Yesterday, Ideal released the weekly sales list for the third week of 2024 (January 15th to January 21st) as scheduled. With a slight advantage of 0.03 million units, it regained the first place from Wenjie.
The ideal that will steal the show in 2023 was originally accustomed to winning. In December 2023, Ideal monthly sales exceeded 50,000 vehicles, setting a record high. Total sales in 2023 will reach 376,000 vehicles, almost double the previous year. It has become the first new force to cross the annual delivery mark of 300,000 vehicles and the only new force currently profitable.
Until the first week of this year, when Li Auto released the list, its weekly sales dropped by 9,800 units from the previous week to 4,300 units, the worst record in the past six months. On the other hand, Wenjie exceeded the ideal for the first time with a score of 5,900 vehicles.
In the second week of this year, Wenjie continued to top the list of new energy vehicle brand weekly sales with a sales volume of 6,800 units, while Ideal ranked second with a sales volume of 6,800 units.
The pressure faced at the beginning of an ideal new year is caused by a combination of factors.
On the one hand, in December last year, in order to achieve the delivery target of monthly sales of more than 50,000 units, Ideal worked hard on terminal preferential policies. While refreshing its own record, it also almost exhausted the user orders in hand.
On the other hand, the upcoming product generation transition will also have a certain impact on cash sales. The three models of the extended range L series L9\L8\L7 will receive configuration updates, and the 2024 models will be officially released and delivered in March. A car blogger revealed that the smart cockpit of the 2024 Ideal L series model is expected to use the Qualcomm Snapdragon 8295 chip, and the pure electric cruising range of the vehicle is also expected to be improved. Some potential consumers are holding coins waiting to buy.
What cannot be ignored is the Xinwenjie M7 and M9, which are competing head-to-head with Ideal's main models. Recently, Yu Chengdong posted on Weibo that four months after the release of Wenjie's new M7, the number of units has exceeded 130,000. Current orders have put Cyrus's production capacity at full capacity, and now weekly production capacity and delivery volume are about the same. As production capacity gradually ramps up, sales figures will continue to rise.
In order to stimulate sales, Lideal has recently launched a more powerful terminal preferential policy than last December. The price reduction range of different versions of L7, L8 and L9 models ranges from 33,000 yuan to 36,000 yuan, which has become the largest discount since the beginning of the year. One of the largest car brands.
Before capturing new territory, it is ideal to use price reduction to recover lost territory as quickly as possible.
Obviously, after the "roller coaster" sales last week, Ideal has realized that it is not that simple to "avoid Huawei's edge". What follows is an unavoidable head-on encounter.
01
Huawei cannot be avoided
Accurate product definition is the starting point for Ideal's success in the first half. This gives Ideal the opportunity to surge at an alarming speed and be on par with its more mature opponents at the organizational level in terms of sales performance. But at the same time, this also means that Ideal has to face a large number of Imitation and competition in the same ecological niche.
Currently, Li Auto has three models on sale, namely Lili L9 (a six-seat SUV between RMB 400,000 and RMB 500,000), L8 (a six-seat SUV under RMB 400,000), and L7 (a five-seat SUV between RMB 400,000 and RMB 400,000).
Wenjie also has three models on sale, the M5 (250,000-class compact SUV), the new M7 (300,000-class five-seat mid-to-large SUV), and the M9 (500,000-class luxury SUV).
The 2022 Wenjie M7, which is positioned at the same level as Ideal ONE, makes Ideal feel the ambition of a latecomer for the first time. Overall, the 2022 Wenjie M7 and the Ideal ONE are in the same price range, but the former has a wider price range. Compared with the price of the Ideal ONE, the rear-wheel drive version of the 2022 Wenjie M7 is cheaper and top-end. Version power is better. There are also many color TVs, refrigerators and large sofas. Huawei's self-developed integrated electric drive, thermal management system and other technical advantages add to the product highlights.
