Aion V is here, with a range of 600 kilometers and a price of only 170,000 yuan. After the big manufacturers wake up, how can Tesla not panic?

Under the dual influence of the epidemic and declining subsidies, China's new energy vehicle market in 2020 continued the downward trend in the second half of 2019, reaching a record "nine consecutive declines."

However, the overall downward trend does not mean that the outstanding data of excellent automakers are concealed. Since mid-2019, GAC New Energy's sales have continued to rise. In the first quarter of 2020, GAC New Energy's sales increased by 53%, 100% and 121% year-on-year respectively.

At a difficult time when the industry is tightening its front line to prepare for the winter, the third product of GAC New Energy's Aion series, the Aion V, which starts at only 170,000 yuan, has officially started pre-sale on April 27. The rise against the trend highlights GAC New Energy's strategic composure and determination. There is no doubt that this different "new force" of a large manufacturer is bringing a different way of playing to the industry.

Big companies and new forces

Interestingly, on the new energy vehicle sales list for the first quarter of 2020 compiled by the China Passenger Car Association, in addition to GAC New Energy, there is another company that maintains high growth, which is Tesla.

Although both belong to the new energy field, are "new forces", and both maintain high growth against the trend, GAC New Energy and Tesla have two completely opposite styles and characteristics.

From the perspective of development, GAC New Energy is affiliated to the traditional automaker GAC. Although GAC New Energy was not established until the new energy market exploded in 2017, GAC has been working in the traditional automobile field for nearly 20 years. In contrast, Tesla was born in 2003 and did not officially deliver its first new energy vehicle until 2012.

From the product perspective, GAC New Energy's main products are the Aion S and the upcoming Aion V, both of which start at an average price of around RMB 200,000. Tesla's main product is the Model 3, which is priced at around RMB 300,000. Although the price is just a difference in the positioning of the manufacturer, since the price will have different impacts on product production capacity and shipments, and thus pose different challenges to the manufacturer, the price also reflects the objective demands of the manufacturer in some aspects.

It can be said that in the current context of the shrinking new energy front, GAC New Energy and Tesla, which have achieved counterattack growth, undoubtedly represent the two forces in the current new energy market - the "new forces" among traditional car companies and new forces in the pure sense.

The different genes of these two types of companies not only determine their respective development directions, but also indicate who will have the last laugh in the subsequent competition.

GAC New Energy’s Caution and Radicalism

The reason why GAC New Energy can compete with Tesla shortly after its establishment is directly related to the solid foundation laid by traditional car companies for GAC New Energy.

First of all, in order to create more competitive products, GAC New Energy continued the traditional car-making route and began to build a new generation of pure electric exclusive platform GEP 2.0 at the beginning of the launch of the Aion series. The biggest advantage it brings is that it makes the space layout of the whole vehicle more reasonable, thereby increasing the vehicle's range. For example, the new product in the Aion series, Aion V, can achieve a maximum range of 600km according to the NEDC standard.

Since building a pure electric platform costs billions of dollars and takes 4 to 5 years, most new car companies have adopted the "oil-to-electric" solution, and simply and crudely launched new energy vehicles that only add battery packs without any optimization. This move is bound to fail to gain the favor of consumers.

Secondly, thanks to the technical background of GAC Research Institute over the years, GAC New Energy also has an advantage over the industry in autonomous driving, which is very important for new energy vehicles. Its Aion LX, released in the second half of 2018, is the first product in China equipped with an L3-level autonomous driving assistance system. Unfortunately, due to the lag in domestic policies and laws, the L3-level autonomous driving system of Aion LX is still in the restricted stage.

In contrast, although Tesla has only achieved L2.5 level of autonomous driving, it has boldly released the technology to consumers. As a result, more than once, traffic accidents have occurred because consumers over-trusted its technology. For example, in 2018, an Apple engineer was playing with his phone while driving a Model X with the autonomous driving function turned on. As a result, the Model X failed to recognize a roadblock and caused a car accident, and the engineer was unfortunately killed.

From this perspective, it can also be seen that traditional car companies and new car companies have different strategies when dealing with radical technologies. The former are aware of the dangers of cars traveling at high speeds, and therefore limit the decentralization of already mature technologies; the latter disregard the lives of users for the sake of marketing and technological iteration.

On the other hand, as mentioned earlier, although GAC New Energy's main product is priced at around 150,000 yuan, and its flagship product Aion LX is only at the same level as Model 3, considering the industry, the main reason for this is directly related to demand and shipments.

Take Tesla as an example. According to insiders, if its Model 3 products are 100% localized in China, the comprehensive gross profit margin will reach 40%, which means there is room for price reduction of about 130,000 yuan. But on the other hand, the annual production capacity of Model 3 in Tesla's Shanghai Super Factory is only 150,000 vehicles. With these two factors combined, Tesla will definitely not let the price of Model 3 drop too much, otherwise there will be a serious shortage of production capacity and huge revenue.

At the beginning of its establishment, GAC New Energy built a smart new energy vehicle factory with a first-phase investment of 4.697 billion yuan and an annual production capacity of 400,000 vehicles. In mid-2019, the factory began production. On the one hand, it is more cost-effective, and on the other hand, the production capacity has gradually caught up. In September 2019, the sales volume of Aion S reached 4,006, ranking third in the list. Therefore, it is foreseeable that as the production capacity of GAC New Energy Factory gradually becomes regular, its next listed Aion V, which is in the same position as Aion S, will also reap good shipment data.

Of course, looking at it from the other side, the reason why GAC New Energy can set the price of its products low is not only due to its product strategy for the market, but also has a deep connection with its own layout and control of the supply chain.

For example, at the end of 2018, GAC announced that it would set up a joint venture with a well-known battery supplier to jointly manufacture new energy vehicle power-related projects. This also enabled GAC New Energy Vehicle to take the lead in mass production of ternary 811 power batteries.

At the end of 2019, GAC also cooperated with Nissan, the world's top motor manufacturer, to jointly build a three-in-one motor. The motor factory is located in the GAC Intelligent Connected New Energy Vehicle Industrial Park, which will allow GAC New Energy to directly reap the benefits of technology - even lower than the ultra-low purchase price GAC New Energy had previously received.

It can be said that by controlling the core supply chain technology, GAC New Energy Vehicle not only obtained industry-leading technology, but also controlled costs. This also explains why GAC New Energy still has enough confidence to insist on high cost-effectiveness even when subsidies have dropped significantly.

In the traditional impression, car companies that have come from the era of fuel vehicles seem to be more conservative and cautious compared to new car companies. But on the other hand, thanks to sufficient cash flow and technical strength, these manufacturers will start faster than new car companies when entering new tracks.

When faced with a conflict between new technology and driver safety, conservative and cautious people will actively choose the latter, which becomes an advantage compared to new car companies.

On the whole, although Tesla has gained some relative advantages in electrification and intelligence, the two biggest focus of future new car manufacturing, due to its early start, as traditional car companies gradually gain momentum, these advantages are likely to be overtaken by traditional car companies with stronger technical strength.

From the market perspective, not only manufacturers led by GAC New Energy choose to start from 150,000 yuan and encircle Tesla from bottom to top, but products represented by Audi e-tron are also constantly eroding Tesla's share of the high-end market.

Caught between these two traditional car companies, Tesla will surely have a hard time in the future.

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.