Travel Hundred People, a media under the banner, focuses on the evolution of the automotive industry

Author: Zheng Wen

Where the mainstream development trend of the industry is, and where the hotspots and news stay.

In the past week, the major news in the automotive industry still revolved around intelligence and related companies.

Lei Jun, who took a step from the Internet industry to the automotive industry, became impatient. How can he cook when the boiler can’t be erected? He posted a job advertisement on Weibo, “angrily recruiting” 500 smart driving talents. Tesla, which always does things unconventionally, still loves to cut prices with its strong autonomous driving reserve. With its strong reserve in autonomous driving, Huawei has also made a way from the mobile phone industry to the automotive industry.

Interestingly, even new car brands that announce sales can announce phase results in the first two days of the month, more actively reporting to the outside world than traditional car companies.

The automotive industry, which is constantly injecting fresh blood, has never been as vigorous and lively as it is today.

Xiaomi’s autonomous driving department attracts talent

In the matter of making cars, Lei Jun, who rushed from the Internet industry, is urgently pulling the progress bar and adjusting the playback speed.

On July 28, Lei Jun rarely showed a talent recruitment poster on Weibo. The poster shows that Xiaomi’s auto-driving department is inviting 500 technical elites to develop L4 autonomous driving to help Xiaomi’s car-making business. The positions include autonomous driving data platform, on-board infrastructure, decision-making and planning, millimeter-wave algorithm, development tools, front-end platform development, embedded software, control, perception, high-precision maps, and simulation platforms. In order to maximize the elimination of regional restrictions, Xiaomi supports offices in multiple places across the country.

The struggle for talent in intelligentization is no longer a matter of just a few days, but has become an open, non-violent war.

The ideals are lofty, but the reality is tough. The dilemma is that while capital is eyeing the “future blue ocean” of intelligent vehicles, the reserve of talents is staying in the untrained present.

Like the Internet in the past, the development of intelligent talents cannot keep up with the speed of industrial transformation.

In the “Guidelines for the Development of Manufacturing Industry Talent” issued jointly by the Ministry of Education and other three departments, it was predicted that the total number of talents in energy-saving and new-energy vehicles will reach 850,000 in 2020, with a shortfall of 680,000.

The “2021Q1 Middle and High-end Talent Market Spring Recruitment Job-hopping Data Report” released by Liepin.com showed that in the first quarter of this year, new energy vehicles were one of the fastest-growing areas in the country in terms of newly added positions, with the number of new positions increasing by 103.54%. The demand for positions such as autonomous driving R&D, intelligent cabin design, software engineers, and user operations has increased by more than 1.8 times year-on-year.

There is a great talent shortfall and the supply of talent is far from enough.The high-end talents in the automotive industry are characterized by their high level of activity. According to the “New Energy Automotive Talents Revelation”, the talent activity in the new energy automotive industry has surpassed that of the Internet industry. The most concentrated group of high-quality talents is usually young people. However, today’s young people are not enthusiastic about the stock incentive plan which requires them to watch the company’s performance for years. Instead, they care more about their own career prospects and immediate material rewards.

Therefore, how to retain high-quality talents for a long time and capture their core development needs has become an important issue for automakers who are eager for talents.

Regardless of when and which trend they are in, the automotive industry is an industry that requires persistence, and cannot withstand the research and development delays and market competitiveness caused by the frequent turnover of key teams. Therefore, it is particularly important to reassess and set the incentive mechanisms for talents, as well as the company’s cultural atmosphere.

New forces: first-tier stable, second-tier gradually clear

In the first two days of August, several new forces successively handed in their performance reports for the previous month. Strangely, even in terms of sales, their efficiency is much faster than that of traditional car companies, attracting attention in the first place.

Yesterday, Ideal Auto announced that it sold 8,589 units of Ideal ONE in July, the first time that monthly deliveries exceeded 8,000 units, and a year-on-year increase of 251.3%. In the first seven months of 2021, Ideal Auto delivered a total of 38,743 vehicles, of which Ideal ONE delivered 72,340 vehicles.

Today, XPeng Motors announced that it delivered 8,040 vehicles in July, a year-on-year increase of 228%, setting a new record for monthly deliveries. Among them, 6,054 units were P7 and 1,986 units were G3. In the first seven months, XPeng sold 38,778 vehicles, a year-on-year increase of 388%.

It is worth noting that after NIO’s monthly deliveries exceeded 8,000 units in June, Ideal and XPeng quickly followed suit and achieved monthly deliveries of over 8,000 units in the following month, with the first-tier companies biting each other tightly.The market performance of XPeng was relatively better than that of Li Auto, but it showed a bit of weakness this month. However, the launch of XPeng P5 will make up for the lack of momentum. Li Auto, on the other hand, has made a comeback after a sales slump in May, which reflects that their restyled models have gained recognition from consumers to some extent. After the launch of the 2021 Li Auto ONE in September, Li Xiang also announced that the monthly sales in September will reach the landmark of ten thousand units.

