Can the capital increase of 800 million yuan help Tengshi, which has suffered losses for many years, enter the blue ocean of new energy vehicle market?
Text: Yun Zhu
Recently, BYD Co., Ltd. (002594.SZ, referred to as "BYD") announced that it and Daimler Greater China Investment Co., Ltd. (referred to as "Daimler") each increased their capital by 400 million yuan to the joint venture company Shenzhen Tengshi New Energy Automobile Co., Ltd. (referred to as "Tengshi"). So far, Tengshi’s registered capital has increased from 3.36 billion yuan to 4.16 billion yuan, and the shareholding ratio of both shareholders is still 50: 50.
As soon as the news came out, there were mixed opinions about Tengshi Automobile’s capital increase of 800 million yuan. Some people thought that this 800 million yuan was Tengshi Automobile’s "life-sustaining money", while others thought that 800 million yuan was not enough for Tengshi to continue to "burn".
Both Tengshi Automobile and BYD said in reply to the interview with Business School that through this capital increase, Daimler and Biyatong jointly promoted the upgrade of Tengshi products and services and the expansion of sales and service networks.
Tengshi Automobile, established in 2011, is a high-end new energy automobile brand jointly established by BYD and Daimler. Seven years after the Chinese New Year, the development of new energy vehicles in China is in full swing, and Tengshi Automobile is still losing money. When Tengshi really enters the blue ocean of new energy vehicles and realizes profit, it has become the focus of the industry.
Ungrounded?
It is an indisputable fact that Tengshi Automobile has been losing money. "Business School" reporters checked the sales and financial situation of Tengshi Automobile in the past three years. According to the data, the sales volume of Tengshi Automobile in 2015 was 2,888, in 2016 it was 2,287, and in 2017 it was 4,713. Financially, from 2015 to 2017, Tengshi Automobile lost 570 million yuan, 1.3 billion yuan and 480 million yuan respectively, with a total loss of 2.61 billion yuan.
From 2015 to 2017, it was the three years of rapid development of new energy vehicles in China. According to the statistics from China Automobile Association, in 2015, the cumulative sales of new energy vehicles in China was 330,000, in 2016, the sales exceeded 500,000, and in 2017, it was 777,000, which can be said to be "step by step".
Compared with the sales volume of the whole new energy vehicle, it is not difficult to find that Tengshi did not enjoy the dividend of the rapid growth of China’s new energy market. Tengshi replied to the reporter: "Tengshi’s products have not only undergone rigorous experimental verification and testing, but also withstood the market test in the fierce market environment. Through market practice, Tengshi has accumulated a large amount of product data and rich experience, which has made sufficient preparations for the development of the new energy automobile industry in the next stage. With the implementation of the national new energy vehicle strategy, Tengshi has taken the lead. While providing consumers with a new green travel experience, it has promoted the development of the pure electric vehicle market in China with practical actions. "
Indeed, Tengshi is one of the pioneers of new energy vehicles in China. However, when the new energy vehicles are excellent, the sales performance of Tengshi vehicles is mediocre. Zhang Xiang, an independent automobile consultant, admitted to the reporter that in the past few years, due to the immaturity of battery technology and new energy vehicle manufacturing technology, the rapid growth of new energy vehicles was mainly concentrated in the A0 and A market segments.
Tengshi Automobile has been positioned as a high-end vehicle since its birth. In 2016, the price of Tengshi 300 was 369,000-399,000 yuan. If it is purchased in Beijing and enjoys state subsidies and local subsidies, the price will be around 250,000 yuan. At that time, BYD, Jianghuai, Beiqi New Energy and other manufacturers launched new energy vehicles, and the subsidized price was around 100,000 yuan. Most car owners buy new energy vehicles in order to "occupy the number" and "be a spare tire". Positioning the high-end makes Tengshi "ungrounded" and the sales performance is flat.
Zhang Xiang believes that with the maturity of new energy vehicle technology and the expansion of the market, consumers have put forward higher requirements for new energy vehicles, and the development of B-class vehicles and SUVs is the general trend. "The price of Tengshi was a little expensive before, and it was close to the price of Tess." Zhang Xiang said.
An industry insider who didn’t want to be named visited Tengshi many times. He told the reporter of Business School that Tengshi needs further improvement in human-machine interface, car entertainment and car networking design. For example, during his visit to the store, he found that the salesperson did not know how to monitor the battery status with the mobile App, or the traditional sales logic.
When will the break-even line of 200,000 vehicles break?
In recent years, new brands in China automobile market have emerged constantly, with ups and downs, and many people have sweated for the new forces of making cars. However, Tengshi Automobile is backed by Daimler and BYD, and it is not "starting from zero" in terms of vehicle development, battery technology and supporting supply chain. Why can’t it escape the "curse" of loss?
Zhang Xiang believes that the general law of the whole automobile manufacturing, whether it is a traditional automobile or a new force to build a car, can’t be broken. "The automobile industry is suitable for the law of economies of scale. An automobile manufacturer has accumulated more than 200,000 vehicles before it has economies of scale. After all, it takes a lot of money to build a production line, build four major processes, set up a sales network, and develop products. If the sales volume does not reach 200,000 vehicles, it will always be a loss. “
In fact, Tesla, as the representative of the new car-making force, has sold more than 250,000 cars, but this "curse" has not been broken. "In the early stage, Tesla sold one car and lost another, relying on Wall Street to continue investing to survive. After more than 200,000 sales, the financial situation is still not optimistic. "Zhang Xiang said.
