Geely’s “new four modernizations”: the heart of seeking change is well known to passers-by

Geely’s “new four modernizations”: the heart of seeking change is well known to passers-by

“The automobile industry revolution has begun to “riot”, from theory to practice, from rumors to reality, from small scale to large scale, from local to overall, from the edge to the center, this is a revolutionary drama of the automobile industry that is taking place. A century-old automobile revolution full of opportunities and challenges is very exciting.”

With the introduction of the “Intelligent Vehicle Innovation and Development Strategy (Draft for Comment)” issued by the National Development and Reform Commission, the “new four modernizations” of new energy vehicles with the trend of electrification, networking, intelligence and sharing will truly reshape the industry pattern. . Traditional auto OEMs mainly rely on hardware and configuration to make money, forming a set of well-known auto industry rules. This is, Tesla is here, grabbing user needs with unique software value, winning the market, and making the entire auto industry think.

2020 is the feast of the new energy vehicle revolution. There are three Chinese independent brand car companies based in the world’s top ten. BYD, Xiaopeng, Weilai, and Ideal are even more popular among capital. Geely, a traditional car company, used to be the “first brother of its own brand”, has ranked first in the sales of China’s own passenger car brands for four consecutive years, but it will lag behind the new energy vehicle field in 2020, and it will be a little lonely. In the new industry changes, how does Geely seize new opportunities in the market and embark on a new journey? In recent months, Geely has been very busy and busy, and the desire for change is well known to passers-by.

1. Through the financial report, see Geely’s “change” and “unchanged”

On March 23, Geely Automobile released its 2020 financial report. Without further ado, let’s take a look at the detailed performance information.

Sales: Final sales for the full year of 2020 were 1,320,217 units, down 3% year-on-year, but outperforming the market. Among them, the Lynk & Co brand has achieved breakthrough development, with sales of 175,000 vehicles last year, a year-on-year increase of about 37%. However, the sales volume of the electric-focused Geometry brand is only 10,300 units, which is more than one segment behind.

Revenue: Geely’s annual revenue was RMB 92.1 billion, a year-on-year decrease of 5%, and it has experienced a year-on-year decline for two consecutive years; net profit was RMB 5.57 billion, a year-on-year decline of 33%, and profit attributable to shareholders was RMB 5.53 billion, a year-on-year decline 32%; gross profit margin was 16%, a decrease of 1.4 percentage points compared with the same period last year.

Cash: As of the end of 2020, its monetary capital balance was 19 billion yuan, basically the same as the same period last year. Through the “change” and “unchanged” financial data, we can see the current operation of Geely Group.

1) In 2020, the overall sales volume fell by 3%, but the market share slightly increased by 0.1 percentage points to 6.5%. This shows that Geely’s market share is basically the same as before. In 2020, the Lynk & Co brand helped Geely Group increase the average selling price of bicycles by 1%, which is also a big improvement. The lack of premium capability of Chinese brand cars has always been a pain point in the development of China’s own brands. We all know that in the past, Chinese brand cars mainly depended on cost performance to win. In recent years, the bicycle prices of China’s own brands BYD, Great Wall, Changan, Geely and other vehicles have risen, which shows the progress of China’s own brands and is a manifestation of the healthy development of China’s auto industry.

2) Both revenue and net profit in 2020 will decline, and net profit will drop by 33%. Gui Shengyue, chief executive and executive director of Geely Automobile Holdings Co., Ltd., said that there are objective factors such as the epidemic and rising raw material prices, but it is also a manifestation of Geely Automobile’s own development cycle. In 2020, Geely’s auto products are facing a transition period from the 3.0 era to the 4.0 era. Most of the products are at the end of the life cycle and their competitiveness is not strong. On the other hand, according to the financial report, the expenses and administrative expenses for distribution and sales in 2020 were 50.53 yuan and 5.745 billion yuan respectively, an increase of 16.65% and 13% respectively year-on-year. Among them, Jiyong’s expenditure on research and development was 3.738 billion yuan, an increase of 671 million yuan compared with last year.

3) The balance of monetary funds in 2020 is basically the same as last year, at 19 billion yuan. From a purely financial point of view, this is a relatively positive indicator. At the same time, the company’s asset-liability ratio reached 42%.

It can be seen from the financial report released in 2020 that although the overall development of Geely enterprises is good, the main financial data for the year has declined, and both new energy and pure electric brand vehicles have fallen behind. In 2020, the annual sales volume of new energy vehicles was 1.367 million units, a year-on-year increase of 10.9%. Geely failed to capture the dividends of the rapid growth of new energy vehicles to offset the impact of the epidemic and other factors on its performance. In the capital market, the market value of Geely was comparable to that of BYD in 2017. Today, Geely has more than 130 billion yuan and BYD has more than 450 billion yuan, which is less than 1/3 of the latter. However, Geely, which has fallen behind, is struggling to catch up. This year, Li Shufu rarely published a 4D thinking and will focus on the research and development of intelligent electric technology.

