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1q21 teleconference record has no rival in the field of high-end cars From Weilai

The following is the 1q21 teleconference record has no rival in the field of high-end cars From Weilai recommended by And this article belongs to the classification: New energy vehicle industry, Smart car, Automobile industry.

On April 30, 2021, Weilai automobile (NYSE: NiO) released its first quarter financial statements as of March 31, 2021 on Friday. According to the financial report, the total revenue of Weilai in the first quarter of 2021 was RMB 7982.3 million (US $12183.3 million), with a year-on-year growth of 481.8% and a month on month growth of 20.2%; The net loss was RMB 451 million (US $68.8 million), a year-on-year decrease of 73.3% and a month on month decrease of 67.5%.

After the financial report was released, Li Bin, founder and CEO of Weilai, Feng Wei, chief financial officer of Weilai, Qu Yu, vice president of finance, and jade Wei, assistant vice president of capital markets and investor relations, attended the financial report conference call and answered analysts’ questions on the spot.

[Weilai’s total revenue in the first quarter was 7.98 billion yuan, up 481.8% year on year, and the supply chain was in short supply of chips to meet the challenge]

The following is the actual record of the conference call:

Analyst: I have two questions. One is about gross profit rate, the other is about chip shortage. From the fourth quarter of last year to the first quarter of this year, your gross profit rate has indeed increased a lot, from 17% to 21%, up by 4%. Can you analyze the growth of gross profit rate from which aspects?

In addition, the shortage of chips has also brought some problems, which is also a common phenomenon in the industry. It may take 2022 to solve this problem. Weilai also lowered its expected sales in the second quarter to 7500 vehicles a month. From shortage to tension, when will the turning point appear? In terms of chips, is there any possibility to relieve the pressure?

Li Bin: in the first quarter, our vehicle cost and production cost remained unchanged. The increase of profit margin of vehicles is mainly due to the improvement of conversion rate of 100kwh battery pack and automatic driving assistance system NiO pilot. Among them, 5000 is from 100kwh battery and 8000 is from NiO pilot.

On the whole, the gross profit rate is indeed higher than we expected. This is mainly due to the increase in the proportion of high configuration models. However, in terms of conventional costs, there is still a decline. We believe that the gross profit rate of more than 20% is a relatively healthy state. We won’t cut prices, and we don’t expect that we will increase by several percentage points every quarter, as we did last year. Although we think there is still room for improvement, we should not be too optimistic about the room for improvement.

As for the shortage, the market is still very volatile. We have to track the impact of chip shortage on the supply chain every day, because the automobile industry chain is very long. The factory in Renesas, Japan, caught fire some time ago and stopped production for several weeks. Because it has a delay effect on the supply chain, which will affect the global industrial chain almost in the middle of May.

Such things may happen from time to time in the whole industry chain, and the challenge is really great. At present, we have stopped production for five days from the end of March to the beginning of April. This will definitely have an impact on delivery in April. From the perspective of the whole quarter, if the capacity of the whole supply chain can be maintained between 7000 and 7500, it will be a great challenge for us. We will try our best to do it. We are very confident. Of course, it is very difficult.

At the turning point, the industry thinks that the third quarter will be better and the fourth quarter should be better. Of course, there are also some more pessimistic people who think that next year will not be possible, which means that there will be a lot of pressure every year. In general, our supply chain partners are quite supportive of us. Yesterday, we held a meeting of partners, hundreds of partners were present, we all hope to support the production of Weilai. On the whole, this is a challenge to the whole industry. So far, what we have done is OK.

Analyst: I have two questions. One is about the special shareholders’ meeting. It’s probably the first time that you have held the special shareholders’ meeting. Can you disclose some details and the reasons behind it? The other is the gross margin expectation. One is the carrying rate of autopilot in the second quarter, and the other is the 400kwh battery pack. In addition, you also provide zero interest rate auto finance services. In addition, I would like to know that semiconductor prices are rising not only in terms of supply, but also in terms of price. And the price of batteries. Can you talk about the impact on gross profit rate?

Li Bin: we made an announcement this morning. One of the more important points is that we will adjust the structure of the board of directors, mainly because the number of directors will increase. We hope that Weilai’s board of directors will be more diversified and flexible. We have nominated members of NiO user trust (Weilai user trust), but the final approval will be decided by the board of directors.

When we went public, I set up Weilai user trust with one third of my own shares, that is, 50 million shares. We have conducted two elections for the directors of user trust, and the degree of user participation is also very high. Our user trust focuses on user care, industry community, social welfare and environmental protection. We believe that at the right time, we should give users the right to participate in the company’s longer-term strategic decision-making. Our board of directors has submitted to the board of shareholders for approval, which I believe is of great significance to the long-term development of the company and the return of shareholders. As the user enterprise of the future, it is a good way to deepen the operation of our user enterprise and understand the user enterprise more deeply.

