Wang Xing, the founder, director, and controlling shareholder of Meituan, made rare comments on the newly listed Ideal L6.
After the release of the Ideal L6 car on the evening of April 18th, Wang Xing said on his social media, "Let me put it this way, I think that among all the models launched by Ideal so far, the L6 is likely to be the one that Ideal's employees have bought the most. I believe many employees of Ideal are also aware of this in the process of designing and producing this car."
Previously, after the sales of Ideal MEGA cooled down, Wang Xing had reduced his holdings in Ideal Automobile for three consecutive times. According to equity disclosure information from the Hong Kong Stock Exchange, Wang Xing sold a total of 4.1623 million shares of Ideal Automobile for three consecutive days from March 26 to March 28, with a total investment of nearly HKD 503 million.
The launch of Ideal L6, the first model of Ideal Automobile priced under 300000 yuan, is also entering a deeper market to cope with fierce price competition in the automotive industry. In order to better cope with the wave of bankruptcy brought about by price wars, Li Xiang, the CEO of Ideal Automobile, once proposed that the country should establish and guide the merger and acquisition system of automobile enterprises.
An industry insider told reporters, "The establishment of the merger and acquisition system proposed by Li Xiang reflects his emphasis on industry stability and sustainable development. The government and industry can consider providing transformation support, vocational training, and other resources to help affected enterprises and employees adapt to industry changes."
Ideal L6 release, hitting the sinking market
On the evening of April 18th, the Ideal new family five seater SUV Ideal L6 was released, with a starting price of 249800 yuan for the Pro version and 279800 yuan for the Max version.
It is understood that the Ideal L6 adopts dual motor intelligent four-wheel drive, with a 0-100km/h acceleration of 5.4 seconds, a CLTC comprehensive range of 1390 kilometers, and a pure electric range of 212 kilometers. As a leader in the domestic car "refrigerator color TV sofa", the Ideal L6 is also equipped with a 15.7-inch 3K dual screen, achieving high-definition four screen interaction.
In terms of autonomous driving technology, the Ideal L6 Pro is equipped with the Intelligent Driving AD Pro 3.0, equipped with 10 cameras and 1 millimeter wave radar, and uses the Horizon Journey 5 intelligent driving chip, which can achieve functions such as high-speed NOA, automatic parking, and parking in and out. The Ideal L6 Max version is equipped with an intelligent driving AD Max, which adds one camera and one LiDAR, and is equipped with the Nvidia Orin-X chip. It has more comprehensive functions and can support advanced intelligent driving functions such as high-precision map free city NOA and valet parking.
It is understood that since December 2019, Ideal Automobile has delivered a total of 720000 extended range electric vehicles. Li Xiang, Chairman and CEO of Ideal Automobile, stated that the launch of the Ideal L6 stems from the real needs of consumers. It is an SUV with a smaller size, more dynamic design, and more affordable price, while retaining extended range four-wheel drive, large space, and leading intelligent experience.
"We have spent over 3 years researching and developing, ensuring the highest quality requirements, and carefully creating this product with the most user value within 300000 yuan - the Ideal L6," Li Xiang said.
According to a research report by Zhongtai Securities, the Ideal L6 has sunk to the SUV market of 200000 to 300000 yuan, which has nearly 2.6 million market space and has not been fully internalized by independent electric intelligent vehicles. In addition, the growth rate of new energy SUVs in this price range is close to 190%, with a good track pattern, low congestion, and no core competitors except for the Wenjie series, ensuring growth potential.
"Chasing BBA" still has difficulty, ideal encounter Wang Xing reduces holdings
In June 2023, Ideal Automotive stated, "With the delivery of pure electric models and Ideal L6, we are confident in achieving total sales exceeding BBA by 2024."
In order to achieve the goal of catching up with BBA, Ideal Automobile set an annual sales target of 800000 vehicles in early 2024. Compared to BBA, Mercedes Benz sold 768000 vehicles in China in 2023. If Ideal Automobile can achieve its annual sales target of 800000 vehicles, it is indeed possible to catch up with BBA in the Chinese market.
However, the lower than expected sales of Ideal MEGA disrupted Ideal Automobile's plan to catch up with BBA. According to data released by Ideal Automobile, the company delivered 29000 new cars in March 2024, a year-on-year increase of 39.2%. In the first quarter of 2024, the company delivered 80400 new cars, a year-on-year increase of 52.9%. Although the year-on-year growth rate of sales is relatively high, there is still a significant gap compared to the previous year's sales target of 800000 vehicles (monthly average sales of 66700 vehicles).
