Automobile manufacturing is a protracted battle, and new car manufacturers may be able to take it slow

Recently, He Xiaopeng's statement on his PPT that "the core of smart cars lies in operation, not in manufacturing" has caused great controversy. Critics have accused He Xiaopeng of being "too arrogant" and "disrespecting manufacturing."

Later, He Xiaopeng explained that a more accurate statement is "the core of the smart car ecosystem lies in operations", and said that the text on the PPT cannot be interpreted directly and needs to be understood in the context.

Some people think that this is a premeditated hype, and He Xiaopeng deliberately created controversy to expand the spread. Whether it is taken out of context or deliberate hype. In any case, there is one point that He Xiaopeng wants to emphasize, that is, operation is very important for new car-making forces.

What to operate?

Xpeng Motors plans to set up a completely self-operated sales and service system across the country, rather than outsourcing sales and after-sales services to 4S stores like traditional automakers do.

The benefit of doing so is that it can export convenient and unified services and provide consumers with a transparent price system, thereby better protecting consumers' experience and rights. At the same time, the ability of automakers to control channels will also be enhanced.

The traditional 4S store model that currently dominates the market has many disadvantages: high investment, high cash flow requirements, opaque prices, and difficulty for consumers to protect their rights.

The development of smart cars is ultimately to provide users with a better consumer experience, and sales and acquisitions are important links in car consumption. Reforming these links can enhance user experience and increase consumers' awareness of the brand.

However, the profits from these links are somewhat meager compared to car sales. For new car manufacturers, most of them do not have sufficient funds, and spending money to build sales and after-sales service systems will inevitably increase financial constraints.

However, just because the profits in the automotive aftermarket are slim, we cannot deny the layout of these links by new car manufacturers. Auto consumption is a whole, and the sales and after-sales services of cars will inevitably affect consumers' perception of the brand.

Brand building and enhancement is not only about quality and technology, but also about service and experience. Although this requires high initial investment, in the long run, the resulting improvement in brand image can provide corresponding compensation for car companies.

By incorporating this thankless link into their own layout, the new forces in car manufacturing will have a harder time, but at the same time, they will have a stronger ability to control service quality.

Internet car companies have great disadvantages compared to traditional car companies in terms of automobile manufacturing, quality, cost control, and supply chain management, and this disadvantage cannot be eliminated in a short period of time.

Internet car companies need to establish their own competitive advantages, and service and operation are their strengths. Internet car companies start from these aspects, which is actually strengthening their own advantages.

If this model of building its own sales and service channels can be successful, it will undoubtedly be a huge advantage over traditional car companies that rely on the 4S store model.

Xpeng Motors is also deploying charging facilities. Xpeng Motors is currently the only domestic automaker that has built its own super charging stations. By the end of 2020, Xpeng Motors will deploy more than 1,000 super charging stations, 10,000 dedicated charging piles and 100,000 third-party cooperative charging piles across the country.

In fact, there is also a lot of room for operation in terms of charging facilities. It can be said that without a major breakthrough in battery energy density, convenient charging facilities are the main way to solve the anxiety of electric vehicle range.

Although the construction of charging facilities mainly relies on companies specializing in this field and the support of the state, in the early stages of market development, when charging facilities are generally imperfect, if the auto industry can build its own charging facilities, it will undoubtedly greatly promote the promotion of its own products. Tesla, the pioneer of electric vehicles, also adopted this strategy.

The operation of charging facilities is more complicated. Similar to building a sales and after-sales service system, building charging facilities by yourself will also involve the energy and funds of the enterprise. Doing so requires a high level of capital strength for the enterprise and a long period of time to obtain returns.

Mass production is not victory

He Xiaopeng and Li Bin's bet on production volume actually highlights the anxiety of Internet car companies in terms of production capacity.

Internet car companies do not have the strong capital strength and financial support from traditional car companies, so funding issues have always been a concern for them.

The automobile industry is a capital-intensive industry. Internet car manufacturing companies need to constantly raise mass production targets to attract the attention of the capital market, while at the same time establishing their brand image and cultivating the market.

However, new car manufacturers lack manufacturing experience. It usually takes about five years for a car to go from design to delivery. In reality, many new car manufacturers have been established for less than four years.

Five years is still the time it takes for traditional car companies with rich manufacturing experience to launch a car. New car manufacturers start from scratch. In fact, it is not easy to come up with a mass-produced model in about four years. Mass production capacity is the shortcoming of all emerging car manufacturers. Tesla, which has been established for more than ten years, is still troubled by production capacity issues.

Moreover, most of the new car manufacturers are involved in car intelligence and autonomous driving. Smart cars are new things and are inherently imperfect. With less resources than traditional car companies, new car manufacturers need to complete more tasks.