As for the gross profit rate, the current gross profit rate of about 20% is relatively healthy for us. We do not expect a significant increase this year. However, the 100 kwh battery pack and other new initiatives are well received by users, which provides them with more choices. And this will bring us higher profit margins, which is an overall trend.

Analyst: I have two questions. One is about competition. Many traditional car companies released their electric cars in the second quarter of this year. In terms of their product pricing and channel strategy, they are learning fast and catching up. In addition, smartphone makers have announced their plans for electric vehicles. You’ve also shared a lot of your new initiatives, but what are the differences between you and other competitors? Will you change your pricing strategy or product strategy in the long run?

Another problem is about the mass production of et7. Considering that et7 has many new hardware, software and functions, the supply will be adjusted throughout the year, especially in the second half of this year. Will you delay the release or encounter production bottlenecks?

Li Bin: at this Shanghai auto show, we saw the vitality of China’s electric vehicle industry. China’s innovation, especially in the field of intelligent electric vehicles, is very dynamic. From the perspective of overall competitiveness, we are very confident in the market competition of Weilai. In the high-end market, we haven’t seen any brand that can compete with Weilai in an all-round way, including products, service system, technology, overall user experience and user community.

The high-end products launched by traditional automobile companies have some highlights, but they need more determination in terms of the degree of intelligence and the ability of automatic driving. Chinese enterprises are really fast in the application of some technologies, including their follow-up to the construction of Weilai’s user community, the construction of user enterprises and the direct service to users. To be honest, there is a certain threshold to be a high-end brand. They will be a pressure on them in terms of pricing. In terms of brand positioning, they have certain challenges in such a market with a price of about 200000 yuan.

What we are focusing on now is our market share of the high-end market. From the perspective of the proportion of electric vehicles and oil vehicles, the proportion of electric vehicles is still very small. Although the proportion of electric vehicles in China exceeded 10% in March, the whole industry is more gasoline vehicles. From this point of view, we still have a lot of room.

From the perspective of long-term differentiation, the automobile industry is not a sprint. We still think that Weilai’s product, technology, brand, service, user enterprise, user operation and community are an overall concept. Our overall advantages can make us more and more competitive in the long-term competition. This is a long run, not a sprint. We are more and more confident.

The second is about the mass production of et7. We think that for Weilai, et7 is the first car of our second generation platform. This is not just the production of this car, but also the mass production of the whole second generation platform. We are the first in the whole industry in the application of sensors, chips and many other technologies. Of course, some companies have launched products of a generation and a half. We don’t think it’s worth doing. If we want to do it, we should make breakthrough innovation and directly launch a new generation of products.

The challenge of mass production this time is certainly very big, including the mass production of lidar and our automatic driving chip partner, NVIDIA Orin. In fact, both of them are a long time ahead of their original plan. This pressure is still very big, but so far, we still think that it is possible to deliver et7 in the first quarter of next year, and we are also pushing in this direction in all aspects, including how to achieve the quality goal, how to break through the bottleneck of production capacity, how to arrange, etc. We all know the speed of our product launch in the past few years. We launch a product every year. Our ability in this aspect is still very strong, and the quality of our products is also in the forefront of the industry. We are very confident in mass production.

Analyst: I want to ask about the details of Neo park. According to what you’ve published, you mentioned that you will eventually reach 1 million production capacity. In the short-term future, will the production capacity of 1 million come, or will it also include other electric vehicle companies? Will Neo park’s cooperation have any impact on your existing cooperation? Will JAC continue to be responsible for plant construction and recruitment, and will Weilai continue to be responsible for equipment purchase?

My second question is about batteries. More and more car companies began to use LSP batteries to control costs, reduce prices and improve penetration. Through recent media reports, we also know that Weilai may also switch to LFP batteries before the end of the year. Can you talk about the latest progress in this regard in detail?

Li Bin: This is very important. Yesterday, Hefei city started the construction of Neo park. I want to remind you that it’s Neo Park, not NiO park. Its Chinese name is Xinqiao. In English, it can be interpreted as Neo bridge. It has the same name as the airport. This industrial park is very large, nearly 17000 mu, or 1.3 square kilometers. This includes R & D, intelligent manufacturing, and even living and cultural areas. There is no doubt that Weilai will be one of the most important enterprises. According to their plan, there will be hundreds of other related enterprises.