In addition to the first three companies, NIO delivered 6,011 new cars last month, setting a new record for monthly deliveries. As of the end of July, NIO’s cumulative delivery volume reached 27,115 units.

Leapmotor delivered 4,404 cars last month, a year-on-year increase of 666%. Among them, 4,283 were Leapmotor T03. The cumulative delivery volume for the first 7 months reached 26,148 units.

Looking at the sales figures for the first half of the year, the “We Xiaoli” faction within the new force camp remains stable, while the second-tier teams are gradually emerging.

How much room is there for Tesla to cut prices?

On July 30, Tesla’s domestic Model 3 standard-range upgraded version was adjusted again, with the price reduced by RMB 15,000 to RMB 235,900 after subsidies. This is the 6th price adjustment (including 5 decreases) for domestic Model 3 since its launch, with a cumulative price reduction of RMB 127,000 from the initial price.

So, how much more can Tesla cut prices?

Some hints can be found in the earnings report released by Tesla for the second quarter of 2021. The report shows a revenue of USD 11.958 billion and earnings per share of USD 1.45, making it the eighth consecutive profitable quarter for Tesla.

Tesla stated that it achieved significant results in the second quarter, producing and delivering more than 200,000 vehicles, with an operating profit of 11%.

An operating profit rate of 11% indicates that if Tesla wants to, it can still further reduce the price of its vehicles. Note that the operating profit rate of most car companies is usually single-digit, and mainstream car companies can only achieve a slight increase from 6 or 7 percent.

Furthermore, Tesla has another sustainable source of service business revenue, which may further increase Tesla’s operating profit rate in the future.The business in question is the paid revenue for FSD software. To some extent, FSD is a nearly profitable business, with the high gross profit and low marginal cost commercial characteristics of software business determining its nature.

On this quarter’s earnings conference call, Tesla CFO Zachary Kirkhorn also talked about the possibility of huge revenue from subscription-based FSD fees.

Gene Munster, co-founder of Loup Ventures, said that Tesla’s book business profit from early FSD purchases and subscriptions will increase from $600 million in 2021 to $102 billion in 2032. The ten-year profit is incredible, with a 170-fold increase.

It should be noted that the FSD software package recently launched by Tesla introduced a monthly subscription model for new subscribers, which will result in even more considerable revenue. The “subscription model” magic has been tasted by many companies, such as Apple, which achieved a high software service revenue of $17 billion in the first quarter of this year.

Tesla has truly materialized the “software-defined car” era with monetary benefits.

Behind the removal of Su Jing is Huawei’s identity crisis.

Su Jing may not have expected to be “punished” for daring to speak out.

As the head of the Huawei Intelligent Driving Product Department and head of the Huawei Autonomous Driving Team, the former chief architect of Huawei Terminal Company and the person in charge of the Huawei Da Vinci AI architecture research and development were removed in the latest adjustment and need to be trained and reassigned to Huawei’s strategic reserve team.

The official response was that he made inappropriate comments about Tesla.

Su Jing was very popular with the media, and having someone who dared to speak out and seize the media’s attention was like directly mastering the “traffic code.” In fact, Huawei’s autonomous driving, accompanied by Su Jing’s remarks, became a hot search as soon as it debuted.

“Tesla has had a pretty high accident rate over the past few years, and the types of accidents are very similar, from killing the first person to the most recent one.”

“Huawei’s autonomous driving is definitely the best.”

“At this stage, companies that do Robotaxi will all fail.”

There are many outspoken words from Su Jing, some of which express the truth, some demonstrate his absolute confidence, and some are more extreme. However, objectively speaking, there are no “technical” comments that are incorrect regarding Tesla. So where is Su Jing’s problem?The problem is that Huawei does not need Su Jing’s radical remarks to stand in the center of the stage. For Huawei, demonstrating its reserve in autonomous driving is an act of showing off, but if it continues to “overthrow the host,” it is afraid that the automakers it hopes to cooperate with will have to “keep their distance.”

Any automaker who sees Huawei at the Shanghai Auto Show, holding ARCFOX with its left hand and Sailing with its right hand like a mascot, and taking away all the attention, will be sweating in their palms.

Huawei wants to make incremental money in the automotive industry in a low-key manner, but objectivity does not allow it. Ren Zhengfei should have realized that the role of Huawei’s intelligent driving solution provider is not easy to establish, and there is an obvious deviation between the perception of outsiders and Huawei’s role positioning.

There is also a phenomenon that reflects the essence of the problem, that is, why Huawei repeatedly emphasizes that it does not make cars, but still cannot cover up the speculation of the outside world, and even the restlessness of internal employees requires a ban to suppress.

The reason is that Huawei wants to present an image to automakers, but their perception of Huawei’s role is distorted and twisted, and its supplier role cannot continue to gain customer recognition.

This is a real dilemma that Huawei is facing.

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.