LI made a profit this year, and Li wanted to talk again.

Recently, the new energy automobile industry has changed again. Wei Xiaoli, which once took the lead, has been replaced by three car companies, Ai ‘an, Nezha and Wenjie, in its sales ranking in October. However, what is worse than the decline in sales volume is that after the delivery volume, revenue and gross profit margin have improved, "Wei Xiaoli" still cannot escape the fate of loss.

Long-term losses are also the shadow of LI, who was founded seven years ago. Even CEO Li Xiang is deeply concerned. "Ideally, we will strive to achieve a monthly income of over 10 billion in 2022. It is time to say goodbye to the loss-making business for seven consecutive years." On November 12th, Li wanted to boast about the delivery data in October through Weibo.

In the car circle, netizens have become accustomed to the behavior of "talking big" about the new forces making cars, especially Li Xiang, who has a very personal style. Although Ideality has achieved a quarterly profit before, Li Xiang’s daring to speak out this time is about to end his 7-year loss. Is LI’s performance turning point here, or is Li Xiang blindly optimistic? In addition, when will the break-even point of the new forces of building cars come? Let’s have a good talk together today.

The turning point of performance has arrived, and the first shot of "profit" has been launched. After each financial report is released, we are more concerned about whether they have turned losses into profits besides paying attention to revenue and delivering data. According to the latest financial report, in the first half of this year, "Wei Xiaoli" experienced a substantial increase in revenue, which increased by 23%, 122% and 112% respectively compared with the same period last year. Although the revenue data is very bright, the net profit still maintains a loss situation, with losses of 4.54 billion yuan, 4.402 billion yuan and 652 million yuan respectively. The losses of the three car companies in the first half of the year add up to nearly 10 billion yuan.

Net loss from the first half of the year alone

6.52

In terms of 100 million yuan, the current situation of Ideal is not very optimistic, but its loss is mainly due to the large investment in R&D in the second quarter, with a total amount of 1.53 billion yuan, up 134.4% year-on-year. Most of these R&D expenses are spent on new products such as Ideal L9, Ideal L8 and Ideal L7. Since the pricing of Ideal L9 and Ideal L8 is between 500,000 and 300,000 yuan, with the delivery of these new models, Ideal predicts that the monthly income will exceed 10 billion in the fourth quarter, and at the same time, it will turn losses into profits for the whole year.

Although it is still unknown how much sales the new product can add to Ideal, the capital market has given a very positive response considering Ideal’s current good cost control ability and the expectation that its future delivery ability will be greatly improved. Recently, LI’s share price has risen by over 10%. However, due to the shortage of chips, rising raw material costs and other factors, ideal delivery and profitability are facing challenges and impacts. There are less than two months before the end of 2022. If you want to get rid of losses this year, you must make great efforts.

There are many doubts, and the ideal needs a "tonic". Among the three new forces of "Wei Xiaoli", the ideal profit has always been the best performance. The reason is that the ideal route is to extend the range, and the investment in research and development will be much less than that of pure circuit lines. As the saying goes, Xiao He also defeated Xiao He. At present, the industry is generally not optimistic about the future of extended-range technology, because from the perspective of carbon emissions, extended-range vehicles are not the optimal solution for new energy products. Compared with pure electric power, extended-range power is more of a transitional product and cannot be the main theme of the future.

Shanghai has clearly restricted plug-in hybrid models. From 2023, plug-in hybrids will no longer give away "green cards" for free. Unable to enjoy the green card policy, which means that many Shanghai consumers will not consider buying extended-range models. If other cities follow this policy, extended-program products will enter the cold winter, and LI will bear the brunt. At present, all LI’s models are equipped with extended-range powertrain, which makes consumers combine the ideal with the word "extended-range". If more cities no longer give green cards to extended-range models, it will undoubtedly make the ideal future even more difficult.

More importantly, there is almost no moat in the ideal. At present, there are many competitors who are mainly engaged in extended-range models. Dongfeng Lantiu, Chang ‘an Deep Blue, Wenjie and Self-Traveller are all on the list, among which Wenjie is the most ideal opponent. Less than a year after entering the market, the world of inquiry has achieved an ideal size. Looking at the domestic market, extended-range models have entered the market one after another, and the ideal market pressure has only increased. How to compete with the mass-increased models is the most important problem to be considered at present, not the blind optimism at present.

In other words, although Ideal will save money, it is possible to make a profit for the first fiscal year since its establishment this year. However, capital has never been interested in such "money-saving" enterprises. "Money-saving" cannot save a future, and only by building its own moat can we have greater hope. Therefore, instead of being complacent about your profitability, it is better to build your own technical barriers as soon as possible before the track is finalized.

When will the new forces break the "curse" of losses? In the current automobile market, new energy vehicles are undoubtedly the general trend. However, because there is no fundamental breakthrough in the cost of new energy vehicles and the scale has not been released, on the whole, it is still "losing money to earn money" and "making sales and losing profits". In particular, because the output of the new car-making forces is too small, the fixed expenses such as research and development expenses and administrative expenses cannot be diluted, and the market competition is becoming increasingly fierce, it is a common phenomenon for the new car-making forces to lose money. And when their breakeven point will come has become a common concern in the industry.

Building a car has never been an easy task. Regardless of the scale of sales, at present, the price of batteries is soaring, chips and core hardware are subject to people, and the price reduction pressure of "Catfish" Tesla. Most of the new car-making forces are in a passive state, and turning losses into profits is still far away, so everyone should be mentally prepared.

However, the ideal adopts strict cost control, which is worth learning. As the saying goes, "Good steel is on the cutting edge", so every car company should make good use of the funds in hand, and don’t be exposed to the negative side of "the founder’s sky-high salary" at every turn, as long as more funds are invested in research and development, and the products are recognized by consumers, I believe more new forces will step into the door of profit.

From the selling point of car products to the financial performance, Li Xiang continues the style of "big mouth". Like other new car-making forces, LI is also facing a lot of investment in R&D expenses, and it is a big challenge to get rid of the losses this year. In any case, the optimistic Li Xiang’s lofty ideals will "explode" in the fourth quarter, whether it is to give confidence to the capital market or to have a well-thought-out plan, and the answer will be announced at the end of the year.