come with her if she has this car. In Hangzhou, there is a female car owner whose son is in high school. She used to drive a Mercedes-Benz, but it was too small. After buying the HiPhi X, her son asked her to stop the car because it was too flashy. However, starting from the European Cup, it was unstoppable. They had to sit next to her as we have a function called “one-click watch football,” and her son wanted to be able to see the school gate and didn’t want to get off. So, the car owner wrote an article in our community saying, “My relationship with my son suddenly became better because of this car, and he is willing to talk to me and share with me.” This is the experience that users want to have, and HiPhi has created a world that satisfies the needs of vehicle owners beyond their cognitive recognition.
User Feedback for HiPhi Currently“`
Chen: User feedback is abundant. Today, we have members of national car enthusiast clubs and over a dozen car owners on-site. Some car owners couldn’t make it due to the epidemic, but it doesn’t hinder everyone’s excitement. Gao He proposed three definitions: “Scene-Defined Design,” “Software-Defined Car,” and “Co-Creation Defines Value.”
“Co-Creation Defines Value” refers to the co-creation with car owners, with our supply partners, and with our employees. The most important is our co-creation with users. So, during this process, we formed a car enthusiast club mechanism in over a year and carried out a lot of public welfare activities. For example, we cooperated with WABC and did an activity to help special children. How can this activity be combined with our product? They make art, and we have a small Bing system on the car that collects paintings, poems, and songs from the past two hundred years in the East and West. Depending on the environment, it can create poetry and paintings through three technology links in our immersive cabin. We also opened permission to the children of WABC, and their paintings are called “Children under the Starry Sky.” At the same time, we put the art works in the car, and the car owners also like them. In the future, we will iterate the system to provide users with an immersive production experience.
The second co-creation with car owners is through the technical platform, which is the scene card I mentioned earlier. Initially, it was hoped that a large number of convenient electrification functions would make things more convenient. For example, when he is sitting in the car, he can easily close any door without getting out of the car. He can also sit in the back seat and easily operate the doors and windows he wants to open. It is very convenient for him. After we promote these scenes to customers, customers will also make many scene cards, and users will share them with each other, creating better interaction. Customers will also make requests to us to produce more interesting scene cards. Our most obvious example is the story during the Shanghai epidemic. In fact, during the Spring Festival, we made a firecracker scene card, and the car can set off firecrackers, because many cities can’t set off firecrackers, people had a lot of fun during Spring Festival. On June 1st, when Shanghai was lifted from the epidemic, the whole Shanghai was very lively as long as there are a few car owners in someone’s neighborhood. Our car owners drove their cars to the road of the neighborhood to set off electronic firecrackers, and we also saw many videos of this. When you create a usage scenario, the user’s usage environment will make you rethink whether you can provide emotional value and make the use of scene cards more diverse.
“`In addition to these user co-creation initiatives, we have also had in-depth discussions with users on how to build a platform, such as our recent “Journey to Inbound” event where we collaborated with top camping teams to build an entire ecosystem. In the future, we may also partner with other airlines, such as Downhill Campsite. Speaking of which, yesterday we held a Creation Alliance event at Lake Lu, which included Guo Xingyu Aerospace, Mr. Tango, who are all comic book creators, including WABC and even Didi, as well as all our partners and collaborators, jointly building a creative ecosystem for car owners. Many car owners and partners participated and shared what they have done in terms of creation. Our suppliers include both B-side and C-side, such as SenseTime, iFlytek, and Huayi Vision, who all have their own exhibition booths. So, what can the cars of the future become, and how can we apply the user-perceived technology of high collaboration first? In the past, we always relied on coordination to address these issues, but why can’t we bring people from all walks of life together to exchange ideas and involve users as well? Therefore, yesterday’s event was very successful, which was also the first of its kind in the industry. Through these initiatives, co-creation with users is embodied in more physical forms and brand creation and technology operation.
What are the advantages of high collaboration?
