Li Xiang has once again advertised for “car and home” through the privatization of Autohome. This time, more information was revealed.
The following content was simultaneously released on Li Xiang’s WeChat Moments and Weibo:
As for the issue of Autohome privatization, please don’t ask me anymore. I have left the management team of Autohome for ten months. My personal energy is 110% invested in my third entrepreneurship, car and home. [Sponsored content] Car and Home, Urban Smart Service Provider.
We provide electric vehicles that are as convenient as gasoline cars, without relying on charging piles.
We offer two car models to meet 90% of urban needs: a small and beautiful SEV, and a large and powerful SUV.
We are striving to change the traditional sales and service model of 4S shops, making it more worry-free, time-saving and cost-effective for consumers.
[Prominent] We are not an internet carmaker, nor do we play the concept of the internet. We are a standard new generation car brand.
We do our own research and development (with the engineering team averaging over 15 years of industry experience);
We produce on our own (with a self-built 750-acre 300,000-output aluminum plant in Changzhou Wujin, as well as supporting BMS and battery plants);
We provide sales and service on our own, breaking the current expensive, low-quality and inefficient situation of 4S shops.
[Long live understanding] Cars are a transportation tool that involves life safety, and research and development, production, and service must be solid. Given a few more years, we will definitely create more new energy vehicles and brands that more people are willing and able to purchase, truly starting from the needs of future consumers, rather than selling those unsold fuel vehicles as electric cars to consumers.
Our requirement of ourselves is to innovate products and business models like Apple, and to do research and development solidly like Huawei, while looking at the global market. I know this is difficult, but easy tasks are not for us. It is precisely because of the difficult tasks we have the chance and persistence. Every encouragement from you is our support, and every ridicule is also our motivation. Understanding, moving forward.
The most eye-catching information in this article is that, in addition to the small and beautiful electric vehicles previously proposed by “car and home”, they will also launch SUVs; the electric vehicles produced by “car and home” do not rely on charging piles; “car and home” may sell cars themselves in the future, that is, it may be sold directly by the factory, like Tesla; and they have their own aluminum plant in Changzhou.
This news shows that SUVs have become a battleground for electric vehicle manufacturers. For example, Li Xiang also invested in NIO, which will soon launch a 7-seater SUV. The two-child policy has once again unleashed the potential of large-space SUVs.From the perspective of not relying on charging stations for electric vehicles and building a self-owned all-aluminum factory, we can see that Cars and Homes have made great efforts in their strategies. However, in terms of direct sales, Tesla suffered some losses due to a lack of a sound sales network when they first entered China. A flawed sales network can directly inconvenience consumers. Whether it is building sales networks in various cities or selling online, when there is a large order volume, there will be great pressure and challenges. Of course, due to the simple structure of electric vehicles and the few maintainable parts for after-sales service, after-sales profits are almost non-existent, which is the most important profit source for traditional dealers. Apart from selling directly by manufacturers themselves, there seems to be no better way. From traditional car manufacturers to electric vehicle manufacturers, the cost structure will undergo significant changes, especially in terms of sales costs.
Li Xiang once again emphasized that Cars and Homes are a new generation of car brands, strictly distinguishing themselves from the popular concept of Internet car manufacturing. Indeed, with different capital backgrounds, understandings of the industry, and mobilizable resources, what they can accomplish are different in different dimensions.
On the official website of Cars and Homes, it can be seen that there are currently three founders. In addition to Li Xiang, there is Shen Yanan, who has worked for Accenture, Lenovo, and Motorola successively, and Ma Donghui, who has worked for JISHI Design, ALT, and Sany Heavy Industry successively. The two co-founders with supply chain and engineering backgrounds complement Li Xiang’s shortcomings very well.
On Cars and Homes’ official website, there is a catchy slogan: “We will redefine automobiles.” The target consumers are aimed at the “two billion consumers.” Such a grand ambition, but only those who have ambition can truly build cars.
To better understand the concept of Cars and Homes, you can refer to an article by Li Xiang at the end of last year.
“How much money does it take to build an electric vehicle enterprise?
Li Xiang, November 2nd, 2015, published on Sina Weibo.
