The termination of IPO guidance is just a warning. Dong Mingzhu's bet on Yinlong was destined to be an endless gamble.

On May 30, the Guangdong Securities Regulatory Bureau released a progress chart of listed companies' guidance work, showing that the listing guidance of Zhuhai Yinlong New Energy Co., Ltd. has been terminated. Zhuhai Yinlong previously engaged in large-scale land grabbing and needed a large amount of financing to fill the gap. Now that the IPO guidance has been terminated and the listing has been blocked, Dong Mingzhu's car-making plan has once again suffered a setback.

Zhuhai Yinlong has gone from being an unknown and loss-making company to the focus of public opinion. Dong Mingzhu has made great contributions to this. The "car-making dream" is Ms. Dong's obsession, and Yinlong is where the dream began.

First, she pushed Gree to acquire Yinlong. After being rejected by shareholders, Dong Mingzhu invested in Yinlong out of her own pocket and also brought in former richest man Wang Jianlin and JD.com boss Liu Qiangdong to invest in Yinlong. For Yinlong, Dong Mingzhu can be said to have gone all in.

Yinlong is actually Gree’s dream

Dong Mingzhu has repeatedly stressed the importance of Yinlong to Gree. In fact, entering the new energy vehicle industry is almost an inevitable choice for Gree. Gree has almost reached the ceiling in the home appliance industry, and its growth space is very limited. Gree must expand its own industrial chain to continue to develop.

Made in China 2025 announced the key directions of China's industrial upgrading. Among the top ten areas directly related to Gree's business are robots and new energy vehicles. New energy vehicles are not just cars, but also a platform for smart devices, which provides huge room for imagination for Gree's future development. Only by grasping new energy vehicles can Gree ensure that it will not be eliminated in future competition.

This is also why Dong Mingzhu maintained the connection between Gree and Yinlong in the form of personal investment after Gree refused to acquire Yinlong. After Dong Mingzhu invested in Yinlong, Yinlong actually became a testing ground for Gree's intelligent equipment. With the help of Yinlong, Gree is entering the new energy vehicle industry chain and even battery manufacturing, energy storage and other fields. Although Gree did not acquire Yinlong, Gree has been enjoying the convenience brought by Yinlong. This should be attributed to Ms. Dong's persistence.

Dong Mingzhu's friends Wang Jianlin and Liu Qiangdong invested in Yinlong, although there were personal reasons, but more importantly, it was based on the long-term layout of their own enterprises. JD.com wanted to engage in new energy logistics; Wanda failed in its early attempts in the energy storage industry, while Yinlong had a certain foundation in the field of energy storage.

Not only JD.com and Wanda, but also big names from all walks of life are planning to enter the new energy automobile industry. Baidu's driverless car has always been very popular; Alibaba, Tencent, Huawei and others also have their own plans. Foreign giants such as Apple and Google are not standing idly by.

New energy vehicles are a new trend that no one wants to miss. This is not only the temptation of huge profits, but also the pressure of industrial upgrading - if they fall behind, the advantages accumulated by these giants may be overturned. What's more, the new energy vehicle industry has generous subsidies and various policy benefits. It would be unreasonable not to seize the opportunity and make arrangements as soon as possible.

Without subsidies, will Dong Mingzhu’s dream of making cars be shattered?

New energy vehicles are indeed a hot spot, but this spot is now very crowded.

By 2020, China plans to produce 2 million pure electric and hybrid vehicles. However, the total planned production capacity of various automakers has exceeded 20 million. The wind can blow up a pig, but it cannot keep it flying. There is no doubt that a large number of projects that follow the trend will fail.

As a result of the previous Sino-US trade war, China has significantly lowered import tariffs on cars, and the biggest beneficiaries are foreign fuel vehicle manufacturers. In order to prevent fraudulent subsidies, China is currently significantly reducing subsidies for new energy vehicles and raising the conditions for issuing subsidies. New energy vehicles, which originally relied on subsidies, have a wider price disadvantage compared to fuel vehicles, which is not conducive to spreading the high R&D costs by expanding production scale.

Moreover, the domestic new energy industry has already had a certain foundation, and the country hopes to promote the development of the industry through both policy and market forces, rather than relying solely on subsidies. In the future, China's new energy vehicles will be further opened up, and the influx of foreign new energy vehicles will make the market competition more intense.