2. Multi-party cooperation to comprehensively improve the ecological chain

At present, the global automobile industry is facing the profound changes of the “new four modernizations”, which has opened a time window for the adjustment of the automobile industry chain and the expansion of the ecological circle. This is a century-old automobile revolution full of opportunities and challenges, and this revolution has just begun. Geely in 2021 can be said to be very busy, seeking openness and collaboration, actively creating new advantages in the industrial chain, expanding the ecological circle, and improving the ecological chain.

Geely and Tencent: In 2021, signed a strategic cooperation agreement with Tencent. According to the agreement, the two parties will carry out all-round strategic cooperation in the fields of smart cockpit, autonomous driving, digital marketing, digital base, digital new business and low-carbon development. According to the agreement between the two parties, Tencent will help Geely complete the digital upgrade of the “full user life cycle” and build a “people-centered” digital service system. At the same time, Geely and Tencent will also jointly promote the low-carbon development of the entire automobile industry chain, explore and jointly build a “carbon neutral” open platform, carry out practice in order to accelerate the realization of the carbon neutrality goal of the automobile industry, jointly improve the level of corporate ESG governance, and explore long-term sustainable development.

Geely and Foxconn: In 2021, they will sign a strategic cooperation agreement with Foxconn Technology Group. The two parties will establish a joint venture to provide OEM and customized consulting services for global automobile and related companies, including but not limited to automobiles and parts. , intelligent control systems, automotive ecosystems and the whole industry chain process of electric vehicles. The division of labor model based on information and communication technology (ICT) will be adopted to help client companies gradually transform to an innovative and efficient manufacturing supply chain system and business model on the basis of the existing automobile industry model.

Geely and Baidu: In 2021, a smart electric vehicle company will be established with Baidu. The newly formed auto company will target the passenger car market, allowing users to buy more extreme smart electric vehicles. It will focus on the entire industrial chain of smart car design, R&D, manufacturing, sales and services, inherit Baidu’s powerful artificial intelligence and Internet technology genes, and leverage Baidu Apollo’s leading autonomous driving capabilities to leverage its 8-year experience in the field of automotive intelligence. Advantages, reshape the form of smart car products, and become a changer in the era of smart travel.

At present, the automotive industry will become an important technological innovation position integrating cutting-edge technologies in multiple fields, and a key area for the industrialization of many new technologies. The cooperation between auto OEMs and multiple parties has become a feature of this year. Major Internet companies have assisted SAIC, GAC, Great Wall, Geely and other companies. In the future, the effect of “1+1>2” may be produced, and China’s auto industry chain will be more complete.

3. Aim at the high-end market and create pure-blooded electric vehicles

Some time ago, Li Shufu published a 4D long article saying, “Based on the changes in the global auto industry and the application environment, Geely has launched two blue Geely action plans.” These two plans refer to:

Plan 1: Mainly focus on new energy vehicles and energy saving, which are embodied in hybrid electric vehicles, plug-in hybrid electric vehicles, extended-range plug-in hybrid electric vehicles and small-displacement energy-saving vehicles. Plan 2: Intelligent pure electric vehicles, establish a new pure electric vehicle company, and actively participate in the competition in the intelligent pure electric vehicle market.

The direct landing project of Blue Geely Action Plan 2 is Jikr Automobile. In the EV racetrack, pedigree matters. Extremely Krypton Motors will showcase a pure-blooded electric vehicle brand.

Geely Automobile Co., Ltd. is jointly invested and established by Geely Automobile and Geely Holding Group (including employee co-investment platform and user rights platform). Among them, Geely Automobile holds 51% of the shares and Geely Holding Group holds 49% of the shares. In addition, the new company plans to inject 2 billion yuan in cash, with Li Shufu as chairman and An Conghui as CEO.

According to An Conghui, Jikr’s planning started five years ago when it developed the vast SEA architecture. Geely Haohan SEA (Sustainable Experience Architecture), namely intelligent evolution experience architecture. This is a brand-new architecture of “intelligence + electrification”, which will have a high degree of automatic driving, a long battery life of 700+km and a luxurious configuration of fully automatic air suspension.

The birth of Jikr Automobile is another layout of Geely Automobile in the construction of “new four modernizations”, and it is also a new answer sheet of Geely on the electric track. Geely Auto’s full-stack self-research capabilities of software and hardware in the three-electric system, SEA architecture, etc., as well as the ecological layout of intelligent technology in intelligent networking, autonomous driving, chips, satellites, etc., all previous achievements and accumulations will be Concentrated in this brand. In 2020, Geely, which missed the new energy outlet, will be a little lonely; in 2021, Geely Auto is seeking change, and everyone knows whether it can overtake on a curve again, we will wait and see.

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