Death Report of New Force Automobile Enterprises

01 Once in the Limelight

In 2022, it was the most glorious year for Nezha Auto since its establishment eight years ago.

Relying on two highly competitive models, the Nezha U and Nezha V, Nezha achieved an annual sales volume of 152,000 vehicles, outperforming well - known brands like NIO and Li Auto and topping the sales list among new - energy vehicle startups in 2022.

At that time, Nezha's slogan was "Build cars for the people." Everyone thought this company would become the "Pinduoduo" in the automotive industry, firmly occupying the low - to - mid - end market in an era where cost - effectiveness reigns supreme.

Even with hindsight, Nezha deserved its market position at that time.

Because it took the "low - price, high - configuration" strategy to the extreme in a price range where consumers care most about cost - effectiveness.

Let's start with the Nezha V, the most crucial model that propelled Nezha to success.

Although priced between 70,000 and 90,000 yuan, the Nezha V has a wheelbase of 2,420 millimeters and a length of over 4 meters, making it a bona fide compact SUV. Most of its competitors in the same price range at that time were micro - cars like the Changan Benben and Chery Ant.

This is quite ingenious.

Nowadays, all automakers claim that their products offer extreme cost - effectiveness, but some models sell well while others don't.

In my opinion, those models that don't sell well fail to understand the concept of "cost - effectiveness" thoroughly enough.

Consumers in different price ranges and different customer groups have different understandings of cost - effectiveness.

In the price range around 300,000 yuan, even with high - end configurations, a car is considered lacking in cost - effectiveness without features like a refrigerator, a large color TV, a comfortable sofa, and zero - gravity seats.

In the price range around 200,000 yuan, even with strong performance and fast acceleration, consumers will feel something is missing if a high - level intelligent driving system is not standard.

When it comes to the price range around 100,000 yuan, all cost - effectiveness boils down to one thing:

Space, space, and damn it, still space.

The Nezha V addressed precisely this demand.

In 2020, Nezha launched the Nezha V, a proper SUV. Through a misaligned competition strategy of using a larger car to compete with smaller ones, it outperformed "old - man scooters" in the same price range and achieved a sales surge.

The other model, the Nezha U, followed a similar path.

Although its price ranges from 110,000 to 160,000 yuan, a mainstream price range, the Nezha U lacks "tech - savvy" designs standard in electric vehicles, such as frameless doors and hidden door handles. It also opted for lower - end configurations in terms of intelligence and the in - car infotainment system. However, its rear - seat space far exceeds that of its peers in the same class.

For the vast majority of ordinary Chinese consumers, a family usually has only one car, and the price is likely to be around 100,000 yuan.

In such a market, the most important thing for a car is not how long its strong points are but that it has no weak points. Whether for family rides or cargo storage, space is king.

Nezha accurately grasped this point. Relying on its advantage in space, it became the sales champion among new - energy vehicle startups and was extremely popular for a while.

If Nezha's glorious moments were accumulated through one car sale after another, WM Motor was born with a halo from day one.

WM Motor's founder, Shen Hui, worked at BorgWarner, the world's largest automotive parts supplier, in his early years. He turned the company's Chinese factory from the brink of bankruptcy into a major taxpayer in Ningbo.

Later, he switched to Fiat and participated in the joint venture between Fiat and GAC. During the 2008 financial crisis, he led Fiat China to achieve reverse growth.

The most remarkable battle in his career was when he joined Geely in 2009 and led the acquisition of Volvo. Thanks to this, the largest acquisition in the history of the Chinese automotive industry, Shen Hui became a legend. Later, as the chairman of Volvo China, he established two vehicle manufacturing plants in China, and the company turned a profit two years after the acquisition.

Since then, Shen Hui has been known as "the first person in the globalization of the Chinese automotive industry."

In 2015, after working as a senior executive for half his life, Shen Hui chose to start his own business at the age of 45, and WM Motor was founded.

True to expectations, Shen Hui, an experienced figure in the automotive industry, launched the first product, the EX5, in 2018. By the next year, the sales volume reached 16,800 units, helping WM Motor become the second - best - selling brand among new - energy vehicle startups, second only to NIO.

Interestingly, unlike NIO, XPeng, and Li Auto, WM Motor bears more imprints of the traditional automotive industry.

For example, it chose to build its own factories instead of using contract manufacturing. In 2016, it established a vehicle manufacturing base in Wenzhou and later built a second base in Huanggang.