Under the crisis, the industry will inevitably face a large-scale reshuffle, and naturally a large number of weak new energy vehicle companies will be acquired or directly go bankrupt. And those production capacities with unstable foundations and backward technology will undoubtedly become the first victims.

There is no doubt that Dong Mingzhu is sincere in making cars, and it is not a so-called malicious subsidy fraud. However, Yinlong is very dependent on subsidies. Yinlong's net profit in 2016 was 836 million yuan, while the amount of national subsidies reported by Yinlong in the same year was as high as 2.135 billion yuan.

Moreover, Yinlong's financial situation is very bad. As of the end of 2017, Yinlong's total assets were 31.512 billion yuan, and its total liabilities were as high as 23.767 billion yuan. Recently, there was news that Yinlong's factory in Hebei has stopped production and workers have not received wages for several months.

Yinlong's previous large-scale expansion is to blame for this situation. Currently, Yinlong has set up 11 industrial parks across the country. The total investment in the newly built industrial parks after Dong Mingzhu's investment exceeded 80 billion yuan. However, the sluggish sales of Yinlong's products have made these investments a heavy burden. This large-scale expansion is likely to catch up with the last batch of state subsidies.

New energy is right, but Yinlong is a failure

Dong Mingzhu once expressed her optimism about Yinlong's technology. However, it is precisely because of its own technology that Yinlong is in trouble today.

Yinlong focuses on lithium titanate battery technology, which is a very unpopular technology path. In 2016, there were 77 domestic companies producing lithium iron carbonate batteries and 75 companies producing ternary batteries; the number of companies producing lithium titanate batteries was the smallest among all material systems, with only 4 companies.

Yinlong's battery technology comes from the American company Aoti, which was also losing money before being acquired by Yinlong and was even forced to delist in the United States. I don't know why Dong Mingzhu thought that a technology abandoned in the US capital market could shine in China.

Coupled with Gree shareholders' rejection of the acquisition of Yinlong, in fact, the market has voted with its feet many times, indicating that the prospects for Yinlong's main lithium titanate battery technology are bleak.

However, Dong Mingzhu has always insisted on her own way. No matter how capable and determined Dong Mingzhu is, she cannot change the laws of nature, nor the low energy density and short driving range of lithium titanate batteries. This is the main reason why Yinlong is not popular in the market. With poor driving range and high cost, not only buyers are not buying it, but also the government subsidies are starting to look the other way.

Lithium titanate batteries are not completely useless. On the contrary, they also have many advantages. Lithium titanate batteries are highly safe, charge quickly, have a long cycle life, and can operate in the range of -40°C to 50°C. However, their disadvantages are also obvious: high cost and low energy density.

Based on the principle and performance of lithium titanate, it is difficult to achieve a significant breakthrough in its energy density. International mainstream companies are not good at lithium titanate battery technology. And China's basic research is far behind the international level, making it even more difficult to achieve a breakthrough.

Gree needs to integrate into the new energy vehicle industry chain, but Dong Mingzhu's investment in Yinlong is actually a gamble. It's fine for Dong Mingzhu to dream of making cars, but she can choose a safer and more common battery technology path.

The best way for Dong Mingzhu and Gree to enter the new energy vehicle industry is actually to acquire an automobile company. New energy vehicles are first and foremost automobiles. Dong Mingzhu can enter the automobile manufacturing industry first and then choose a battery supplier. If lithium titanate doesn't work, then switch to lithium iron carbonate. If lithium iron carbonate doesn't work, then switch to ternary batteries. Now putting all the chips on lithium titanate is actually a gamble. If it fails, it is likely to lose everything.

Currently, Gree Group is planning to acquire Changyuan Group. Changyuan Group mainly deals in electric vehicles, smart factory equipment and smart grid equipment. This shows Gree's determination to enter the new energy vehicle market, and investing in Changyuan is obviously much safer for Gree than investing in Yinlong.

However, Yinlong has not been sentenced to death. But the first thing that Yinlong needs to solve in its self-rescue and transformation is the funding problem, and Yinlong has been heavily in debt in the previous round of expansion. Now that the IPO guidance has been terminated, the road to listing and financing has been blocked.

I wonder if Miss Dong can still hold on during Yinlong’s current crisis?

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.