Author: Su Qin

Compared to the external problems frequently faced by XPeng Motors during the Neisui Period, the ideal wolf emergency is more from internal problems.

On September 2nd, Shen Yanan, the CEO of the Ideal car, reduced 400,000 shares of the Ideal car in Hong Kong stock market; on September 6th, Shen Yanan reduced another 600,000 shares. In the two reductions, Shen Yanan cashed in approximately RMB 91.15 million.

In fact, as early as December last year, Shen Yanan had been frequently reducing his holdings and sold 2 million shares in total before the latest two reductions. With the latest two reductions, Shen Yanan has successfully cashed in RMB 273 million. The ideal car has become Shen Yanan’s huge cash machine.

As for this, the Ideal car only said, “cashing out is a personal reason”.

However, as one controversy dies down, another arises. On September 14th, Zhejiang Ideal Automobile Co., Ltd. showed the registration of cancellation, and the legal person happens to be Shen Yanan, which immediately caused various netizens and media to “dare to associate.”

In order to resolve the numerous public opinions and impressions, on September 16th, the Legal Affairs Department of the Ideal car issued its first statement after launching its official Weibo account, stating that Zhejiang Ideal Automobile is only one of many companies that meet the Ideal car’s business and tax requirements across the country, and has not carried out any substantive business, nor any economic disputes such as creditor’s rights and debts.

Frequent reductions and company cancellations, coupled with the CEO Shen Yanan pushing the Ideal car into the vortex of public opinion, are not ideal, especially during the difficult time of the Ideal car now.

The Not-So-Ideal Ideal

In July, the sales volume of the Ideal car was 10,422, still the leader among new energy brands, but in August, the sales volume plummeted to 4,571.

What’s more, the Ideal car was hit by a sudden wave of protests by more than 1,000 owners, which seriously undermined the brand’s image of a warm and happy family.

The direct reason was, of course, the sudden price reduction of RMB 20,000 for the Ideal ONE, in order to give way for the Ideal L8 and L9, and the official authorization of suspension of production in October. However, many customers complained that sales did not inform them of the relevant matters when buying the Ideal car, which seriously damaged the rights of recent Ideal ONE buyers.

However, the fundamental reason is the fast product iteration cycle that exceeds the user’s usage cycle, making users more sensitive to cars, which are already sensitive consumer products.In addition, the direct-sales model of Ideal Auto without dealers’ inventory adjustments has formed a flexible pricing system, which acts as a buffer, leading to all updates and iterations being delivered directly to users by the automaker, making it impossible for users to accept it at once.

Although there is no legal flaw in the manufacturer’s updates and iterations upon signing the contract for the sale of old cars, it is morally disgraceful, which makes users who choose Ideal Auto turn from love to hate in an instant.

Ideal Auto has stumbled in coordinating emotions with old users before. In 2021, Ideal Auto also concealed the information about the launch of the 2021 ONE and sold the old model to users, forcing users to resort to rights protection measures.

In fact, since the rise of China’s new energy vehicle market, similar incidents have been frequent. Tesla, NIO, and XPeng have all stumbled during product updates and iterations, leaving indelible stains on their brands to varying degrees.

While neglecting user interests, their own product problems occur repeatedly.

On July 17th, according to the report of “China National Radio Network,” the air suspension of the Ideal L9 test drive car broke during driving, causing it to not be able to move. On July 26th, a blogger revealed that when test driving the Ideal L9, the automatic brake failed, the front axle airbag exploded, the car crashed into the barrier for tens of meters, the left front bumper shattered, and the front end was close to being “disfigured.” Although the blogger was unharmed, he was soaked in the rain for two hours.

Within three months of its release, the Ideal L9 had two incidents of axle fracture, and the label of the “strongest SUV under 5 million Yuan” seemed to break along with the axle.

As Ideal Auto’s flagship model, the Ideal L9 highlighting such serious issues inevitably raises concerns about its upcoming Ideal L8.

Although the Ideal L8 is an evolution of the Ideal ONE, in terms of design and configuration, it looks more like the Ideal L9’s sibling model. It feels like someone wants to write a story about Zhang Fei’s brother, but dresses Li Kui as Li Gui while saying there are hidden mysteries that readers won’t understand.

At present, the production of Ideal ONE is coming to an end, but it is deeply embroiled in a rights protection storm; the arrow of L9 has been released, but the campaign’s results have been disappointing; the bullet of L8 has already been loaded, but it is still unknown whether it is real or just a blank.In such a turbulent time, Shen Yanan, as a co-founder, has shown extremely unscrupulous behavior by stabbing the Ideal Auto in the back. So, what prompted Shen Yanan to engage in such unjust actions?

From 1 Hour to 273 Million, Has Shen Yanan Lost His Original Intention?

In a span of only 7 years, Shen Yanan went from making a decision to start a business within an hour to cashing out 273 million.

