Xiaomi’s comprehensive hardware profit margin will never exceed 5%.
In 2018, Lei Jun wrote this in an internal letter from Xiaomi.
▲Picture from: REUTERS
In 2023, after Xiaomi obtained the qualification to build cars from the National Development and Reform Commission, Lei Jun renewed his promise of “5% profit” to Xiaomi Motors, and he wanted to do it even more. It can be learned from insiders that Xiaomi has implemented the thinking of making mobile phones into the car-making business. Lei Jun hopes to make profits through the software ecosystem on the premise of maintaining parts profits at 1%.
Using cost-effective thinking to leverage the market size, and then taking advantage of the trend to engage in “technology sales” business, Xiaomi is not the first car company to have this idea. There is also Leopao ahead of this road.
▲Zhu Jiangming, CEO of Leapmotor
Zero ran back to Wen in the first half of the year, and the focus shifted
There are only three car companies that dare to flaunt their own full-stack self-research and have achieved actual results – Tesla, Xpeng and Leapmoo.
In August this year, Zhu Jiangming announced the progress of Leopao’s self-research to the outside world. Leopao has completed independent research and development in battery packs, electric drive units, etc. Currently, Leopao’s self-developed technology accounts for 70% of the total BOM cost. .
For Lingpao, self-research on technology is the key to maintaining competitiveness.
▲ Picture from Weibo @我是真History
Based on self-developed hematopoiesis, Leapao also had overly optimistic expectations for the market. In 2021, Leapmotor CEO Zhu Jiangming proposed an ambitious five-year plan. In the plan, Leapmotor will enter the top three domestic new forces in 2023, and further gain as much as 10% of the domestic new energy market share in 2025.
Two years have passed, and the answer sheet handed over by Leapao cannot be said to be good-looking. From 2021 to 2022, Leapao’s cumulative loss was approximately 8 billion yuan. In this year’s mid-year financial report, Leapao’s half-year loss reached 2.276 billion. In nearly four and a half years, the net loss has expanded to 12.2 billion yuan.
A cruel fact lies before our eyes. Leappo will not be able to rank among the top three domestic new forces in 2023, and its ultra-high market share plan in 2025 seems far away.
However, we can still find some signs of “recovery” from the half-year financial report. Turning our attention to gross profit margin, the financial report shows that Leopao’s current gross profit margin is -5.9%. Although it is still in the negative range, compared with -26% in the same period in 2022, Leopao’s gross profit margin has been significantly improved.
▲Picture from: Businesswire
This is related to Leappa’s recent sales performance. In March this year, Leopao officially released the extended-range version of the C11 and the new C01, deeply exploring the 150,000-class B new energy market. Leopao provides the market with more energy structure options. The market began to “dislocate” and compete for market share.
Facts have proved that Lingpao’s “cost-effective and multi-energy” strategy worked quickly.
In May, Leapmotor delivered a total of 12,000 new cars in a single month, a month-on-month increase of 38%. Among them, the delivery of C series models increased by 38% month-on-month, and the delivery volume exceeded the 10,000 mark. The C11 car series delivered more than 7,100 new cars, and became a domestically produced model. The number one B-class new energy SUV; in June, Leopao’s new car delivery reached a record high, with a total of more than 13,000 new cars delivered in a single month. The delivery performance of C-series models went further, with more than 11,600 units delivered in a single month, accounting for The sales ratio exceeded 87%, and the C11 series delivered more than 8,900 units, setting a record high and continuing to occupy the top spot among the new B-class SUVs.
It is worth mentioning that from the overall delivery structure, the delivery proportion of C series models has exceeded 80% for a long time, and the sales baton has been passed from the T03 series models to the C series models.
According to the mid-year financial report provided by Leapao, the total delivery volume of the C11 model was 27,500 units, far exceeding the 8,975 units of the T03 model. Leapao’s sales focus has smoothly completed the transition, with the average price of a single vehicle rising to 130,000.
The recovery in sales has had a continued positive impact on Lingpao’s gross profit margin performance. Striking while the iron is hot, Leopao once again launched a “price war” in August. Leopao adjusted the prices of some of its C series models. Among them, the C01 model had a maximum price reduction of 20,000 yuan. The successive cost-effective “bombs” further stimulated the market. The future market demand of Leapo and the scale effect it can leverage are expected to dilute more production and manufacturing costs for Leapo.
In addition, active cost reduction actions are also being carried out simultaneously. In September, Leapao will launch the CTC battery pack version 2.0 to further reduce battery costs while pursuing lightweight battery models.
With the combination of “sales + cost reduction”, Leipao is confident that it will completely return its gross profit margin to positive before the end of 2023.
Small ways to play
Full-stack self-research often means high R&D investment. But compared to today’s leading new forces, the amount of R&D expenditures on Leapbo is much smaller.
Referring to the financial report data of the three “Wei Xiaoli” companies, in the second quarter of this year, Ideal’s R&D expenditure was 2.43 billion yuan, a year-on-year increase of 58.4%; NIO’s single-quarter R&D expenditure was 3.34 billion yuan, exceeding 30 for three consecutive quarters. billion; Xpeng Motors’ single-quarter R&D expenditure reached 1.37 billion yuan, a year-on-year increase of 8.1%.
And, what about Zero Run?
In the first half of the year, Leapao’s R&D expenses were 823 million yuan, a year-on-year increase of 56.4%. Although there is a considerable increase compared to the same period, the fact before us is that the R&D expenditure data of the leading new forces in a single quarter has already doubled the expenditure in half a year.
