Ideal is falling behind "NIO, Xiaopeng and Li Auto".

Last week, Ideal Auto, the company with the lowest market value in the U.S. and Chinese stock markets among the three major Chinese new car-making forces, followed in the footsteps of Xpeng Motors' secondary listing in Hong Kong and officially went public on the Hong Kong stock market. However, it faced the "unsatisfactory" embarrassing situation of falling below the issue price on the first day of listing.

When asked why they chose a secondary listing, Li Auto co-founder Shen Yanan admitted in an interview, "We hope to attract more investors from the Asia-Pacific region, especially local investors, that is, Chinese investors, to invest in our company."

However, Ideal Auto's debut on the Hong Kong stock market failed to achieve its goal of "attracting Chinese investors", and its stock price fell all the way to HK$106 today.

This situation is obviously much lower than the expectations of Ideal's management, and it does not match the actual sales volume. Judging from the sales performance of Ideal Auto in recent months, its market performance is not bad, and is even better than that of Weilai and Xiaopeng, especially in July, when the delivery volume once exceeded the historical high, reaching 8,359 vehicles.

So, what exactly is the reason why the capital market is hesitant about Ideal Auto, and will its prospects be "ideal" enough?

Pursuing quick wins and taking shortcuts, R&D capabilities gradually fall behind

For investors and Ideal Auto, the current sales performance is not enough to guarantee a broad enough track in the future.

Earlier this month, NIO, Xpeng and Li Auto announced their respective new car delivery data for July, which were 7,931, 8,040 and 8,589 respectively.

Judging from the data, Ideal Auto is currently leading in sales compared to NIO and Xpeng, but if we delve deeper into why Ideal can do this, we will find that it is not relying on strong R&D capabilities, but rather a lazy "shortcut".

Ideal Auto took a shortcut and adopted the "borrowing" approach as much as possible in terms of autonomous driving technology. Compared with NIO and Xpeng, it was obviously much more dismissive of its own autonomous driving technology.

At present, both new car companies such as Tesla and Xiaopeng, as well as traditional car companies such as Volkswagen and Toyota, have invested a lot of money and energy in the field of autonomous driving. However, Ideal Auto has been sitting on the sidelines in this competition. It was not until 2019 that it belatedly launched the L2 level autonomous driving function. At this time, NIO and Xiaopeng have already completed the iterative upgrade of commercial autonomous driving technology.

Why does Ideal Auto pay so little attention to autonomous driving technology?

The answer is simple, because the capital market believes that autonomous driving technology will not help much in car sales in the short term, and its research and development requires a huge investment of money.

Data shows that Ideal's R&D investment in 2020 was only 1.1 billion yuan, which is a huge gap compared with NIO's 2.487 billion yuan and Xpeng's 1.726 billion yuan.

Judging from the data alone, NIO and Xpeng are undoubtedly companies that attach more importance to investment in technological research and development. It is not difficult to understand why Ideal was still using Mobileye Eyeq4's solution to achieve autonomous driving until 2020, while NIO and Xpeng have already switched to NVIDIA's platform with stronger technical customization and development capabilities.

Autonomous driving technology has been recognized by the industry as the ultimate goal of the development of smart cars. In the future, all smart cars will be equipped with high-level autonomous driving capabilities. Although Ideal Auto, which has always adhered to the "take-it-as-it-is" approach, has saved money and reduced resource investment at present, its excessive reliance on external technology has caused it to lose to its competitors in the field of technology.

This started last year when Ideal Auto announced that it would launch L3-level NOA autonomous driving function this year. However, it has not been installed in mass-produced models until now. This shows the embarrassment of Ideal Auto in cutting-edge technology.

Unlike traditional fuel vehicle brands with a history of hundreds of years, new energy vehicle companies, which have been established for less than 10 years, have extremely limited funds and energy. In addition, because the automobile market itself is an extremely asset-heavy industry, the first few models launched by new forces in the early stage are usually of the same model. For example, Tesla launched a number of sedans in succession before finally launching the Model Y SUV.

However, over the years, even though NIO and Xpeng have launched a variety of different models in the same period, Ideal Auto has insisted on only making SUVs.

If Ideal is a luxury car brand that builds cars by hand, it is understandable, but the problem is that Ideal is a car brand for the general public, and this single product logic is not practical for it. For it, the reason for being so unique is probably more based on the amount of resources and the input-output ratio.

