21st Century Business Herald reporter Zuo Maoxuan reports
Ideal Automobile has decided to postpone the launch plan of pure electric SUVs.
On the evening of May 20th Beijing time, Li Xiang, founder, chairman, and CEO of Ideal Automobile, suddenly announced this news during the 2024 Q1 financial report conference call of Ideal Automobile.
"We will not release pure electric SUV products this year, but in the first half of next year," Li Xiang said.
He explained that this decision was mainly based on two reasons.
Firstly, having sufficient self operated supercharging piles is a necessary condition for selling mid to high end pure electric SUVs.
Ideal Automobile believes that the right time to market its products is when the number of self operated supercharging piles reaches the same level as Tesla's.
Secondly, Ideal Automobile needs to upgrade and increase the number of booths and shopping malls.
Li Xiang stated that the number of store booths is very important for sales with multiple car models and price ranges. If we want to support a sales scale of over 10000 new car models, we will need to add 500-600 new booths nationwide, otherwise there will be a problem of increasing product quantity without increasing sales. "This is a problem that Ideal L8 has encountered in the past few months, with a 40% reduction in the number of L8 booths. We are now restoring the number of L8 booths," Li Xiang said.
According to the original plan of Ideal Automobile, 2024 is the product year of Ideal Automobile. In addition to the Ideal Mega and Ideal L6, which were already launched in the first half of the year, Ideal also plans to launch three pure electric models in the second half of 2024. Compose a product matrix of 4 extended range electric vehicles and 4 pure electric vehicle models.
However, the intensification of market competition and a series of challenges that Ideal Automobile faced in the first quarter have forced it to rethink its strategic pace. No longer blindly rushing forward in pursuit of sales, but facing the challenges of reality, making more adequate preparations when entering the more mainstream pure electric market to avoid repeating the same mistakes.
There is a gap with the expected start of the year
"I must admit that since the beginning of this year, we have faced multiple challenges in our internal operations and external environment, and our performance in the first quarter has fallen short of our expectations at the beginning of the year." Li Xiang did not shy away from the many challenges that Ideal Automobile faced in the first quarter during the financial report conference call.
However, he also reiterated that in the face of problems, Ideal Automobile actively and quickly makes adjustments, fully launches and implements organizational and process optimization, and improves internal operational efficiency and decision-making quality.
In terms of sales, Ideal Automobile delivered a total of 80400 vehicles in the first quarter, a year-on-year increase of 52.9%. Still in the first tier of new forces in car manufacturing, with a year-on-year growth rate higher than most car companies.
However, the market misjudgment of Ideal MEGA and the product switching of L7, L8, and L9 have still had a certain impact on Ideal car sales. The sales of Ideal Automobile in the first quarter were temporarily surpassed by its direct competitor Wenjie.
The first quarter report of Ideal Automobile shows that its total revenue in the first quarter of 2024 was 25.6 billion yuan, of which automobile sales revenue was 24.3 billion yuan, a year-on-year increase of 32.3%; The net profit in the first quarter was 591.1 million yuan, a year-on-year decrease of 36.7%; The gross profit margin in the first quarter was 20.6%, a year-on-year increase of 0.2%.
Overall, although Ideal Automobile's revenue continued to grow in the first quarter, its net profit declined to a certain extent. From a side view, Ideal Automobile is indeed facing a more challenging market competition environment.
However, it should be emphasized that since the fourth quarter of 2022, Ideal Automobile has achieved profitability for six consecutive quarters. At the same time, even though the market situation was severe in the first quarter, Ideal Automobile still maintained a gross profit margin of over 20%, and its cash reserves reached 98.9 billion yuan.
Ideal Automobile still maintains good profitability, stable cash flow, and has the ability to resist risks.
From the perspective of the rhythm of delaying the launch of new electric vehicles, Ideal Automobile's focus this year is still on several extended range electric vehicles of the L series.
For the L series, the monthly sales performance of Ideal Automobile in the coming months is expected to be very optimistic.
According to Li Xiang, the Ideal L6 has been widely recognized, and after the price strategy adjustment, the order volume of L7, L8, and L9 continues to increase, with no plans to lower prices in the future.
According to official data, since its launch on April 18th, the Ideal L6 has locked in 34000 orders and its production capacity is expected to exceed 20000 in June.
This is Ideal's first product with a starting price of less than 250000 yuan, and it is also a key volume product for Ideal Automobile this year.
Due to the entry of the L6 into a new price range, Ideal Automobile also announced on April 22nd the adoption of a new pricing system, with several products on sale experiencing varying degrees of price reductions.
The impact of price reduction on sales is immediate.
In the past April, Ideal delivered a total of 25787 new cars, a year-on-year increase of 0.4%, and sales exceeded the market.
Looking ahead to the second quarter, the ideal expected delivery volume is 105000 to 110000 vehicles, a year-on-year increase of 21.3% to 27.1%, and the total revenue is 29.9 billion to 31.4 billion yuan, a year-on-year increase of 4.2% to 9.4%.
Improve execution efficiency
With the development of the new energy vehicle industry, in the process of elimination, the new forces of Chinese car manufacturing also need to face various challenges that arise in their growth. The key lies in how to face reality, and how to form stronger system capabilities through review and reflection.
Undoubtedly, the ideal car that has been making great progress all the way took a sharp turn in March this year. But ideals have always been people who are good at adjusting and quickly driving strategic execution.
On March 11th, Li Xiang, founder, chairman, and CEO of Ideal Automobile, responded to negative public opinion on his social media. "Although I am in darkness, I still choose light," Li Xiang said. Ideal Automobile has taken legal measures to deal with organized illegal and criminal activities in the incident.
In an internal letter released on March 21st, Li Xiang also acknowledged a misjudgment in his grasp of the rhythm of the pure electric market. "We mistakenly treated MEGA's stage from 0 to 1 (commercial validation period) as operating from 1 to 10 (high-speed development period)."
At the same time, excessive focus on sales and competition, desire surpasses value, and the user value and operational efficiency that Ideal originally excels at significantly decrease.
Through retrospective reflection, Li Xiang believes that Ideal Automobile needs to focus on users and efficiency, returning to the improvement of user value and operational efficiency.
Obviously, for the current ideal car, it is necessary to continue focusing on extended range electric vehicles, which can maintain good scale and profitability this year, thereby supporting the long-term development of the enterprise.
At the same time, in the face of the unsuccessful initial battle in the pure electric market, Ideal Automobile also needs to make more adequate preparations to ensure confidence in entering the pure electric market again.
On the afternoon of April 3rd, Ideal Automobile issued an internal announcement for all employees, announcing the launch of the Matrix Organization 2.0 upgrade and the adjustment of organizational structures in multiple departments. This is the largest internal adjustment after the upgrade of the matrix organization launched by Ideal Automobile at the end of 2022.
Li Xiang did not respond positively to the recent layoff plan. He emphasized during the first quarter financial report conference call that the biggest change in this organizational adjustment is to establish a dedicated team for quality operations, allowing the business to focus on high-quality decision-making and improving execution efficiency, without having to spend time on repetitive operational work.
"The upgrading and adjustment of an organization usually requires a real result to be seen from 12 to 24 months. The results of this organizational upgrade will be seen more clearly in 2025," Li Xiang said.