In 2014, at the age of only 37, Shen Yanan had already worked as IT Director of ZTE, a management consultant at Accenture, and was currently serving as Vice President of Lenovo Group and Chairman of Motorola Mobility (China). At that time, he was at the forefront of the intelligent trend and witnessed firsthand how those senior executives who had created 130 million RAZRV3 Blade phones per year were “optimized” early at their retirement.

Shen Yanan deeply felt that in the tide of the times, it was difficult for individuals to fend for themselves. Is the fate of those “optimized” executives today potentially his fate tomorrow?

In 2015, Shen Yanan met Li Xiang through a friend’s introduction. One was an enterprise executive who had hit a bottleneck in his career, the other was the famous founder of Autohome, who had continuously started businesses. After chatting for an hour in Starbucks at the Beijing European Place, Shen Yanan, despite having no experience in the automotive industry, decided to join Ideal Auto.

That same year, Shen Yanan resigned from all positions at Lenovo Group to become the CEO of Ideal Auto, responsible for the company’s overall strategy, business development, supply chain management, sales, and marketing.

In the first half of this year, Ideal Auto sold 60,403 vehicles, achieving an average monthly sales volume of over ten thousand with only one Ideal ONE. Compared to the first half of the year, where Xpeng had a net loss of 4.402 billion and NIO had a net loss of 4.54 billion, Ideal’s net loss of 652 million can be considered much closer to profitability.

It can be seen that Shen Yanan has done a pretty good job as the CEO of Ideal Auto.

In an interview with a foreign media in July, Shen Yanan re-emphasized the target mentioned by Li Xiang in the internal letter of 2021 that by 2025, Ideal Auto will achieve 2 million units in sales and occupy 20% of the domestic electric vehicle market share. Shen Yanan also said: “We attach great importance to this 20% target and we are doing everything around it.”

However, now it seems that even though Ideal Auto is getting closer to profitability and target construction, it doesn’t stop Shen Yanan from pulling the rug out from under the feet of the car owners demanding justice, sales plummeting, and the whole industry waiting for laughs, giving the public more interesting gossip.

So, has Shen Yanan lost faith in the future of Ideal Auto?## The Challenges Faced by China’s New Energy Vehicle Industry

Considering the current situation in China’s A-share market, the downturn in the new energy sector is not an urgent concern, but we should beware of the fact that by 2023, not only will the nationwide subsidies for new energy vehicles be abolished, but many first-tier and new first-tier cities will also stop issuing green license plates for hybrid cars, including range extenders.

Ideal cars derived from policies will face uncertainties without political support.

Looking at the international scene, the upstream raw material price rise has led to thinning margins for downstream enterprises. The uncertain pandemic situation has made the globalized supply chains of automobile companies extremely fragile. Should one link be broken, the entire system suffers. Additionally, the US semiconductor export restriction to China has caused a bottleneck in the supply of chips, forcing domestic enterprises to invest more in research and development. Although this may prompt the growth of domestic enterprises in the long run, it also puts them under pressure in the short term.

As the market fundamentals experience turbulence, corporate executives should boost their team’s confidence. However, at this moment, Shen Yanan chooses to cash out and take advantage of the situation, which is indeed incomprehensible.

In fact, it’s not only Shen Yanan, the largest shareholder of Ideal Cars with a 20% stake, who has been reducing his holdings. Wang Xing, the chairman of Dianping, which holds a major stake in Ideal Cars, has frequently sold shares and has already disposed of 1.18 million shares, netting RMB 187 million.

The successive reduction of holdings by Wang Xing and Shen Yanan is by no means a positive signal for Ideal Cars. At this moment, who knows what Li Xiang is thinking? Perhaps he feels helpless and troubled. After all, two powerful comrades-in-arms not only fail to express support, but also retreat in the face of difficulties.

Now, after seven years since its establishment, Ideal Cars has come to a crossroads again in the face of internal and external troubles. Whether to go left or right, prosper or perish, it all depends on a single decision.

EV Talk

From 2015 to 2022, in its seven years of entrepreneurship, Ideal Cars has been seeking change, but one of its captains, Shen Yanan, gradually became conservative. Their rhythms no longer synchronized and the seven-year itch became a challenge for Shen Yanan and Ideal Cars to overcome.

This challenge is not unique to Shen Yanan and Ideal Cars. As a matter of fact, the new forces in the automobile industry has gone through nearly a decade of transformation. Veteran leaders of other new energy vehicle brands, such as XPeng He of XPENG, have resumed their roles and stock prices have risen, which is not such a rare thing anymore. It’s the small businesses that are starting to face mid-life crises.

However, what is more alarming is whether these incidents collectively signify that the new forces in the industry are no longer as “new” as they used to be.

When the bubble bursts and the novelty fades away, once the market, users, and everyone, including brand stakeholders, return to reason, can the new forces in the automobile industry come up with truly new things to meet the users’ newest needs? That’s the essential question for new forces in the industry, especially those who have enjoyed the limelight, attention, flow, capital and users for years.

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.