Compared with competitors with multiple models, Ideal's single model is indeed simpler and easier to manage in the supply chain. However, for Ideal's future, this lazy "shortcut" behavior has also directly caused it to lose too many potential consumers.

Judging from the monthly sales list of new energy vehicles in my country, only 3 of the top 10 are SUVs, and the rest are all sedans. Ideal Auto currently only makes SUVs, which directly discourages most consumers from buying it and also makes it lose too much potential market share, resulting in a further decline in its market voice.

If you were to ask what is the biggest difficulty that pure electric new energy vehicles are facing in the process of market expansion, I believe that both practitioners and consumers would give the same answer - battery life.

Due to the fact that there have been no breakthrough technological advances in battery technology for many years, not only digital products such as mobile phones and computers have the problem of short battery life all year round, but pure electric new energy vehicles also face this problem.

In order to solve this problem, each pure electric vehicle company has given its own solution. Tesla and Xiaopeng provide users with battery fast charging technology, while NIO is promoting its own battery replacement route. There is no essential difference between the two technical routes. They just provide users with different choices based on the current situation.

Why are Tesla, NIO and Xpeng still so stubbornly choosing the pure electric route when there has been no technological breakthrough in battery technology?

The answer is simple. Pure electric is the ultimate direction of development of new energy vehicles and the overall research and development direction of the entire industry.

When faced with this problem, Ideal did not choose to stick to the pure electric route like its competitors. Instead, it gave up directly and turned to using hybrid-electric extended-range technology.

The extended-range technology can indeed bring a lot of short-term dividends to Ideal Auto, combining the long range of fuel vehicles and the cost-saving advantages of electric vehicles, allowing Ideal to create models with good sales based on the current consumer pain points. However, everything has a price tag, and the only difference is when to pay. The decision to extend the range has caused Ideal to begin to face the problem of gradually lagging behind in technology in the main direction of pure electric vehicles, the industry's development.

Even though Li Xiang, the founder of Ideal Auto, once blasted "those who think extended-range electric vehicles are a backward technology" as a bunch of technical idiots at a press conference, Li Xiang has firmly practiced "saying one thing and thinking another" behind the scenes. In its prospectus for its listing in Hong Kong, Ideal Auto clearly outlined its future development route - a pure electric route, and will launch at least two pure electric models every year starting in 2023.

The facts are obviously very clear. Even though Li Xiang says that he does not agree with the views of the "technical people", he is verifying their views with his own actions. It's just that Ideal has to pay more for its previous decision to take a shortcut and not make pure electric vehicles. It's not just a slap in the face, but also the market recognition.

Ideal will not be able to launch a pure electric vehicle until 2023, which is six years behind Xpeng, which launched its first mass-produced pure electric vehicle in 2017. Regardless of how much experience Tesla, Xpeng and other automakers have accumulated in manufacturing pure electric vehicles over such a long period of time, the fact that Ideal now needs to raise funds and develop pure electric vehicles from scratch is already very backward in the industry, and it is not even as good as Jia Yueting and his Faraday Future in the United States.

The market environment has changed dramatically, and Ideal Auto is in a difficult situation

Although Ideal's car sales have been good in recent months, it cannot escape the problem of low profits that are common among new car companies.

As of 2020, Ideal Auto still has not achieved profitability, with a total net loss of 4.123 billion yuan in three years. It is obvious that if Ideal's self-sustaining ability is seriously insufficient, relying on external investment will become the only way for Ideal Auto to survive.

Ideal has frequently "cut corners" in its technology research and development routes, and its difficult financing history shows that they have not won the recognition of the capital market.

Before the launch of its first mass-produced model, Ideal One, Ideal had only received an investment of 5 billion yuan, while the financing figures for NIO and Xpeng before the launch of their first mass-produced cars were 14.5 billion yuan and 10 billion yuan respectively.

The co-founder of Ideal previously claimed that the financing obtained from the listing in Hong Kong would be mainly used for the subsequent research and development of new models and technologies, which gave the outside world a very clear signal: Ideal is short of money.