And the founders of a group of new forces that build cars have always said that building cars is a matter of burning money.
"Building a car requires ingenuity, and building a smart car costs money in the first three years. It is impossible to have enough financing in the first three years. I think that even a team with great experience in industry R&D and supply chain will need at least 20 billion yuan to burn the company with products listed and cash income." Shen Hui, founder of Weimar Automobile, said.
"Building a car is a very expensive thing, so if a startup wants to build a car, it needs at least 20 billion yuan to prepare, otherwise it will not be done well." Li Bin, founder of Weilai Automobile, once said.
At present, Daimler and BYD have invested a total of 4.16 billion yuan in Tengshi. According to the reporter’s rough statistics, Weimar Automobile has accumulated more than 6.6 billion yuan, Xpeng Motors has more than 5 billion yuan, Weilai Automobile has accumulated 14.6 billion yuan in the first five rounds of financing, and LeTV has accumulated 11.3 billion yuan …
Although Tengshi is not the highest amount of financing among all the cars, it is obvious that Tengshi’s existing funds are stretched, and it needs "blood transfusion" in the future.
"Building a car can’t be done overnight. The automobile industry needs continuous high-input characteristics, which is doomed to be a long-term goal. However, the front load of profit must be based on taking consumers as the core and ensuring the quality of brands and products. In the future, Tengshi will continue to promote the development of new energy vehicles in China with the help of high-quality resources of both shareholders, so that more China consumers can enjoy the green travel brought by Tengshi. " Tengshi said.
BYD told reporters that Tengshi’s shareholders have always been willing to provide financial, technical and talent support for its development. This capital increase once again shows Daimler and BYD’s optimism about China’s new energy market, and also recognizes Tengshi’s brand development potential, and releases their confidence in Tengshi’s long-term development to the outside world.
In recent years, new forces of car-making have emerged. After visiting auto china in 2018, Shen Jun, managing director of Accenture Strategy, told the reporter of Business School that the biggest change of this year’s auto show was that a number of "PPT" cars were produced in mass production. It can be seen that the market structure has changed. In the field of high-end new energy vehicles, Tesla may be the only competitor in the past, but in 2018, there will be a wave of new competitors, including Weilai, and high-end new energy vehicles launched by traditional automobile manufacturers. "Tengshi welcomes more peers to join this industry, and only more enterprises can better promote the development of China’s electric vehicle industry." Tengshi said.
Zhong Shi, a well-known commentator in the automobile industry, believes that whether a car company can make a profit depends on the third car. The first car will become a brand, the second car will consolidate its advantages and test the market heat, and the third car will be mass-produced. Tengshi adopts an "iterative" approach. At present, Tengshi 500 is listed, which is its third car. Facing many new entrants, Tengshi has also entered a critical period that determines success or failure.
Start the marketing war
According to the announcement, the capital increase of Tengshi shareholders is mainly used for personnel expenses, market advertising expenses, payment of goods to suppliers, repayment of bank principal and interest expenses, vehicle purchase, battery upgrade and testing, and construction of service network.
Previously, Tengshi Automobile left a relatively low-key impression on reporters, and there were not many marketing advertisements exposed. In terms of sales network, Tengshi has not many sales outlets, but many prospective car owners have found that Tengshi has been selling at the same store in Mercedes-Benz’s 4S shop.
In the retail industry, many small brands often spend a lot of money to live next to luxury brands in order to gain more attention and attention. MK, Coach and other luxury brands have achieved rapid growth in this way.
In the automobile retail industry, Tengshi did not "live next to" Mercedes-Benz, but moved directly to Mercedes-Benz’s 4S shop, which on the one hand can expand the terminal quickly and at low cost, so that consumers can contact Tengshi’s products very conveniently; On the other hand, it can enhance Tengshi’s brand awareness and influence, because Mercedes-Benz is one of the most typical representatives of luxury cars.
This original intention is good, but Zhang Xiang observed that Tengshi was with Mercedes-Benz and thought that users would think Tengshi was a luxury new energy vehicle, which was acceptable, but not many people paid the bill in terms of sales volume.
In addition, in terms of charging pile facilities, Zhang Xiang believes that Tengshi is not as heavily invested as Tesla. At present, the number is not particularly large. The charging pile with Tengshi logo is not open to social new energy vehicles. On one occasion, he charged Tengshi on a public charging pile, and there was also a situation in which the power did not increase but decreased after charging.
Next, Tengshi will greatly expand its sales network. Tengshi is inextricably linked with BYD. At present, the general trend of the whole automobile industry in China is "self-improvement". Like Geely, Chang ‘an and Great Wall, BYD is also developing high-end products. Will BYD and Tengshi have the problem of "fighting each other"?
In BYD’s view, the positioning of the two brands is different. BYD relies on self-produced Chinese products to form brand radiation. Under BYD’s main body, Tengshi will focus on the demand of China consumers, focus on the research and development of electric vehicle technology, and constantly develop new energy vehicles with environmental protection, energy saving, safety and comfort, and excellent quality. BYD believes that China’s high-end new energy vehicle market is still a blue ocean.
Now Tengshi’s problem is how to enter this blue ocean as soon as possible through the continuous improvement of product strength and brand strength.