How can Zero Run, which emphasizes “self-research in all fields”, survive?
However, in the domestic new energy market, small companies have their own way to survive. For Leapmotor, the sunk cost of developing head-mounted smart driving chips and autonomous driving is too great, which is something that small car companies cannot afford. On the basis of existing cash reserves, the right solution is to find the right direction to launch a “hematopoietic” technology.
The new “Four-leaf Clover” centrally integrated electronic and electrical architecture of Leapmoo is the product of such “hematopoietic” technology. With “Four-leaf Clover” as a turning point, Leapao has transformed from a pure car company to a wholesaler of product technology.
On July 31, Leapao officially released its centrally integrated electronic and electrical architecture. According to the official statement, “Clover” uses a SOC and an MCU chip to integrate the cockpit domain, intelligent driving domain, power domain and body domain to realize four-domain central supercomputing. To give a simple and easy-to-understand analogy, the centrally integrated architecture is equivalent to putting all computing chips into a box, efficiently transmitting decisions directly to the dispersed parts of the car in a brain-like manner, reducing the reuse of smart parts such as chips. Achieve high efficiency and cost reduction.
It is worth mentioning that the most special feature of the “Clover” central integrated architecture is its high degree of flexibility. “Clover” provides different solutions for different configurations of models. The standard solution is equipped with 8155+NXP S32G, the mid-range solution uses 8295+S32G high-end chips, and the high-end solution is equipped with an OrinX chip on this basis.
Really realize the effect of “one fish to eat more” and one structure to be used for many purposes. Opening up vehicle model solutions from standard to high-end configurations has paved the way for Leapmo’s “technology wholesale”.
Technology wholesaler, going global
Leapao’s insistence on “full-stack self-research” began to reap rewards after the release of the new pure electric architecture.
What is relatively certain at present is that two car companies will have authorization for vehicle technology.
Zhu Jiangming revealed to the outside world at the press conference.
According to channel sources, Volkswagen intends to cooperate with Leapmotor to fully transform its Jetta models into electrified vehicles. Interestingly, compared to the joint development cooperation with Xpeng, Volkswagen’s cooperation with Leapao seems to be more thorough. Volkswagen intends to buy out a certain generation of Leapao’s platform technology and push the electric Jetta into the mainstream mass market.
In addition, Stellantis, the fifth largest automobile manufacturer in the world, is rumored to be exploring the possibility of cooperation with Chinese new energy automobile companies. The cooperation may be in the form of investment and development of corporate partnerships. According to relevant sources, Leapmo is one of the frontrunners. one. Rumors of cooperation are rampant, and Lingpao has not stopped its pace of internationalization.
Lingpao, a technology wholesaler, has expanded its business overseas.
On September 4, at the Munich Mobility Expo (IAA Mobility), Leapmotor officially unveiled its first global strategic model, the C10. Leapmoon C10 is positioned as a medium-sized SUV. It will be equipped with Leapao’s latest self-research result “LEAP 3.0” for the first time. It adopts a centrally integrated electronic and electrical architecture and provides two power structure options: extended range and pure electric.
It is worth mentioning that the Leapmotor C10, which was born out of the internal code-named B11 model, is fundamentally different from the current model of Leapmotor. It is not an “international reskinned version” of the current model. Compared with the C11 model, the C10 is built on a brand-new platform, with a larger vehicle size and more cabin space. It will also be the first to be equipped with Leapmotor’s CTC 2.0 chassis integration technology.
Based on the new central control architecture, Leapao C10 has the advantages of higher integration, higher efficiency, and more intelligence. The central supercomputing platform performs flat domain control of the entire vehicle and accurately manages all electronic control units. The high-efficiency advantages of central integration are first reflected in “sensorless OTA”. According to Leapmotor officials, the C10 can complete a vehicle OTA within 25 minutes. At the same time, the electrical architecture and flexible interfaces are pre-embedded. Compared with other competitors, Leapao’s OTA will be more independent and controllable.
In terms of smart hardware, Leapao C10 is the first to use the 8295 car chip, which improves the smoothness of the interaction between the smart cockpit and car owners. Secondly, Leapao also adds an NVIDIA OrinX chip to the high-end version of the C10, with 254TOPS computing power and overhead Lidars work together to provide higher-level intelligent driving capabilities.
Starting with the C10, its first global strategic model, Leapmotor announced that it will release five new cars for the global market in the next two years, mainly in four overseas markets: Europe, Asia Pacific, America and the Middle East. Interestingly, in addition to broadening the international product matrix, Leapao has also refined its international technology and business model.
Leapao is not only a car manufacturer, but also a provider of comprehensive solutions for smart electric vehicles.
Zhu Jiangming once again emphasized Leapmoon’s emphasis on technology at the globalization strategy conference.
According to internal disclosures from Leapao, with the central integrated electrical architecture as the core, 4 technology licensing models will be provided in the future:
- Technology sharing based on central integrated electrical architecture and peripheral controllers
- Central integrated electrical architecture + battery + electric drive technology sharing
- Technology sharing based on overall delivery of lower body
- Technology sharing based on vehicle-level cooperation
4 ways of cooperation, deepening the relationship step by step, and relying on the “main course” of architecture technology, Leapao has opened up a technology sales model for more possibilities.
On the road to technological profitability, Lingpao is at the forefront. But compared to Xiaomi Auto, which aims at software ecology, Leapao has resolutely turned to a more versatile architecture and technology branch at the intersection of this straight road.
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