We planned Neo park with Hefei City, and we participated in a lot of planning. We will not invest in the infrastructure construction of the park, which will be invested and constructed by Hefei municipal government, and we will be a very important user. And you mentioned the capacity of 1 million 100kwh batteries, will all give to Weilai? If we develop fast enough and use so much, I don’t think they will complicate the problem. We should use the infrastructure of these factories.

What’s the point for us? The talent gathering of the automobile industry chain is certainly very helpful to increase our competitiveness. Just like our automobile innovation port in Anting, Shanghai, we are the first enterprise and the largest enterprise in it. Now we have gathered a lot of talents, and now the start-up companies are going there, which is a good thing.

Another very big benefit is to improve our operational efficiency, including internal operational efficiency. If our R & D, manufacturing and staff living can be concentrated in a small area, it will greatly help to improve the internal operation efficiency.

And the efficiency of supply chain logistics. For example, according to the current planning, our battery factory and vehicle factory will be put together. After the battery production, it can be directly transported to the vehicle factory through the conveyor belt. The seat factory is also planned in this way. Just putting the battery factory and the vehicle factory together can reduce the logistics cost by $100 per battery. If the scale reaches 1 million vehicles, it will be a very large sum of money. This kind of efficiency improvement will be very meaningful.

As for the way of cooperation, the second factory in our plan will still be the way of manufacturing cooperation. We will focus on the manufacturing process, supply chain and quality control. We will also invest in some equipment, but we will not buy land, build factories or recruit workers. We will still cooperate with JAC in the daily operation of the factory and the management of workers through our joint venture.

On the issue of LFP batteries, Tesla and other companies are using LFP batteries in their main products. There is no doubt that LFP battery has its advantages, especially in terms of cost. But if we don’t solve the problem of endurance and performance in low temperature, it will have a great impact on the user experience in winter. If we can solve the performance problem of LFP battery at low temperature, it will be the premise for us to switch to LFP battery.

Analyst: I’d like to ask you a question about the cooperation between you and Sinopec on the power station. Will Sinopec share part of the capital expenditure for the second generation power plant? Will Sinopec share part of its revenue? Is it only a part of the rent or a part of the revenue according to the charging of vehicles?

Li Bin: our cooperation with Sinopec will gradually deepen, but at present our cooperation is relatively simple. We mainly use their local resources. Each gas station also has operators. In the long run, their operators will participate in the operation of our power station, and we will cooperate in this aspect. At present, we are not involved in the mode of revenue sharing.

Analyst: I have two questions about competition. Just after the Shanghai auto show, we are lucky to see the development of many products and industries. Will this speed up the process of launching your popular brand? In addition, many auto companies are considering making their own chips. Has Weilai ever considered that? Will you abandon NVIDIA and choose to make your own chips?

Li Bin: from the perspective of competition, I also saw some models worth seeing. The most impressive model for me is Wuling Hongguang’s Baojun kiwi, which sells for more than $10000. We can also see that in the mass brand market, many companies have indeed launched some good products. As I mentioned earlier, the innovation ability of China’s electric vehicle industry is very strong. We are very confident in the popularization speed of electric vehicles. However, in the high-end market, I am not particularly impressed.

The second question is about the research and development of chips. From the perspective of the industrial chain architecture of intelligent electric vehicles, it must be transferred from software to intelligent chips and then to intelligent hardware. In the long run, the top companies should continue to invest in intelligent hardware, but we have no plans to make public. However, you should know that our determination in R & D is very firm. We will make continuous and long-term investment around the full stack technology of automatic driving and intelligent electric vehicles.

Analyst: I have two questions. One is about R & D, the other is about gross profit rate. In this quarter, your R & D expenditure actually slowed down, slightly lower than that in the fourth quarter. You mentioned that R & D expenditure will be reduced to half by 2021. What’s your latest progress on this strategy? What’s more, what areas will you focus on? From the perspective of proportion, how much vehicle development will be used, such as the application of automatic driving?

In addition, if you compare profit margin with market share, do you pay too much attention to profit margin and neglect market share? Will you consciously increase its scale, make it more competitive in the market, and strike a balance between profit margin and market share?

Do you think the rise in raw material prices will have an impact in the next few quarters? Some battery manufacturers have mentioned that battery prices may rise. For example, as you mentioned earlier, the conversion rate of 100kwh battery was 25% in the first quarter. What about 400kwh battery?

Li Bin: in terms of R & D, it is true that R & D investment in the first quarter was not particularly high. The R & D of vehicles goes with the products. Our et7 mass production work is in progress. The work related to et7 mass production in the second quarter, including the cost of testing and EDD (Environmental Assessment) of external partners, will increase. From a financial point of view, the closer et7 is to mass production, the higher the cost will be.

We are still developing a large number of products, because we need to apply NT2 to the upgrade of new products as soon as possible. From the second quarter, R & D expenses will increase significantly, which is largely related to the increase of subsequent mass production models.

