Author: Wang Xuan

This year’s autumn is exceptionally cold because, for some unknown reason, everyone is enthusiastic about spreading “chills” to each other. “Tesla’s price cut spreads chills to independent brands,” “Argo AI’s bankruptcy spreads chills to the autonomous driving industry,” etc. We don’t even need to verify whether these chills really exist because in the context of an economic downturn, any bad thing that happens will be assumed reasonable, even if it is a malicious speculation.

In the past month, no one has felt the chill more than the “ZEALER” electric vehicle brand. “Opening below the initial public offering price” and “halving of the stock price” have become the starting points for sensational articles. On the eve of its listing on the Hong Kong stock exchange, ZEALER released its most important model of the year, the ZEALER C01. With its 0 yuan deposit policy, the launch event saw 100,000 orders that night. All these measures were taken to achieve a more perfect outcome the next day, but things went awry.

It was also because of ZEALER that I witnessed how public opinion could make a 180-degree turn in an instant. The previous day, ZEALER was hailed as one of the “new five tigers” among new power brands due to its consecutive monthly sales of over 10,000 cars. The next day, doubts about “Can ZEALER still lead the way?” were rampant, and the stock price was just the beginning of all the negative news.

For the “all-self-developed” approach, most people only give superficial comments without depth, and R&D investment is significantly lower than that of top new power car companies like WmAuto and NIO. Even with over 10,000 monthly sales, profitability is still a distant dream for ZEALER. Since mid-2021, ZEALER has been seeking to enhance its brand image. The C11 model was released with a retail price of around 150,000 yuan, while the C01 is a model priced at over 200,000 yuan. This has raised questions about whether ZEALER’s brand image can sustain the market for new cars.

In the face of these questions that require profound answers, we interviewed Zhou Ying, the general manager of ZEALER Technology’s marketing department.

All-self-developed: A double-edged swordZero Run has the stubbornness of an engineer, because only they are promoting the all-domain self-research in the industry. In the past, we used to hear about full-stack self-research at the new power brand launch conferences, where suppliers provided hardware and car companies researched software and applications. All-domain self-research is about developing hardware and software together.

At the launch event of Zero Run C11 in September 2021, a special area was set up to showcase the achievements of all-domain self-research. Although there was a table full of accessories, it was difficult to connect them logically. The area contained intelligent driving perception hardware, components of the three-electric system, and even headlamp groups. To outsiders, Zero Run’s self-research seems to lack coherence and does not have a specific field of expertise, resulting in the brand and product not leaving a clear memorable impression on users.

In contrast, Wei Xiaoli’s investment has a strong sense of purpose, such as Nio’s battery swap station, Ideal’s air suspension and range extender, and XPeng’s autonomous driving algorithm. These self-research projects not only solve practical problems for users, but also create more selling points for the products.

Regarding the external confusion, Zhou Ying explained to us: “In fact, the self-research achievements of Zero Run can be summarized into three categories: power system, intelligent driving system, and intelligent cockpit system. We have the R&D capabilities for core technologies and components, including whole vehicles, the three major electrical systems (battery, motor, and controller), autonomous driving, and electronic components of intelligent cockpit systems.

All-domain self-research is a keyword throughout the development of Zero Run, which is also related to the background of the times. Zero Run was founded in 2015, when China’s electric vehicle industry was still in its infancy, and the industry chain was not as mature as it is today.

As a new car company, we not only face the problem of traditional supply chain issues but also an inadequate electric vehicle parts supply system. Therefore, Chairman Zhu Jiangming decided from the beginning to master the core technology of electric vehicles in our own hands. And the three categories mentioned earlier are the most important technology areas that we believe in the current electric vehicle field.

Compared with other emerging car companies, LI has chosen the most difficult self-research route. In the initial stage of LI’s development, the phased achievements of full-domain self-research are not that significant. However, after the system is gradually established and improved, the ability to alleviate the problem of supply chain disruption with self-researched results is particularly important for large-scale automakers.

Recently, German car rental company Sixt stated that it had signed a new cooperation agreement with Chinese automaker BYD to purchase about 100,000 electric vehicles from BYD in the coming years.

Regarding this news, the director of the German Automotive Management Institute stated in an interview with the German Commercial Times that in the field of electric vehicles, Chinese companies have stronger delivery capabilities than German automakers. If European manufacturers are ordered, the delivery cycle will take more than a year.

Today’s BYD has a position in the automotive industry similar to that of Toyota, with extremely strong integration capabilities. Friends who have been to BYD’s headquarters may have learned that BYD has a special wall to display patented technology, and these technologies can enable BYD to integrate the upstream and downstream industry chains to form a self-supply closed loop, even in the global automotive supply chain. In the winter, products can be delivered to customers at the fastest speed.