Under the "cost-effectiveness" offensive, the sales of Ideal ONE began to plummet in the month when the 2022 Wenjie M7 was launched, and had to stop production early. Along with this, there are also a series of costs such as compensating suppliers for losses of more than 1 billion, loss of teams, etc.
Thus, there was the long Weibo post in which Li Xiang admitted that he was "crippled" by Wenjie, with every word in tears. "We were surprised to find that the painful problems we encountered in product research and development, sales and services, supply and manufacturing, organizational finance, etc. were solved more than ten years ago, or even twenty years ago."
At the strategic meeting in September 2022, all company executives reached an agreement to learn from Huawei in an all-round way. Li Xiang personally took the lead in establishing the IPMS process and poached people from Huawei to help the organization achieve comprehensive evolution.
Zou Liangjun, senior vice president of sales and service of Li Auto, is a former Honor executive. He joined Li Auto last year and is responsible for the sales and service group, managing sales, delivery, service and charging network.
Li Wenzhi, former director of Huawei's Global HRBP Management Department, also joined Li Auto last year and served as the head of the CFO office, responsible for Li Auto's process, organization, and financial reform. Li Wenzhi has worked for Huawei for 18 years, of which the first 16 years were responsible for sales in domestic and overseas markets, and the last two years were responsible for the group's human resources work.
Xie Yan, former vice president of Huawei's Consumer BG Software Department and director of the Terminal OS Department, joined Li Auto as CTO the year before last. He was mainly responsible for promoting the implementation of self-developed chips, including Li Auto's self-developed operating system and computing power platform. He is also in charge of the AI technical committee just established by Ideal.
To a certain extent, before the rise of Wenjie, Ideal recreated a "little Huawei" in the automotive industry, and its organizational processes and combat methods grew rapidly. The success of the L series model has been a beautiful job.
But in the final analysis, Huawei is a company in China that cannot be copied. This is specifically reflected in the technological accumulation in the ICT field, the breadth and depth of R&D resources, the experience in conquering the world market, and the unparalleled brand potential.
The first step for Huawei to enter the automotive industry and get rid of losses is to conduct pixel-level benchmarking against the ideals of the leader in the market segment. The teacher will demonstrate the questions that the students have done.
The new M7 aims at the ideal L7, using it as the core comparison model to fully exploit its cost-effectiveness advantage. After the M9 was launched, it became the most direct competitor to the ideal L9. In terms of parameters, it highlights "what others don't have, I have, and what others have, I have excellence"; as far as the product itself is concerned, the chassis, power, cockpit and intelligent driving also show amazing performance.
Regarding how Ideal views Huawei, Li Xiang repeatedly emphasized that "Ideal maintains a good attitude when facing Huawei: 80% learning, 20% respect, and 0% complaining."
When the two powers compete, they often compete over the shortcomings of the barrel. Although the industry is gaining momentum, subsequent product reputation and delivery performance will still bring uncertainty. Recently, the growth rate of orders has been slowing down. On November 27, 2023, 100,000 Wenjie M7 vehicles were ordered; on December 26, 2023, 120,000 Wenjie M7 vehicles were ordered; on January 20, 2024, 130,000 Wenjie M7 vehicles were ordered. The backlog of orders has aggravated consumers' wait-and-see mood. Especially before the New Year, many consumers want to pick up their cars and take them home for the New Year. Some users said that it was promised delivery within 4-6 weeks, but now most people have not mentioned the car for more than 12 weeks. Some users mentioned that it now takes 6-8 weeks to pick up the car for the regular version, while it takes 3 months for the high-end version.
There are many cases of new forces missing out on the market due to production capacity issues. NIO ET5, Xpeng G9, and Changan Deep Blue SL03 have all suffered from delivery issues, and their sales have turned from hot to cold.
The sales battle is a comprehensive test of brand, organization, products, sales, supply chain, and delivery that Ideal and Huawei face at the same time. Any mistake may lead to a sudden change in the battle situation.
