At the end of 2022, Li Xiang, Chairman and CEO of Ideal Automobile, wrote a small task for himself, "to achieve a breakthrough in revenue scale of 100 billion yuan by 2023.". Now, Li Xiang's ideal has completed a small task.
On February 26th, Ideal Automobile released its financial reports for the fourth quarter and full year of 2023. The financial report shows that in 2023, Ideal Automobile achieved a revenue of 123.85 billion yuan, a year-on-year increase of 173.5%. The total delivery volume of automobiles reached 376030 units, a year-on-year increase of 182.2%.
In 2023, the net profit of Ideal Automobile for the whole year was 11.81 billion yuan, which is higher than the net loss of 2.03 billion yuan in 2022, achieving a turnaround from losses to profits. Based solely on the profits of 2023, Ideal Automobile has filled the accumulated losses of the previous five years in one breath. At this point, Ideal Automobile has finally achieved its first annual profit, becoming the third new energy vehicle company in the world to achieve profitability after Tesla and BYD.
Sprint at the end of the year, achieving a "small task" for the ideal
In 2023, many car companies used a price war strategy of "exchanging price for quantity" to maintain sales and market share, but the results were not satisfactory. Ideal cars priced at over 300000 yuan can still achieve a year-on-year sales surge of 182.2%, which is impressive. Among them, the revenue in the fourth quarter is even more impressive.
Among them, Ideal Automobile's revenue in the fourth quarter of 2023 was 41.73 billion yuan, a year-on-year increase of 136.4%; The net profit was 5.75 billion yuan, a year-on-year increase of 2068.2%.
The poster news reporter found that its fourth quarter revenue was almost close to the full year revenue of 2022, and accounted for more than one-third of the full year revenue of 2023. Looking back at the ideal situation a year ago, it was still in a loss making state - in 2022, Ideal's annual revenue was 45.29 billion yuan, a year-on-year increase of 67.7%; Net loss of 2.032 billion yuan. What is the ideal behind turning losses into profits in just one year?
The reporter found that the profit path of Ideal Automobile benefits from the dual increase in its vehicle gross profit margin and delivery volume. In 2022, the gross profit margin of Ideal Automobile's vehicles was 19.1%, but it increased to 21.5% by 2023. Compared to other new car making forces, the gross profit margin has been consistently declining. Taking Tesla as an example, the average sales price of Tesla Model 3 has decreased by about 11.5% compared to the previous year, and the final gross profit margin has decreased by 7.35 percentage points to 18.2%, which has a significant impact on profits.
Li Tie, Chief Financial Officer of Ideal Automobile, stated that with the growth of business scale and optimization of production, supply and sales coordination, the gross profit margin in the fourth quarter reached 23.5%, and the annual gross profit margin was 22.2%. 2023 is also the first year for the company to turn losses into profits and achieve healthy profitability.
It is worth noting that since its establishment in 2015, Ideal Automobile has undergone a rapid transformation from an entrepreneurial company to a growth oriented enterprise in 8 years. Ideal Automobile has surpassed Tesla and BYD in terms of profitability, becoming the world's fastest new energy vehicle enterprise to achieve profitability and creating a miracle in the growth of Chinese automotive brands.
Ideal Automotive Official Website
After the increase in gross profit margin, Ideal began to crazily "make up classes"
The gross profit level is an important indicator to measure a company's ability to sustain growth. Li Xiang, founder, chairman, and CEO of Ideal Automobile, once said, "As an intelligent electric vehicle enterprise, we believe that a healthy threshold is (gross profit margin) 20 points." Nowadays, Ideal has reached the threshold, which also provides a guarantee for its integration into the second half of the development of new energy vehicles.
The ideal of starting relatively late in the development of autonomous driving has been questioned whether it can "keep its job.". Faced with doubts, Li Xiang once admitted on Weibo that "it's not that he doesn't want to engage in self research, but that the money he raised barely meets the needs of product research and development, self built factories, supply chain and service system construction, as well as paying salaries to the team." Nowadays, Li Xiang's concerns may no longer exist.
As of the end of 2023, the cash reserves of Ideal Automobile reached 103.67 billion yuan, and Ideal, which holds a large amount of cash, has also generously increased its research and development investment. The financial report shows that the company's research and development expenses in the fourth quarter were 3.49 billion yuan, a year-on-year increase of 68.6%. In 2023, the annual R&D expenses reached 10.59 billion yuan, a year-on-year increase of 56.1%.
As early as the fall 2023 Ideal Automotive Strategy Meeting, the company officially incorporated the leading technology in intelligent driving into its core strategic goals, and plans to expand its intelligent driving research and development team to a size of 2000 people this year.
As of now, the total mileage of intelligent driving for Ideal Automobile has reached nearly 1.43 billion kilometers, of which the NOA mileage for intelligent driving is nearly 560 million kilometers. During the 10 day Spring Festival holiday from February 8th to 17th, over 220000 ideal users used the intelligent driving NOA function, with a cumulative driving distance of nearly 50 million kilometers.
Behind the frenzy of performance, crises are everywhere
Although the growth in 2023 has given Ideal an advantage, its crisis has not been resolved. In addition to the need to improve their own technology, the pressure from competitors has put Ideal Automobile in danger.
The ideal biggest competitor is undoubtedly Huawei Wenjie. In June 2023, Li Xiang recalled on Weibo that "in the third quarter of 2022, the release and operation of the Wenjie M7 directly crippled the Ideal ONE. We had never encountered such a strong opponent before, and for a long time we had no strength to fight back." Shortly after this Weibo post, several products under Li Xiang's umbrella were impacted by Wenjie.
Since the launch of the new Huawei Wenjie M7 on September 12, 2023, it has been playing an ideal game with no strength in its hands. Sales exceeded 10000 in October, surpassed ideal L8 in November, and surpassed ideal L7 in December. In January of this year, Huawei Wenjie M7 achieved sales of nearly 33000 vehicles, winning the monthly sales champion of domestic new car brands.
Faced with strong competitors, Ideal Automobile will also challenge its goal of delivering 800000 vehicles annually, which means that Ideal will face a KPI of doubling delivery volume in 2024, with a year-on-year growth of 112.77%. Looking ahead to the first quarter of 2024, Ideal Automobile expects to deliver 100000 to 103000 vehicles.
But the ideal after the start of the new year is not ideal. The delivery volume in January this year was only 31165 vehicles, and in February, due to factors such as the Spring Festival holiday, there were only 10100 vehicles as of February 18th. In other words, with less than 6 weeks left in the first quarter, ideal car sales need to reach 58700 to 61700 units.
In addition to the sales crisis brought by competitors, there is also an uncertain market outlook crisis for the Ideal MEGA - a high-end pure electric vehicle model. MEGA is the first product of Ideal Automobile to transition from range extender to pure electric, but the pure electric MPV market is not a blank space. Faced with a challenging market and the rise of the industry, it remains to be seen how long Ideal Automobile can sprint in this new energy vehicle company elimination race.
As of the reporter's press release, the automotive industry chain has boosted its momentum, with the automotive ETF (516110) up 1.1% and trading at a premium during the day. The stock price of Ideal Automobile rose over 18% to HKD 166, with a total market value of HKD 330.6 billion.