Chen: Just now, I mentioned that HiPhi X is a big toy, including ourselves, and we haven’t figured out how much value HiPhi X really brings to car owners and what kind of driving habits it changes. It wasn’t until we released HiPhi Z today that it became very clear. To many people, HiPhi X and HiPhi Z are toys, but to our car owners and engineers, they are intelligent and convenient means of transportation that change the way you travel. Most importantly, they use extreme efficiency to create experiences that truly meet user needs.Here I’d like to share something with you. Our car owners spend an average of 2.8 hours in the car. As we know, time is more valuable than traffic. People have only 24 hours a day, and they need to sleep too. So why do our car owners like to stay on our car for such a long time? I think it’s because the car creates a lot of experiential value for them, which makes them willing to stay. What are these values? First of all, we have created something that others don’t have: a touch-free system. We see the hidden door handles. You may feel high-class and ceremonial, but what’s the convenience behind the ceremony? In adopting the same philosophy as when we evaluated the size of mobile screens in the past, there are a lot of tricks in extreme pursuit. Why can HiPhi make the falcon-wing doors? We have also seen many high-end foreign brands make such concept cars, so why can HiPhi be the first to make it happen? Now people find it very convenient to use. The other day, a newcomer in a certain place got married and liked to use the car from HiPhi. So I think the car brings more experiential value.
Let me give another example. Our female car owners have increased rapidly, now nearly 40%, while only 10% before, and we think it’s normal. At the beginning, we thought HiPhi was designed primarily for males, but now we see more and more female car owners. I think two changes have led to this.
First, in terms of technology, the car is big but easy to drive. As the number of female drivers increases, they feel that they can handle this car. Just like driving a BMW MINI, because its turning radius is as small as the MINI’s. When you drive down a narrow alley at night and have poor visibility and no confidence, the HiPhi X can illuminate two lines of light that are the same width as the car, so you can tell if the place is passable. This is very practical for female drivers and really grasps the pain points of customers and provides technical service to female car owners. Another example, when a girl goes out, especially a young family, what is her difficulty? Because family members are busy, but she cannot rely on them or her aunt to take care of her children all the time. Sometimes, she has to take care of her own children. Our car has two cameras and three screens, one of which can make the onboard camera face the back seat. When the car owner is driving, she can see all the performance of the kids in the back seat, without affecting any of her operations. Many car owners have shared such scenarios.
All of the smart devices and accessories in HiPhi are touching the real needs, which other products do not have in these functional aspects. So I think this kind of intelligent convenience brings unprecedented experiential change to users, not to mention the bags and packages. Our car doors can be fully opened with one key, and can be controlled by voice, because girls need to be graceful when carrying bags. Now the proportion of female car owners is increasing, which reflects the true value of our intelligent convenience.# The Future of Intelligent Vehicles and HiPhi’s Innovations
What technology will shape the future and lead the way in technological advancement? We believe that it is the transition from individual intelligence to scene intelligence. The current intelligent driving ADAS system, intelligent cockpit system, and the six major domains in the automobile industry create a complete data chain and experience that changes how people travel. Now, we can travel without carrying car keys, have designated driver modes, car washing modes, and maintenance authorizations. For door-to-door car pick-up, I can give authorization, and the car can be shared with others. Even when traveling, I can authorize after-sales service and monitor my car’s real-time status.
During the COVID-19 pandemic in Shanghai, our company supported the local government in transporting doctors, but our employees were all stuck at home. We authorized city officials to use our vehicles located at various stores in the city, which were quick to learn and intelligent. This type of secure and smart arrangement would have been hard to imagine in the past. This is an example of how true intelligent vehicles integrate individual intelligence with scene intelligence. After all, the saying goes, “you’re only as strong as your weakest link.”
Furthermore, HiPhi has made innovative strides with various features like the touch-free system in the HiPhi X and the HiPhi Bot in the HiPhi Z. Think about the fantasy Sci-Fi film where your “Bumblebee” comes closer to you. Even though you can’t transform, HiPhi can be nearer to you and help you accomplish many tasks.
Technology advancement is not only about creating features that were once nonexistent but also providing users with the value they seek. I believe this is where HiPhi truly shines. For instance, we cater to the needs of female drivers with features that save users time, like one-click access through scene cards. By utilizing scene cards, the car’s system is not replaced by carplay, and HiPhi’s autonomous driving aims to free up your time, eliminate boredom, and integrate multiple services into one scene.