02
The ideal comfort zone, there’s no going back
For ideals, even if they can withstand the struggle with the world, 2024 will still be full of challenges. The methodology that was proven successful by the market in the first half can certainly be continued, but it may not be able to replicate the next success in a new arena. In other words, this is not enough.
For 2024, Li Auto has set an annual sales target of 800,000 vehicles. According to Zou Liangjun, senior vice president of Li Auto, the main market is divided into three parts:
First, the L7/L8/L9 three cars on sale have an average price of more than 300,000, and the target is 400,000 units in 2024;
The second is the new model Ideal L6, which is positioned at less than 300,000 units. It will be launched in April and will challenge monthly sales of 30,000 units and is expected to reach 270,000 units;
The third is the pure electric MPV Ideal MEGA, which will be officially launched and delivered in March this year. It will challenge the monthly sales target of 8,000 units and is expected to sell 80,000 units. The three total 750,000 vehicles, and the remaining 50,000 vehicles will depend on the three high-voltage pure electric models that Ideal will launch in the second half of the year.
The expansion of the product matrix brings both opportunities and challenges. In the MPV market that MEGA is about to enter, competitors such as Xpeng X9, BYD Denza D9, Jikrypton 009, and Great Wall Weipai Alpine are surrounded by enemies. Especially the Xpeng X9, which is the only model in its price range that comes standard with rear-wheel steering and dual-chamber air springs. With a price of 350,000-400,000 yuan, it is very cost-effective. In contrast, whether MEGA priced at more than 500,000 yuan can be paid for by the market still needs to be verified.
Entering the pure electric market also means that Ideal will have to compete head-on with rivals such as Tesla, Xpeng, and NIO. This means that Ideal must invest more in core technologies such as battery, intelligence, and energy replenishment. Especially for the price range of Ideal’s main products, investment in energy replenishment experience is crucial.
Selling both extended range and pure electric vehicles well will also be a new challenge for ideal sales capabilities. Ideally, channel evolution must be carried out on the basis of controlling costs and maximizing the efficiency of direct sales.
Taking advantage of the resources accumulated from the victory in the first half, Ideal will begin to accelerate its all-round layout in 2024. Improving efficiency and making up for shortcomings is the main focus of Ideal this year.
In terms of intelligence, during last year’s third quarter results conference call, Li Auto President and Chief Engineer Ma Donghui said that Li Auto will take “leading intelligent driving” as its core strategic goal. By 2025, the size of Li Auto’s intelligent driving R&D team is expected to increase from the current 900 people. Expanded to over 2,500 people.
In order to cope with the pressure from Huawei to expand its stores, Ideal will also increase investment in channels. In 2024, Ideal's sales network will further expand to third- and fourth-tier cities. It is expected to achieve full coverage of third-tier cities by the end of 2024, with a coverage rate of more than 70% in fourth-tier cities. At the same time, Li Auto plans to open 800 stores by the end of this year to support its annual sales target of 800,000 vehicles.
In fact, losing sales in the first two weeks is not necessarily a bad thing for Ideal. To a certain extent, Huawei is an opponent that Ideal actively chose and fought for. If we observe carefully, we can find such signs in terms of propaganda caliber and strategic approach.
Looking at the entire automobile industry, it is one of the few consensuses that only by being among the top few will you have a chance to survive. Huawei's potential in the car industry has not yet been fully released, and all competitors have already felt breathless pressure. Being able to compete and compare with such opponents is an ideal way to establish a position in the market. What is needed next is for Sun Gong to build a new city.
In the fierce competition, both Ideal and Huawei have to show their trump cards. No player can sit back and watch the fight between tigers and tigers. For the entire automobile industry, a more noteworthy trend is that few people mention "Wei Xiaoli" anymore. Questions and ideals form a dual-power structure, the head is accelerating to differentiate, the Matthew Effect is intensifying, and competition will become more fierce. Those companies that are at the bottom of the sales list, or even not on the list, will have a difficult time.
Post time: Jan-26-2024