Moreover, WM Motor was not only favored by Internet capital and venture capital such as Tencent, Baidu, and Sequoia but also received significant investments from local governments in the early stage.

It can be said that among new - energy vehicle startups, WM Motor represents another path for Chinese new - energy vehicle startups besides the "Internet - based car - building" model.

However, even someone as outstanding as Shen Hui is not the most prominent entrepreneur among new - energy vehicle startups.

Because the founder of HiPhi has a higher profile.

HiPhi's founder, Ding Lei, joined SAIC Volkswagen in 1988. That year, Shen Hui had just gone to the University of California, Los Angeles (UCLA) for his freshman year, He Xiaopeng and Li Bin were still in middle school, and Li Xiang, a member of the post - 80s generation, was in the second grade in Shijiazhuang.

Later, Ding Lei served as the general manager of SAIC - GM and the vice - president of SAIC, leading SAIC into the "one - million - unit sales" era. In 2013, Ding Lei even entered politics and served as the deputy head of Shanghai's Pudong New Area.

During his tenure as the deputy head, Ding Lei oversaw the construction of the largest overseas super - charging station at that time (with 50 charging piles), which, to some extent, laid the early foundation for Tesla's super - project to land in Pudong.

It can be said that Ding Lei is a true automotive godfather.

In 2017, Mr. Ding started his own business and founded HiPhi. Right from the start, it targeted the 600,000 - 800,000 - yuan market.

In 2020, when the first mass - produced model, the super - car SUV HiPhi X, was launched, it really shocked its peers.

First of all, its configuration is truly luxurious. It is not only equipped with HiPhi's patented NT wing doors, programmable intelligent headlights, and full - leather seats throughout the car but also has extremely exquisite workmanship. The refrigerator has three - level temperature adjustment, the cost of the headlights exceeds 100,000 yuan, and the sound system was tuned in the UK before the car was shipped back to China.

Secondly, the price is really astonishing, ranging from 570,000 to 800,000 yuan, easily outperforming NIO, which was positioning itself as a luxury brand at that time. Even now, brands like Zeekr and Yangwang are in this price range or even higher, but it is still very risky for an independent brand without a large - scale corporate backing to target the ultra - luxury market.

Finally, there is the sales volume. In 2020, it sold more than 4,200 units, and in 2021, it sold more than 4,300 units. Although the absolute number is not large, in an era when the annual sales champion among new - energy vehicle startups only sold 40,000 - 50,000 units, it was quite impressive. Moreover, with a single HiPhi car costing as much as two or three cars of other brands, the sales volume had a high gold content.

In those years, HiPhi was regarded as the most special, most distinctive brand among second - tier new - energy vehicle startups, and the most likely to take on the challenge of competing with BBA and even Porsche.

During the years when new - energy vehicle startups were emerging and the penetration rate of new - energy vehicles in China began to increase rapidly, Nezha, WM Motor, and HiPhi undoubtedly had their own glorious moments.

Although they had different origins and positioning, at certain times, they were as popular as NIO, XPeng, and Li Auto and could even challenge the status of the so - called "Big Three" among new - energy vehicle startups.

So, what prevented them from maintaining their glory?

How did these once - glorious new - energy vehicle startup brands like HiPhi, Nezha, and WM Motor end up in a situation where they can only be "resurrected" in rumors?

Today, let's talk about the "loser group" among new - energy vehicle startups.

02 Died Due to Strategy

If we consider 2014 as the first year of new - energy vehicle startups, then from 2014 to 2019, it was a chaotic period. There were more than a hundred new - energy vehicle startups in the market at one time. In 2017 alone, more than 60 new automotive brands emerged.

However, only a few have survived until now and still have some say in the industry.

The other more than a hundred companies died for various reasons on this cruel car - building path.

Coincidentally, HiPhi, Nezha, and WM Motor represent three of the most typical ways of failure.

Let's start with HiPhi.

The most interesting thing about HiPhi is that its strategy is an exact copy of Tesla's.

What is Tesla's strategy? You can read Elon Musk's famous article in 2006, "The Secret Tesla Motors Master Plan." In it, he outlined a series of top - down strategies for Tesla.

Among them, the two high - end flagship models, the Model S and Model X, were crucial steps for the company to enter the market and establish a high - end luxury positioning.

There's no need to elaborate on how successful these two models are, especially in the high - end market, where many business and entertainment celebrities have bought them.