[The concept of forming an electric vehicle team]“This year, I (Autohome) and my old rival Li Bin (YiChe) jointly founded two electric car companies: NIO and Chehejia. Li Bin is in charge of NIO, building a high-quality electric vehicle brand that is quite similar to Tesla judging by the current products available. I execute the leadership of Chehejia, building small and beautiful electric transportation vehicles for which we still don’t have any benchmark companies to refer to in the market. Toyota, Honda, Nissan, Peugeot, Renault, Volkswagon, Audi, and others have had similar prototype concept vehicles in the past.
Although we are from the internet (two New York Stock Exchange-listed internet companies), we differ from most of the internet car startups. What we first perfect is not the HMI (Human Machine Interface, including hardware, system, application, content, etc.) team, nor the styling design team, but rather the team of supply chain and manufacturing, as well as the technology, engineering, and R&D team.
The core leaders of the supply chain and manufacturing team have experience in leading the construction of billion-scale factories from scratch and a firm network of supply chain connections. The technology, engineering, and R&D team have an average work experience of more than ten years and have participated in many mass-produced cars. Although building cars is extremely difficult, the quality and professionalism of personnel in the automotive industry are also excellent. Finding the right people is essential.
[Car is more important than the internet]
People outside the internet industry nowadays like to say “internet plus,” but the car is one of the most complex industrial products in the world. Speaking only of the complexity of the HMI software and hardware system, it is no less than any mobile phone, and HMI accounts for at most one-tenth of a car. So, in our view, there is no internet plus car at all, only a clear recognition that the essence is car plus internet, to realistically go step by step. The car is the foundation, and the internet is the icing on the cake and helps to improve efficiency. Having high-quality cars first makes the rest meaningful.
As for the so-called “wool comes from pigs,” wanting to sell cars without making money but through service and value-added to make money, it is not realistic at all. Electric vehicles have a simpler transmission structure, eliminating a lot of oil changes and maintenance; the value of aftersales and maintenance will be significantly reduced. Coupled with the long warranty period of electric vehicles, aftersales even lose entirely.
Regarding those who still want to push advertisements on the in-car screens, I only want to say: Go fuck yourself! Are you crazy about money?
Before large-scale popularization of autonomous driving, safety remains the top priority in driving. The best entertainment in the car is the accompanying audio content. The hope of adding video or more entertainment options in the car, and expecting drivers to have fragmented time just like mobile phone users, is practically taking life-threatening risks. There is no fragmented time for driving, only life and death.> As far as the importance of the Internet is concerned, I believe that it has become as essential as eating and sleeping. You wouldn’t ask others about how you slept and what you ate today, right? On the other hand, those who keep talking about the Internet only have their voices heard on the Internet but their physical and mental states are still outside the door.
Premier Li Keqiang’s description of the Internet Plus is more about awakening various industries to the importance of the Internet in improving productivity. China’s future economic growth cannot continue to rely on scale and cheap labor. These two advantages have already been completely exhausted. In the next decade, improving efficiency will play the most important role in the healthy development of Chinese society and economy.
[Can electric cars be manufactured by OEM like mobile phones in China?]
It cannot be achieved within five years, if you want to sell more than 100,000 units per year. If you only plan to produce a few thousand or even a few hundred units per year, you don’t need to prepare for the four main production processes including stamping, welding, painting, and final assembly. The cost that the factory has to pay for OEM and upgrading their production line may exceed your annual revenue.
We have also considered why expensive production lines for the four main processes (stamping, welding, painting, and final assembly) are necessary. Can’t we eliminate stamping and use cheaper pipe profiles instead? In fact, it is impossible. The cost saved by using pipe profiles is easily offset by the lower production efficiency and consistency caused by their use.
New entrants to the electric vehicle industry cannot cheat the government subsidies by reverse engineering existing models on the market, dismantling their engines and fuel tanks, replacing them with batteries and motors, and quickly selling the cars before the government subsidies end to make some profit. If it’s not such a scheme, they will definitely consider using new lightweight materials. If you choose to develop a structurally optimized electric car from scratch based on batteries and motors, you will most likely consider using an aluminum alloy architecture. Unlike fuel cars, the weight of the car body of an electric car will directly lead to an increase in battery capacity, becoming the cost that the automakers themselves have to bear and the most expensive part of the cost. After lightweight design, the extra cost of an aluminum alloy can be completely compensated by the saved battery cost.