Ideal Automobile also conducted a review in the announcement, stating that the company mistakenly operated Ideal MEGA from stage 0 to 1 (commercial validation period) as from stage 1 to 10 (high-speed development period). Therefore, the next step will be to operate Ideal MEGA at a rhythm from 0 to 1, focusing on the core user group and cities with strong high-end pure electric consumption capabilities, and then promoting it to more cities and larger user groups.
In the face of the cooling sales of Ideal MEGA, the stock price of Ideal Automobile has also been affected. On February 28th, the closing price of Ideal Automobile Hong Kong stock was HKD 176.9 per share. On March 28th, the closing price of Ideal Automobile Hong Kong stock was HKD 121.3 per share. Within a month, the stock price has fallen by over 30%.
Against the backdrop of a significant drop in stock price, Wang Xing, an important shareholder of Ideal Automobile, also reduced its holdings. According to equity disclosure information from the Hong Kong Stock Exchange, Wang Xing sold 950000 shares, 1.4139 million shares, and 1.7984 million shares of common stock of Ideal Automobile for three consecutive days from March 26 to March 28, totaling 4.1623 million shares and involving nearly HKD 503 million. The shareholding ratio decreased from 21.76% to 21.53%.
After the release of the Ideal L6, Wang Xing said on social media, "MEGA is a bit like a car made for the Ideal CEO himself, the L6 is the car that Ideal employees made for themselves."
The scale of price reductions by car companies exceeds that of 2022, and Li Xiang "supports" the establishment of a merger and acquisition system
The Ideal L6 is Ideal's first model priced below 300000 yuan, and its launch is also a step for Ideal to actively respond to price competition in the new energy vehicle industry.
In order to further cope with the price war, at the press conference, Ideal Automobile stated that if you order the Ideal L6 before 24:00 on May 5th, you can enjoy a limited time benefit worth 20000 yuan, including a 5000 yuan deposit to offset the 10000 yuan purchase price, a 10000 yuan appearance color and wheel hub optional fund, a 7kW AC charging station worth 5000 yuan, and installation services.
So, how intense is the current price war in the automotive market? On April 14th, Cui Dongshu, Secretary General of the Joint Conference on Passenger Car Market Information, announced in a document that the scale of price reductions for passenger cars in the first quarter of this year has exceeded 60% of the total scale of price reductions for the whole of last year, equivalent to the total scale of price reductions in 2022. The main factors affecting the overall price reduction scale are new energy vehicle models such as pure electric and plug-in hybrid, with little price reduction for gasoline vehicles.
At present, most new energy vehicle companies have not yet achieved profitability, and price wars will accelerate the industry reshuffle, eliminating car brands with backward sales and profitability. Regarding this, Li Xiang, CEO of Ideal Automobile, once wrote, "The country should establish and guide a merger and acquisition system for automobile enterprises, including qualification related issues. Many new brands will encounter operational and financial problems in the future, although they are all the results of reasonable market competition. If the social loss caused by mergers and acquisitions due to poor management is 10, the social loss caused by bankruptcy due to poor management is 100. The three major automobile companies in the United States were also the product of fierce competition and mergers among hundreds of automobile companies back then."
"Government guided mergers and acquisitions can reduce disorderly competition in the market and help create a healthier and more sustainable market environment," said An Guangyong, an expert from the Credit Management Committee of the All China Mergers and Acquisitions Association, in an interview with reporters
"Establishing a merger and acquisition system for automobile enterprises at the national level first helps optimize resource allocation, improve the efficiency and competitiveness of the entire industry. Through mergers and acquisitions, advantageous resources can be integrated, economies of scale and synergy can be achieved, and production costs can be reduced. Secondly, through mergers and acquisitions, large automobile enterprises with international competitiveness can be born, which helps improve the international competitiveness of China's automobile industry." Zhan Junhao, a strategic positioning expert and founder of Fujian Huace Brand Positioning Consulting, said in an interview with reporters.
However, Zhang Xiaorong, the director of the Deep Science and Technology Research Institute, believes that market mechanisms should be allowed to function without excessive intervention in the market. Some industry experts have also told reporters that the automotive industry is a highly competitive industry, and excessive intervention may have the opposite effect. Previously, non market mechanism led merger and acquisition cases lacked successful samples. The automotive industry should be more lenient in its entry and strict in its exit, and resolutely eliminate enterprises with poor sales relying on production qualifications for sale.
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