As competition intensifies, the new forces show more of a sense of crisis for future development. On September 25, Nikkei reported that Fang Yunzhou, chairman of Nezha Automobile, said in an interview with the media, "I'm not saying or boasting, Nezha will definitely survive in the next 3-5 years." Previously, on September 22, Nezha held the first batch of Nezha X delivery ceremony in Hong Kong. Nezha is currently one of the few new forces that survived the last two rounds of elimination, and it once became the champion of the delivery of new forces.
(Image source: Nikkei)
However, in the past two years, the development of Nezha Automobile has entered a downturn. In terms of sales, it has been maintained at about 10,000 units per month, and after the rest of the car companies have achieved a significant increase, they have not yet found a way to improve. Nezha delivered 11,005 vehicles in August, down 0.1% m/m and 9.1% y/y. From January to August this year, Nezha Automobile delivered a total of 75,790 vehicles, a year-on-year decrease of 10.4%.
Nezha's sales volume in 2019 was 10,000 units, 15,000 units in 2020, 64,000 units in 2021, and 152,000 units in 2022, winning the sales championship of the new forces that year. However, in 2023, Nezha's growth rate has slowed down significantly, and even declined, with 124,000 deliveries that year. In the first half of this year, Nezha Automobile delivered a total of 53,800 vehicles. Regarding the sales performance, Fang Yunzhou's previous response was that at present, new energy vehicle companies are in a trough period, ranking first, second, or fifth, there is not much difference.
However, it is difficult to achieve profitability without achieving a certain scale, which also means that the company cannot survive the competition. Taking Leapmotor as an example, the company's development path is very similar to Nezha's, starting from low-priced models. Zhu Jiangming, chairman of the company, once said that whether it can become the top five in the market will depend on whether the company can survive well. Therefore, he believes that each car company will use its own ability to fight for status and share, which must be a very competitive process.
It is precisely in this way that Leap gave up the preparation of early profit in exchange for market share. However, unlike Leap, Nezha has not been able to complete its IPO so far.
On June 26 this year, Hezhong New Energy Automobile Co., Ltd. (hereinafter referred to as "Hezhong New Energy"), the parent company of Nezha Automobile, officially submitted a listing application to the Hong Kong Stock Exchange, with CICC, Morgan Stanley, CITIC Securities, ABC International and CMB International as joint sponsors. If all goes well, Nezha will become the fifth new car-making brand listed on the Hong Kong Stock Exchange after Ideal, Weilai, Xiaopeng, Leap, and Zeekr.
Prior to this, Nezha had also repeatedly rumored IPO plans. As early as July 2020, Nezha announced the launch of the listing application of the Science and Technology Innovation Board, and plans to complete the listing in 2021. At that time, Nezha CEO Daniel Zhang said that the development of automobile companies needs a lot of money, and the more money, the better. However, in the end, due to multiple factors, Nezha Automobile did not achieve listing on the Science and Technology Innovation Board. In the subsequent February 2022, June 2023 and September 2023, Nezha Automobile was successively rumored to have an IPO plan, but it was quickly denied. From this calculation, Nezha's listing has been delayed for more than three years.
In order to promote the listing, more than two months after submitting the declaration, Nezha Automobile chose to change its CFO. A number of media recently reported that Chen Rui, CFO of Nezha Automobile, has recently left his post, and his successor is Pan Deng, former managing director of Goldman Sachs (Asia). According to public information, Pan Deng joined Goldman Sachs in 2015 and was responsible for investment banking business. In addition, Nezha's delivery ceremony in Hong Kong is also considered to be a momentum for the IPO.
Nezha Automobile CEO Daniel Zhang previously judged that before 2025 is the qualifying round, and the future is the knockout round. After 2025, there will be a chance to continue to develop at the table. That is, the annual sales volume will reach 500,000 units in 2025, and the formation of a real systematic ability can be regarded as a real firm foothold. From the current point of view, only the ideal and the question world are close to this goal. It is precisely because of this that no new force has yet claimed to have succeeded in landing on the shore. Other rivals, such as Xpeng Motors, the company's chairman, He Xiaopeng, believes that the threshold is 1 million vehicles.
"The next stage of the new energy vehicle market is who can produce and sell 1 million new energy vehicles per year, which is just a knockout entry, that is to say, I was not eliminated." He Xiaopeng said.
According to the prospectus, from 2021 to 2023, the total revenue of Hezhong New Energy will be about 5.089 billion yuan, 13.05 billion yuan and 13.555 billion yuan respectively. Among them, the growth rate reached 156% in 2022 and slowed down in 2023, which was mainly affected by its sales volume. At the same time, due to the increase in the average selling price with the change of product mix and the expansion of production and sales scale to promote the improvement of economies of scale, the gross profit margin of Hezhong New Energy increased from -34.4% in 2021 to -22.5% in 2022, and then to -14.9% in 2023, and still did not achieve a positive gross profit margin during the reporting period.
However, born in distress and dying in peace, Nezha's early warning of an existential crisis this time is also a continuous pressure on himself and a sense of vigilance. As for how to survive in the future, Nezha's thinking is not limited to the domestic market.
Fang Yunzhou believes that the industry is now too serious. As early as 2021, Nezha judged that there would be a greater involution in the industry, so he has been thinking about going overseas and seeking new development overseas. He believes that because the global sales of new energy vehicles have just started, the rapid internationalization of electric vehicle companies is an important way to avoid involution. At the same time, in terms of product structure, Fang Yunzhou also said that Nezha is making adjustments, including increasing the price of single products and reducing dependence on a single product.
In October last year, Nezha Automobile announced its overseas plan, which is expected to deploy in 30 countries and regions in overseas markets, with more than 100 channels, and fully launch overseas business in 2024. From January to June this year, Nezha Automobile exported 17,687 new energy vehicles, a year-on-year increase of 154%, ranking first in the export volume of new power car companies.