Author: Huang Xiaoshan
“Since last year, my time has been divided into two parts. One is to achieve our strategic goals and constantly improve the organization and management capabilities; the other is to focus on the R&D of next-generation products and build a multi-product management system. I have basically been occupied 100% of the time by these two things.“
The above paragraph is a description of Ideal Auto founder and chairman Li Xiang’s time during a small media interview held at Ideal Auto headquarters on the morning of May 26.
On the evening of May 25, Ideal Auto had just released the 2021 version of Ideal ONE. The new car has upgraded its extended-range electric system, Ideal AD advanced driving assistance, intelligent cockpit, and ride comfort, and its NEDC comprehensive cruising range has reached 1080 kilometers. At the same time, the 2021 Ideal ONE will still maintain all 56 configurations as standard, with a unified retail price of 338,000 yuan.
Still “a model, a configuration, a price targeting a certain group of people”, extremely precise and simple.
During the interview, Li Xiang and Ideal Auto CEO Shen Yanan answered 43 questions in one hour, with an average of about 1.5 minutes per question. Their responses were extremely efficient and concise.
The media on-site questions focused on “autonomous driving and intelligence”, “technology and R&D”, “sales and revenue”, “plans and goals”, “competition and countermeasures”, and other aspects.
The biggest feeling I had on-site was that Ideal Auto is facing huge pressure and challenges, one is visible from the outside: falling behind competitors in autonomous driving; the other is invisible to the outside world: organization and management after reaching a certain scale.
Catch up with competitors in autonomous driving first
“In terms of autonomous driving, we need to catch up with Tesla and XPeng. This is the first stage goal.” Li Xiang said.
Li Xiang admitted that Ideal Auto is relatively backward in autonomous driving, and he also gave a relatively objective and pragmatic competition path: first catch up and then surpass.
In addition to Tesla, China’s XPeng has launched its own NGP, NIO has launched its NOP, and the two companies have also put in a lot of effort in autonomous driving publicity. Ideal Auto, which has not launched similar features, is the only one left among the “three new forces in automotive”.
Why not launch? The answer is: it cannot be done.
Why can’t it be done? We found some clues from this event.
In April 2019, the first Ideal ONE was launched, equipped with the Mobileye EyeQ4 visual recognition chip, which can achieve L2 level assisted driving.The 2021 Ideanomics ONE is equipped with two Horizon Journey®3 autonomous driving chips, which have the ability to assist with NOA navigation driving in addition to the Level 2 advanced driving assistance system. With the coverage of high-precision maps, the NOA navigation driving function will be pushed to 2021 users through OTA at the end of September and gradually cover more closed roads.
However, the old version of Ideanomics ONE cannot obtain NOA capabilities through OTA upgrades because the hardware does not support it.
At the launch event, Li Xiang repeatedly emphasized that the AD advanced driving assistance system is “full-stack self-developed,” and although the hardware is from others, the perception algorithms at the software level are all their own.
“The previous algorithm was a black box,” Li Xiang mentioned in an interview, indicating that Ideanomics did not have access to the core algorithm in previous autonomous driving solutions, which was not disclosed by suppliers.
Meanwhile, Li Xiang gave high praise when talking about cooperating with Horizon.
“We are very satisfied with them because many of their teams work directly with us. When we do various perception tests and calibrations, whether it is in Changshu factory or experimental factory or control road, they have professional engineers working with us. The value of cooperation with Horizon is much better than that with previous chip suppliers. Although the founder of Horizon, Yu Kai, used to be a technology master, his customer management is far beyond our expectations. Our autonomous driving team has encountered various suppliers before, and Horizon is the team with the most cooperative and professional attitude that we have ever seen. This greatly exceeded our expectations,” Li Xiang said.
It is clear that Horizon not only provides chips but also deeply cooperates with Ideanomics in the development of autonomous driving technology, while the shortcomings of previous chip suppliers are also evident.
At the Q1 earnings call on the evening of May 26, Ideanomics CTO Wang Kai also mentioned that the previous supplier, Mobileye, was not flexible enough to adopt Ideanomics’ self-developed algorithms, but NVIDIA and Horizon’s chips could.