HiPhi clearly copied the "dual - flagship" strategy intact. Two years after the launch of the HiPhi X, HiPhi launched its second flagship, the coupe HiPhi Z, which features a cyber - mecha samurai design style and is equipped with a self - developed in - car infotainment system and intelligent driving system.

As sci - fi as its appearance, the price of the HiPhi Z is also remarkable, exceeding 600,000 yuan, still outperforming other new - energy vehicle startups.

HiPhi undoubtedly hoped that the HiPhi Z would continue the success of the HiPhi X and use these two important flagship models to firmly position the company in the ultra - high - end market.

To achieve this, HiPhi spent two years and a large amount of funds recouped from the HiPhi X to polish this mecha - style car. To support the launch of the Z, HiPhi doubled its employee size within two years and opened more than 300 new stores nationwide after the launch, sparing no expense.

However, things didn't go as HiPhi hoped. The HiPhi Z was a disappointment. Only about 1,000 units were sold in the four months after its launch, and later, HiPhi even stopped publishing the sales data of the HiPhi Z. It was probably just a drop in the bucket.

The failure of the Z was predictable. After all, the X is positioned as a super - car SUV and is not known for its space and practicality. Now, with the launch of another coupe, the two models overlap too much in terms of price and positioning. The customer base that HiPhi can reach is limited. Many people who bought the X would not buy the Z.

This alone is not fatal to the company.

What's really fatal is that the intensity of competition in the new - energy vehicle market increased exponentially during the two years when HiPhi was polishing the HiPhi Z.

In 2022, Li Auto launched three models, the L9, L8, and L7, in one go, solidifying its position as the king of range - extended electric vehicles and the godfather for dads. It also lowered the price range of its products.

NIO launched its second - generation platform and completed listings in Hong Kong and Singapore successively, preparing for the subsequent fierce competition in terms of capital and products.

Although XPeng experienced a setback with the G9, the company replaced its GAC - affiliated executives and introduced Wang Fengying as the general manager, carrying out drastic reforms in the corporate organization. It also continued to raise funds.

It can be said that while HiPhi was patiently polishing the HiPhi Z, thinking it could achieve a one - shot victory, other companies realized that the competition in the new - energy vehicle market is a long - term battle and there is no possibility of achieving success in one go. So, they all chose to stockpile resources for the long winter and stepped up the arms race.

As a result, we can see that HiPhi wasted these two years.

In 2023, realizing its mistake, HiPhi hurriedly launched its third "life - saving car," the HiPhi Y, priced at around 300,000 yuan. It is a genuine mainstream SUV, taking a more approachable route compared to its previous products.

However, in fact, the HiPhi Y still doesn't deviate from the overall strategy and is still following Tesla's successful strategy. In HiPhi's plan, it will, like the Model Y, support the entire company's fate on its own.

Unfortunately, this didn't happen.

After all, when the first - generation domestic Model Y was launched, NIO was still dreaming about the market above 400,000 yuan, XPeng only had the low - priced G3, and the Li ONE was in a completely different market segment from the Model Y.

During the years when the Model Y dominated the domestic market, there were almost no decent competitors.

But by the time the HiPhi Y was launched, almost all competitive automakers had already made arrangements in the 300,000 - yuan SUV market. HiPhi wanted to increase sales in the lower - end market but found that it was already a red - ocean market with no room for growth.

It's predictable that after the launch of the HiPhi Y, the monthly delivery volume only reached more than a thousand units.

Subsequently, HiPhi defaulted on its payments to suppliers, and many suppliers stopped supplying parts. HiPhi could no longer deliver cars, followed by layoffs, salary disputes, and production halts. In early 2024, HiPhi completely shut down, and in the eyes of consumers, this automaker was already dead.

The most direct reason for HiPhi's failure is that the company ignored the domestic competition environment and blindly copied Tesla's strategy, thinking it could become the Chinese Tesla.

HiPhi is not the only company dragged down by a wrong strategy.

Nezha is also in the same boat.

In 2022, the success of the Nezha U and Nezha V once pushed Nezha to the top of the sales list among new - energy vehicle startups.

However, Nezha didn't hold this throne firmly.

First of all, the unit price and gross profit of Nezha cars are very low. By selling cheap cars at a loss, its sales volume was only two or three thousand units more than that of NIO, XPeng, and Li Auto. This sales championship was somewhat unworthy of the name.

Secondly, Nezha's sales