Therefore, full-domain self-research is actually a shield against the breakdown of the industry chain, which also conforms to Zhu Jiangming’s idea of ​​mastering core technology, he who masters core technology, masters his own destiny, and some core technology can also become a weapon to change destiny in the era of transformation.From the current situation, intelligent driving and intelligent cabin have become the high ground that car companies must compete for. This is also the area where new forces car companies strive most. LI, which is no exception. In terms of intelligent driving, LI is the first company to launch autonomous driving chips in the form of an OEM. According to LI, the design plan of the Lingxin 01 began in 2018.

In 2018, the first batch of products from new forces car companies had just been launched. At that time, all intelligent features were still in the stage where the application suppliers packaged the solutions. LI keenly discovered the opportunity and took action. Obviously, they knew that by grasping intelligent driving, they would grasp the initiative in the intelligent car race.

At the same time, LI’s decisive work style is also related to the founder Zhu Jiangming’s previous experience in founding Dahua Technology. Without the courage to self-develop, Dahua Technology would not have achieved the leading position in the security field. This part of the story has been mentioned in our previous article “Why this car company holds onto self-research and refuses to let go”, so it will not be repeated here.

Focusing on the present and speaking through products is the way to go for LI Auto. Its R&D investment in the past three years is not as much as Weixiaoli, and even in some years is less than one-tenth of the top ten.According to Zhou Ying, zero-run is currently focusing more on the practical application of research and development, applying all R&D achievements to mass-produced products. For example, all delivered products are equipped with zero-run’s self-developed electric drive system, and the self-developed CTC battery chassis integration technology is also installed on the just-launched zero-run C01, aiming to maximize the input-output ratio.

Compared with other new energy vehicle companies, zero-run is the most pragmatic one, which is also in line with their user profile. The main selling price range of zero-run’s products is between 150,000 and 300,000 yuan, and the core needs of these users are “more, faster, better, and more cost-effective” rather than “new, strange, unique, and special”. Using their self-developed advantages to reduce costs and improve product power is the best way to attract their target users, rather than by creating flying cars to attract attention.

“Let the product speak for itself” is the phrase Zhou Ying mentions the most. Of course, if zero-run’s products do not have strong competitive advantages, it will be difficult for them to achieve monthly sales of over 10,000.

For zero-run, there are still misunderstandings from the outside world. In some reports after zero-run’s stock price plummeted, I found information such as “zero-run’s main problem is still with itself, one is in the high-end market positioning, but 90% of sales are A00-level small cars”.After the failure of its first small electric sports car S01, T03, a micro car, indeed took up the sales responsibility of the LI (Zero Run) Auto, but micro cars are not all of LI. In July and August of this year, when LI Auto’s sales exceeded 10,000 units in succession, the sales of the C11, the medium-sized SUV of LI, also exceeded 6,000 units, accounting for more than half of the total sales. Such sales data also indicate that LI Auto’s brand-upward plan has achieved phased success.

However, what puzzles us is that, after the C11 has established a mass base for LI in the market of 150,000-200,000 yuan, the C01 has gone further with a price range of 193,800-286,800 yuan. Regarding this approach, we always think that LI needs to show more profit possibilities to its investors before going public. Compared with C11, C01 has a larger vehicle size and higher configuration, and correspondingly, there will be more profit space.

Facing this issue, Zhou Ying frankly said, “LI Auto has gone a long way of ‘exchanging market shares for prices.’ On top of C11, we tried to cut losses to maximize user benefits, and at the same time, we laid a mass foundation for ourselves. However, C01 has a higher positioning and a higher price range, which gradually returns to the price range that matches its product power.”

Indeed, this is the case. It is believed that the senior executives of every new energy vehicle company will frown upon discussing profits. Recently, CEO An Conghui of Xpeng Motors also mentioned in an interview that “selling one electric vehicle at a loss for every vehicle sold today, we will eventually achieve profitability by scaling up and platformizing.”

Profitability is even more challenging for new energy vehicle companies. The operation of secretly increasing prices is commonplace, and some even disguise their own price-hiked products as “financial products.” In comparison, LI is one of the few ethical companies.

Though the price of the LI ONE is higher, users can get a C-level car experience by upgrading, including a car length of over 5 meters, a wheelbase of nearly 3 meters, a three-screen cockpit, a rear boss seat, a panoramic sunroof, and a suede roof. In terms of configuration, they are still generous. They are only seeking a better balance between cost, price, and profit.

Conclusion

In the interview, Zhou Ying talked about LI’s vision of becoming a “century-old store.” Through a deep understanding of LI, we found that it does have the characteristic of sustained development. Their wide layout, accurate judgment, and sincere hospitality are the highlights of LI. They don’t need more “coldness”, they need kindness.

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.