Since 2017, new energy vehicles have been highly sought after by investment institutions. However, since last year, many new energy vehicle companies that were once in the limelight have gone bankrupt. Among them, there was even a bizarre phenomenon that Byton burned through $800 million of investors but went bankrupt without producing a single car.

The various chaos in the new energy vehicle market have led to a gradual rationalization of the capital market's investment in new energy vehicle companies since the beginning of this year, rather than the blind pursuit of it a few years ago. Investment in new energy vehicle companies has begun to pay more and more attention to technology accumulation and product market performance, which is obviously a lingering worry for Ideal, whose technical strength is not satisfactory.

Unlike the era of fuel vehicles, when my country has long lagged behind developed countries in Europe and the United States in core technologies, in the field of new energy vehicles, my country is on the same starting line as developed countries in Europe and the United States.

In order to promote the development of the new energy vehicle industry, my country has a very generous sales subsidy policy for new energy vehicles, which has greatly reduced the price of new energy vehicles, making their counterparts in the same class have a clear price advantage over fuel vehicles. This has effectively promoted the development of my country's new energy vehicle industry and helped a batch of new force vehicle companies to gain a firm foothold in the market.

However, for Ideal, this sales subsidy is more like a sword of Damocles hanging over its head. It can help lower the threshold for consumers to buy Ideal cars, but the controversy over whether extended-range electric vehicles are pure electric vehicles has never stopped.

At present, extended-range electric vehicles can no longer enjoy local subsidies in Beijing, and Shanghai has also announced that it will no longer issue green license plates for extended-range electric vehicles by 2023.

In addition, according to the news that my country has repeatedly lowered the policy subsidy ratio for extended-range electric vehicles, overall, it may only be a matter of time before extended-range electric vehicles are completely kicked out of the list of new energy vehicles. Once cancelled, it means that Ideal will face an extremely difficult market situation. After all, Ideal will not be able to launch their first pure electric vehicle until 2023.

In April this year, Huawei and BAIC Polar Fox The two companies jointly held a grand press conference, at which the Alpha S, with which we are now very familiar, was released. This time we will put this car aside and focus on the policy information released by Huawei.

Although Huawei has repeatedly stated that it will never build cars, judging from its actions in the field, it is clear that Huawei is not satisfied with just being a core technology supplier like Bosch, which is completely hidden behind car companies, but wants to become the soul of traditional car companies.

Although the chairman of SAIC has previously publicly stated that he would never cooperate with Huawei on car manufacturing, because he believes that car companies must master intelligent technology themselves, rather than letting Huawei become their soul.

However, we cannot ignore that in addition to super-large-scale car companies like SAIC, there are also many traditional small car companies that do not have the ability to develop intelligent technology on their own. These will be Huawei's unbreakable foundation, and this is the biggest threat to a number of new car companies.

Among these new car companies, Ideal Auto is the one that faces the greatest threat. Regarding the remarks made by the chairman of SAIC, He Xiaopeng, the founder of Xiaopeng Motors, also expressed a similar view before, that car companies must master intelligent technology themselves, only in this way can they produce the best products. Therefore, for cars possessed by Huawei, these new car companies such as Tesla and Xiaopeng that attach importance to automobile intelligent technology will not be too panic.

However, the situation is just the opposite for Ideal Auto. Due to its previous disregard for the research and development of autonomous driving technology, it is obviously very difficult to deal with Huawei, whose current autonomous driving technology level has reached the quasi-L4 level. Moreover, in terms of intelligent technology for smart cars, Huawei has also provided smart cockpit solutions including Harmony car OS software platform, Harmony car domain ecological platform and smart hardware platform. Whether Ideal can get funds in the stock market to continue to develop intelligent technology is still an unknown.

In addition, because Ideal Auto insists on "taking shortcuts", it has no obvious advantages in pure electric vehicle technology compared with traditional automakers who are just getting started in pure electric vehicles. It may even be overtaken by traditional automakers because of their advantages in manufacturing. The extended-range route chosen by Ideal has ultimately become the biggest burden that hinders Ideal's progress into the future.

In general, it is not unforeseeable that Ideal Auto will fall below the issue price on the first day of listing on the Hong Kong stock market. The lack of investment in technology and slow action have caused the company to gradually lag behind its peers in the industry. It will be difficult for it to maintain its current leading sales advantage in the future. The capital market's pessimism about it is indeed reasonable and logical.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.