In addition to the shortcomings of suppliers, another important reason is the lack of money. Li Xiang also said in the interview that the R&D investment before the IPO was relatively cautious, and with a limited cash reserve, the normal operation of the enterprise had to be guaranteed, and the primary goal of going public was to increase R&D investment.Hardware can be done in collaboration, but software must be mastered by Ideal Automotive in order to control key aspects such as autonomous driving, operating system, domain controller, and R&D supply chain. This transformation has directly resulted in a significant increase of investment in R&D, with our autonomous driving team scale growing from 30 people in 2020 to 300 people presently, and expanding to 600 people by the end of the year, which corresponds to a technological investment of 3 billion yuan this year,” said Li Xiang, Founder and CEO of Ideal Automotive, indicating the level of investment in R&D and its team.
At the same time, Li Xiang also pointed out that the upcoming full-size SUV, LI ONE’s successor, Li Xiang X01, will be equipped with two NVIDIA Orin chips with a computing capability of up to 400 TOPS, and the entire vehicle will be built directly according to the Level 4 autonomous driving program and still be the standard configuration.
“My management ability is not enough yet”
Ideal Automotive’s Q1 2021 financial report showed that it delivered 12,579 vehicles, with revenue of 3.58 billion yuan, gross profit of 617 million yuan, and gross profit margin of 17.3%.
“The biggest challenge for a smart electric vehicle company, from scaling up to the next level, is organization and management. There are many organizational forms a smart EV company can take, and depending on the different business states, it crosses many organizational forms. From supply chain manufacturing to internet development, sales services, to R&D of multiple vehicle models and large software, we have to master this system-oriented, complicated organizational capability,” said Li Xiang. He smiled, but could still feel the pressure behind him.
It is understood that the global employee population of NIO is more than 9,000, while that of XPeng Motors is more than 5,000. The team size of Ideal Automotive, which is more than 4,000 people, is currently the smallest. Even with this quantity, internal organization and management is still a major challenge.
After all, building cars is completely different from what he did before with Bubble Network and Autohome. In previous internet models, when heading in the wrong direction, he could quickly adjust course and start over. However, in car manufacturing, a small strategic mistake could result in losses of tens of millions to billions in investment, and more importantly, wasted time.
“Therefore, we are constantly studying and learning. On the one hand, we are learning from the best examples in organizational management, such as Huawei’s IPD model. On the other hand, we are figuring out how to use digitalization to bring different organizations that may exist within the four quadrants back to a single space, allowing everyone to work more efficiently. This is the biggest challenge we face in the future,” said Li Xiang.
“I feel that my management ability is not enough,” Li Xiang candidly admitted.
As a corresponding action, Ideal Automotive is also undergoing major changes and restructuring in its organization, reclassifying business units, splitting R&D into product development (PD) and research and development (RD), and establishing an OKR evaluation mechanism, among other things.Founder’s ceiling determines the ceiling of the company. Li Xiang’s strengths lie in facing problems directly, being frank, constantly learning, and having a strong ability to define products. However, there is no perfect person or company. After the setback of the SEV project and with limited resources, Li Xiang took the risk of developing range extenders. Although the product won, the ideal car may miss the time window of pure electric platform.
In 2022, Ideal will launch the X01 full-size SUV range extender version, and in 2023, the pure electric high-voltage platform model will be launched. The tight and inadequate R&D investment and reserves in the early stage have made the ideal car’s salable models too rare.
In this year’s internal memo, Li Xiang mentioned that the strategic goal of Ideal in 2025 is to have a 20% market share and become China’s leading intelligent electric vehicle enterprise. The decisive moment given is in 2030.
Currently, we can see that the elimination game of intelligent electric vehicles is accelerating, and the decisive moment will come earlier. We must seize the core technology and improve our organizational and management capabilities. With good news, Ideal is accelerating to solve the first challenge of “catching up with autonomous driving.” In Li Xiang’s words, “Before, everyone thought we were too slow. But for next-generation products, everyone may say that your progress is so fast.” It is evident that Li Xiang is still very confident.
As for the second challenge of “organizational and management capabilities,” it is not only Ideal but also the problem faced by all companies such as NIO and XPeng. The only solution is long-term learning and action, and Li Xiang is obviously on the road.
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.