Regarding user services, we emphasize “affordability.” We have received interesting feedback from HiPhi X users claiming that the car is a 680,000-yuan automobile with 6,800,000-yuan worth of services.I’ll take the recent activity as an example. HiPhi X has been delivered for a year, and there have been no major problems with the more than 300 sensors and 500 actuators assembled in this new product, unlike any product of any new generation brand. When we apply new technologies, the quality of delivery goes without saying.
Under the condition of quality assurance, we launched an activity at the one-year delivery mark this year. After all, your car will inevitably be scratched or need a deep cleaning and maintenance after one year. We can offer our users a free service worth around 8,000 yuan. All car owners are happy with it. You don’t have to do it, but we’re willing to do it for all car owners. It’s just a free service we provide.
Services can also do other things, such as when a car owner accidentally rubs the car. Because today’s electric cars have a great advantage: the state requires the upload of battery data, and we also share this data. What will the after-sales service department do after receiving this data? We will immediately follow up with services and provide car owners with chauffeurs, or help car owners with other things. This is what we call car owner services. It means you can always be by the car owner’s side when needed.
Now we are launching the HiPhi Care service, consisting of four sections. The first section is called HiPhi Service, which is the after-sales service of Gaohong, as I mentioned earlier. The second is HiPhi Energy, which is the Gaohong energy service, that is, our charging pile service. We have made a promise to our car owners that, as long as they cannot find any charging resources within three kilometers of their location, we will help them build it immediately. A while ago, we spent 10 months in a town under Shaanxi to connect a charging pile for a car owner. The car owner posted on Moments, feeling very moved. We did this just to let the car owner enjoy free charging. This is the service provided by Gaohong to car owners.
The third part is called the HiPhi Care butler. We will create a butler group for each car owner, including after-sales personnel, charging personnel, delivery personnel, and some core management personnel. When a car owner has any problems, he can provide feedback in this group. Because the car owners’ insights into the product experience in the early stages are also what we need, this way, the product can be constantly iterated in the feedback. 78% of the problems car owners raised during each OTA iteration were addressed. They raised more than 800 issues because the more functions there are, the more detailed the problems become. For example, they initially asked how to adjust the door opening angle. We improved more than a dozen items with just one open-door function, and it’s hard to achieve a door handle-free door since the usage scenarios vary. When to open the door, what angle, how much to open, how to close it, all need to be considered. Therefore, through this co-creation process, users can more easily adapt to the new functions, and Gaohong has created user habits.The last thing is HiPhi Deliver for high-end delivery. Even at the time of delivery, HiPhi provides you with a service experience that can be summed up as affordable. All registration and insurance fees are free of charge after the car owner pays for the car. Previously, car owners mentioned that even if it is only a few hundred or a thousand yuan, it still counts as a service experience. We often think about what HiPhi should provide to our esteemed car owners. Initially, HiPhi cars may seem a bit complicated for novices. Therefore, HiPhi developed the entire HiPhi Classroom through rumors to make users love our cars more, because using the car can really bring out its value. Otherwise, with so many features installed on the vehicle, if you only take photos and make phone calls, many features will go unused.
Financial Situation
Question from Tencent Auto: How is our financial situation now? Generally, we are losing money on every car sold because HiPhi has not gone public and we have only raised one round of funding. Can you tell us about our current financial situation and whether we will need additional financing in the future?
Chen: “We cannot make bold statements, but we do not want to simply survive because, as you may have seen, it is very difficult for new energy companies to make profits. We need to look at it from two perspectives. Firstly, can we generate positive cash flow for every car we sell? Secondly, where did our investments go? I will answer from these two dimensions.
Firstly, HiPhi now has a positive cash flow for every car sold. Therefore, the more cars we sell, the healthier we are. We will not sell cars at a loss. This is the first issue. Secondly, our research and development center and company staff have more than doubled in the past year. We have hired over 5,000 employees through a lot of social recruiting this year. Especially when other companies are losing personnel, we are still continuously expanding our workforce, mainly recruiting in the research and development team. How can we ensure that new products are launched every year and that new technologies are used for iteration? We must invest.