On the other hand, investment in autonomous driving software, basic technology of intelligent electric vehicles, NT2 technology and next generation NT3 technology will accelerate, and our staff will increase. In the past quarter, our R & D personnel have also increased a lot, and we will continue to increase our R & D personnel. In terms of basic technology, platform technology, including ET2, the growth rate is also very fast. This year, if the R & D cost of 5 billion is spent efficiently, it will also be a challenge. Judging from the figures, our R & D is actually speeding up.

The second question is about profit margin or market share, and how to choose between them. From the perspective of enterprise operation, reasonable gross profit rate is necessary. The current gross profit level is better than we expected. We did say that we do not reduce the price, but also to better use the profits in services, including power exchange facilities, community related user rights, etc.

I hope you can look at the market share at different levels. The market share of Ferrari and Porsche is definitely different from that of Wuling Hongguang. This is the characteristic of the automobile industry. Weilai focuses on our market share in the high-end market, which is very important. Some brands will continue to reduce their prices, but in fact, brands in the automotive field need to be divided into different regions. That’s why Porsche can’t sell 300000 cars, but its profit accounts for a very high proportion of Volkswagen’s profit, with more than 40% coming from Porsche.

For this matter, we need to have a more long-term thinking. We need to maintain the brand community well. I don’t think it’s a good way to increase the market share by reducing the price. In fact, we may not achieve this goal. We believe that a better way to achieve a certain profit margin is to make our products and infrastructure and services better. This is our long-term strategy.

In terms of the global high-end market, with nearly 10 million vehicles, our market share is only a few thousandths, and we still have a very large space for growth. Of course, how to enter the mass market is another problem. But we will definitely not use the brand NiO to enter the mass market.

Analyst: I have two questions. First of all, I would like to know that you are going to hold a press conference in Norway. Do you have any other overseas expansion plans to share with us? In addition, the prices of raw materials and chips are rising. Will it affect the prices of your parts?

Feng Wei: Norway is the first stop of our long-term global expansion plan, but we only focused on Norway in the conference call on May 6. In March, we have set up our Norwegian sales company and a local team, who will be responsible for local operations and services. We have also selected an address for our NiO house in Oslo. Welcome to our conference call on May 6.

As for the rising cost, the price of raw materials will rise in the next few quarters, but we will strictly control the cost, so it will not have a great impact on our gross profit margin.

Li Bin: on the one hand, we have reduced the cost of some parts, but also increased the price of some bulk commodities and chips. On the whole, we have saved more than we have increased. Therefore, the overall cost will still drop.

Analyst: in the long run, about your cooperation with Sinopec, you have the goal of 500 power stations. How will you cooperate with gas stations? How will Sinopec start the business of 5000 charging and swapping power stations?

Li Bin: Sinopec announced that they will build 5000 charging and swapping facilities in their gas stations. Of course, they are not cooperating with us. They don’t just have power stations, they have charging stations. Of course, we hope to deploy more under appropriate circumstances. We don’t only cooperate with Sinopec, we have many partners, some of them are national, some of them are regional. We have enough supply of sites for power stations.

Weilai: the revenue of 3q20 is 4.526 billion yuan, exceeding the expectation. Weilai: 7102 units delivered in April 2021, 102803 units delivered in total. Weilai automobile: 17353 new cars delivered in 4q20, a year-on-year increase of 112%. Weilai: the gross profit margin of 3q20 financial report is 14.5%. Q4: 5600 + the second generation platform NT2 is absolutely ahead. Li Bin is very confident. Weilai: 3q20 financial report teleconference record will be released soon. Weilai: 2q20 telephone According to the minutes of the meeting, it is expected that the delivery of 11000 batteries in Q3 will lower the threshold. Weilai: in November 2020, the delivery volume will set a new historical record, doubling year on year for eight consecutive months. Weilai: in January 21, the sales volume will increase by 352.1% year on year. 7225 batteries will be delivered, setting a new record. Weilai: 3q19 financial report teleconference record Li Bin said: don’t worry about the competition of Tesla Model 3 domestic version. Weilai: the total revenue of 1q21 is about 7.982 billion yuan, a year-on-year increase 481.8% Weilai: 3965 units delivered in August 2020, doubling year-on-year, creating a new high-speed passenger car Association: Tesla new energy sales ranked first in May, Weilai and other new forces became important forces in new energy vehicle market Weilai: delivery volume exceeded 7000 in December 2020, 43728 units delivered in the whole year Weilai: 2q20 revenue reached 3.72 billion yuan, increasing 146.5% year-on-year Weilai: 30000 destination charging piles will be built Analysis

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