Many new car manufacturers, such as Weilai and Xiaopeng, have incorporated charging facilities, sales and after-sales services into their layout. This makes the work more complicated.

Taking these factors into consideration, rushing to mass produce and deliver vehicles may not be a good thing for new car manufacturers. Rushing to deliver vehicles to cater to the capital market may be fatal to a new brand if serious quality problems occur.

Product quality is the foundation of the brand, the foundation of operation, and the foundation for further financing. Internet car companies may wish to be more patient and calm, and spend more time to polish the hardware and software to be more perfect, which will be more conducive to the long-term development of the company.

The goal of new car manufacturers is not just mass production, and they cannot rush to deliver for the sake of mass production. Automobiles have very high requirements for safety and quality. New car manufacturers should not be afraid of slow delivery, but should be afraid of unsafe vehicles and poor product quality that will damage their brand image.

The Tycoon and the Cheapskate

Xpeng Motors spends money very frugally.

Some people say that He Xiaopeng's shocking statement is actually for marketing. If it is really for marketing, He Xiaopeng has ignited the topic with just two PPTs and has become the focus. It must be said that such marketing is indeed very efficient.

The bet with Li Bin is undoubtedly a low-cost, high-return advertisement.

He Xiaopeng posted on WeChat Moments on July 31 that no new car company can deliver 10,000 units this year. He also said that the first car of a new car company should be delivered internally and to a small number of users, and a mid-term reform should be made to free up time and space to significantly improve the quality and platform system.

Li Bin later responded by saying, "If NIO fails to deliver 10,000 cars this year, it will compensate He Xiaopeng with an ES8." The two of them sang the same tune, and the exposure of both brands increased.

Xiaopeng not only saves money on marketing, but also saves as much as possible in daily operations. He Xiaopeng once said that Xiaopeng Motors spent so little money last year that it was "embarrassing to say it out loud," and the rent for the new headquarters is very cheap, at only 1 yuan per square meter per day.

Compared with Xiaopeng's frugality, NIO is much richer.

NIO spent 80 million on a press conference. NIO has opened seven sales experience stores in the CBDs of core cities such as Beijing, Shanghai, Guangzhou and Hangzhou, and the rent for each store is not cheap. NIO still plans to set up 15 NIO centers in 13 cities this year. NIO House has children's playgrounds, NIO coffee, Internet celebrity food and other services for elite car owners, and all of these require funds to maintain.

Of course, NIO and Xpeng have different branding routes. NIO hopes to create a high-end brand image in this way.

But NIO has almost spent all its money.

As of the end of June 2018, the company's cash and cash equivalents and restricted cash totaled RMB 4.48 billion.

In the first half of this year, NIO lost $502.6 million. At this rate, if there is no new source of funds, NIO's cash flow will almost dry up by the end of this year.

On August 14, NIO officially submitted its IPO documents to the US Securities and Exchange Commission. NIO's tycoon-like spending habits forced it to go public for financing.

Xpeng Motors has made it clear that it will not go public in the short term, but will continue to raise funds, and it is expected to raise a total of 30 billion yuan by the end of next year.

It is a capital winter and everyone wants to raise money to survive the winter. He Xiaopeng recently said that Xiaopeng Motors spends money very frugally and still has a lot of cash on its books.

Savings mean that Xiaopeng Motors doesn’t have to rush to go public.

Although going public can raise a certain amount of funds, it consumes a lot of a company's energy and also involves risks. Moreover, the performance of some technology companies that have recently gone public in the United States shows that now is not a good time to go public.

After going public, the company's operations will be constrained by the capital market. Listed companies need to spend energy to take care of financial reports and various short-term indicators to cater to the capital market, which is not conducive to letting go and taking a long-term perspective.

Recently, a big part of the reason why Tesla wants to go private is to avoid interference from the capital market and focus on long-term goals.

Compared with Xiaopeng's more people-friendly brand positioning, NIO's high-end brand positioning seems a bit too high and too lonely.

Since it is positioned as a high-end brand, it is necessary to invest a lot of money in brand building, which will inevitably take up funds for R&D and manufacturing. If the product is not good in the end, the actual effect of the previous investment in brand building will be greatly reduced.

Although electric vehicles are in their infancy and provide a good opportunity to overtake others, in reality, new car manufacturers with no manufacturing experience should not aim too high in brand positioning.

Improving brand image is a gradual process that requires product strength and quality as support, rather than simply piling up configurations and competing for cost-effectiveness. Brand strength gained by spending money will not last long.

Making cars is really difficult, it is really expensive, and it takes time to make cars. This is especially true for new car manufacturers. New car manufacturers should pay more attention to products and quality, rather than one-sidedly pursuing mass production and delivery and overly high brand positioning.

I sincerely hope that a few of the new car-making forces will survive in the end.

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.