Why can this investment achieve the highest capital efficiency? I think this is because we have accumulated three advantages. The first advantage comes from our innovation team and core engineering and R&D team. Today, we have a very good cooperative relationship with our technology suppliers, and more importantly, both parties have a common language for communicating technology. If someone tells you that they have a good thing and want to use it, you may not understand right away or think about its value to customers. As a startup team in the automotive and mobility industry for over 20 years, they can have equal technical conversations, even triggering each other’s ideas. Just like there were many good competitors in Xerox that were not discovered or used within Xerox, but Apple took them and used them. I think this is our first advantage.”The second advantage is that our team is more organized, and over the past twenty or thirty years, the automotive industry has accumulated many talents. This organization can improve efficiency in the development process, which leads to faster development speed and lower development costs, and allows you to avoid doing useless things or to make things that everyone likes, such as a satisfactory product experience and intelligent scenes. Therefore, our second advantage is the people.
The third advantage is the positioning. If Gaohe’s positioning is for cars worth 300,000 to 400,000 yuan, then our product has no chance. Although Gaohe was not the first to appear, we woke up early and worked late. I used to think that waking up early and working late was not good, but now I think it is good because you can think clearly before doing something. With strategic determination, you can make things happen, even the difficult tasks. In this way, the capital market will invest in us, including people, technology, and our original intention.
Impact of the Epidemic
Chen: The Shanghai epidemic not only affected Shanghai, but also the Yangtze River and the whole country. The impact of the inability to import parts is far-reaching and has a huge impact on us. We should respond in two ways. The first is to maintain a friendly and long-term cooperation relationship with the supply chain, which is unique to us. During the process of supporting our dreams, they are always thinking of solutions.
The second is to rely on our own efforts. During the Shanghai epidemic, we made a pretty impressive move. Shanghai was sealed off around March 27th, and our company sealed off itself on March 14th. Our founder Dingzhong felt that the epidemic might not be optimistic, so he locked himself and 300 engineers together to ensure the progress of R&D. All business partners lived in the company, and others went home. They lived together until June, and they ensured the progress of R&D. However, in the manufacturing chain, our factory in Yancheng was indeed impacted in many ways. For example, chips caused a chain reaction and some parts could not keep up with supply.
So what do we do? Our engineers are basically stationed at the supplier’s place and rely on hard work. If there’s an opportunity, you have to seize it, so the supply chain also affects our market delivery volume in the second half of the year. Our inventory has reached a historical low point, and it can barely last for three days. Even in the early stages of the epidemic recovery, the entire supply chain system was affected, but now it’s a little better. The epidemic does not only affect our company, but also all companies in the industry. I believe the country will also introduce more policies to accelerate recovery in this regard.
We have many strategic collaborations with the supply chain. For example, yesterday’s Creation Day event in Luhu had core suppliers to showcase their future core technology. Why are they willing to work with us to display their future technology? Because suppliers also need technology to survive, and product strength is the core competitiveness.Enterprises can work together with suppliers to build their core competitiveness. Everyone is willing to follow the suppliers and apply the latest technology. In addition, we are also developing new cross-border integration models, because controlling in the electronic era is only the surface, and we still need to create more user experiences. For example, our collaboration with UNREAL this time. As game developers know, its rendering engine is first in the world. Why does it want to cooperate with Gaohe? We also know that Tesla began to say that it can play games, and everyone can say that they can play games. But first, the game interface needs to look good, and your engine ability needs to be strong. So, developing strategic cooperation like this is also a reflection of our continuous layout. You need old relationships and new partners, and at the same time, you need to consider what the core of future technology positioning is, how everyone can move forward, and how to cooperate across borders.
Back to the South China system, our development is quite fast now. Last year, Gaohe only had three stores in South China, Xiamen, Guangzhou, and Shenzhen. Today, in addition to opening three or four stores in Guangzhou and Shenzhen, we have also started delivery in Zhongshan, Dongguan, Foshan, Fuzhou, Quanzhou, and even Nan Chang, which will be completed in September. Therefore, we are beginning to penetrate the entire South China market through a percolation-type approach, because the South China market is indeed very good.
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.