Here comes the question, besides Chery Jaguar Land Rover, where in China has a real all-aluminum production line?
To sum up, there are currently only two ways to produce highly complex electric cars while ensuring safety and quality:
- Build a factory from scratch. Get land from the government, build a factory building, arrange a production line, recruit and train workers, solve the surrounding supply chain, adjust the production line, and start production.
Like most car manufacturers, LvChi Auto will adopt this method, as its production line is relatively simple.> 2. Revamp existing factories. In the above process, except for the processes of purchasing land to build factories and recruiting workers, all the other processes and investments will not be reduced because the cost of renovating the factory is the main expense.
NIO adopts this method of revamping existing factories to save time and money.
Why can Apple smoothly produce billions of iPhones every year when it comes to Foxconn’s production lines, Xiaomi can also produce tens of millions of phones, while Hammer struggled to produce T1? Because the cost of Apple’s production line renovation, equipment investment, number of production engineers, and investment in rebuilding a factory is almost the same.
In fact, there is not much difference in cost between building a factory from scratch and large-scale renovation of an OEM factory. Assuming an annual production capacity of 100,000 vehicles, the cost of building a small factory for producing small and beautiful cars is approximately USD 100 million, and the cost of building a factory for producing high-quality passenger cars is approximately USD 2-3 billion. If you plan to expand production capacity to 300,000-500,000 vehicles, you will need more money…
TESLA is between these two models. During the economic crisis, TESLA spent tens of millions of dollars to buy a factory in California from Toyota, but later the investment in various equipment and manufacturing requirements exceeded the cost of buying the factory by tenfold.
[How much money do electric vehicle companies need]
There are several important prerequisites. If you plan to develop a pure electric vehicle (not reverse-engineered or converted from a gasoline-powered car), if your goal is to sell more than 100,000 vehicles per year, and if you want to create a pre-sale and after-sale service system that always focuses on consumers. After meeting three years of research and development, testing, trial production, and building or revamping high-quality production lines, you have a systematic after-sales service network and several decent experience stores when selling.
In addition to the above prerequisites, as a new brand, you basically cannot secure very good payment terms in the supply chain (it is better to not have payment terms and choose to lower the price instead), so you need to prepare for three months of cash flow.
In summary, from scratch to the first mass-produced car being sold for one year, it will take a total of four years (efficiency is already very high because automobiles involve life safety and are not child’s play). A small and beautiful car built by Chehejia needs approximately USD 200 million in investment. NIO needs approximately USD 1 billion in investment. Chehejia has prepared USD 100 million, and NIO has prepared USD 500 million.
To create an electric vehicle, financial capacity is indeed a necessary condition that courage cannot replace.
If you don’t have the courage, you should not make electric vehicles because its difficulty and complexity far exceed that of the Internet and smartphones.> 2015: Intelligent Electric Vehicles
Watching intelligent electric vehicles in 2015 might be like seeing intelligent phones in 2005. We laughed at phones with only one day of standby time and terrible touchscreen experiences, while we had Nokia phones that could last a week on standby.
Nobody knows what will happen in the next decade. Time might be an entrepreneur’s best friend.
Of course, the automotive industry allows non-professionals to enter, such as South Korean Hyundai, Geely, BYD, etc., who entered the entire vehicle manufacturing industry from other industries or related industrial chains. In recent years, with the popularity of electric vehicles, traditional car companies have taken electric cars as their strategic focus for layout. Supporting manufacturers such as batteries and motors have also increased their investment, policy support, and consumer willingness to pay. Charging facilities are gradually improving, resources and the environment are becoming more mature, and this may be the best opportunity for new-generation electric vehicle brands to enter the market.
Bless Li Xiang and other electric vehicle manufacturers. I hope this market becomes increasingly mature and improved with the entry of more and more competitors.
Image from Chehejia Official Website.
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A Serious Electric Vehicle Enthusiast’s WeChat Official Account
Keywords: Tesla electric car, Google autonomous driving, Elon Musk, driverless, BYD, batteries, Apple
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.
