On April 30th Ideal Auto announced the latest delivery. As of April 29, its only production model, ideal ONE, had delivered more than 2,600 units in the month. Ideal ONE is a plus-size hybrid medium-sized SUV, priced at 328,000 yuan, officially launched on April 10, 2019, and launched in December. To date, ideal ONE has delivered more than 6,500 units.
The ideal ONE came a little late compared to other mainstream new car makers, but it was a bright spot in the first quarter of this year’s sales rankings. In the first quarter, ideal ONE delivered a total of 2,989 units, surpassing the Small Peng G3, Weimar EX5, which N01 and other models, second only to the Tesla Model 3 and NIOES6. From the plug-in hybrid market ranking, in March the ideal ONE overtook BMW 5 Series PHEV, Passat PHEV, Mondeo PHEV and other models, ranked first. In addition, it ranks fifth in the luxury medium-large SUV segment.
Only the ideal ONE sold in three years
Ideal ONE presents the phenomenon of “black horse”, mainly considered to be the consumption of initial seed user orders, NIO, Weima, Xiaopeng just opened delivery also presented this phenomenon. Ideal Car CEO Li wants to say that the new car companies will rely on seed users in the early days, but at most about 10,000, the latter must consider how to expand new users. For the current number of new orders per day, as well as the delivery of 6500 orders, the proportion of pre-sale orders, Li would like to say that it is not convenient to announce.
After consuming the first wave of traffic, the head of the new car construction enterprises through product OTA upgrade, speed up the pace of new vehicle launch, expand the business model and other ways, continue to establish traffic orders, such as The Launch of The Mobile Travel Platform, Weima direct purchase mode, NIO car to promote free power change, etc. , in addition to NIO, Weima and Xiaopeng have launched at least two models.
But the path of the ideal car seems a little different. “We’re going to expand sales, we’re going to expand the city’s reach, and we’re not thinking about new business models to boost subsequent orders.” Li wanted to say to the Economic Observer. In addition, Li wants to say that the ideal ONE will only do the ideal ONE OTA upgrade in the next three years, “I think this is the difference between the nature of smart cars and traditional cars.” In the long run, in addition to adding routes, pure electric routes are also in the ideal car plan.
Combined with previous user feedback, on April 30, Ideal Car announced the ideal ONE OTA upgrade plan. Among them, the software level includes adjusting the energy mode, optimizing the experience of assisted driving system, adding off-road escape mode, WLTC and NEDC operating range, 360-degree ring view of the new “hub view” and other functions, the end of May will be another OTA upgrade. At the hardware level, it is committed to performing seat hardness tests for vehicles that are off-line by January 7, 2020, and to replace them free of charge, as appropriate.
At the same time, the ideal off-line channel layout is also accelerating. At present, the total number of auto retail centers in the country is 19, covering 17 cities, and by the third quarter the total will increase to 30, and by the end of the year the retail network will cover the vast majority of provinces in the country. And after-sales service network, so far the ideal car has covered 25 provinces and municipalities directly under the Central Government, by July this year, the ideal car after-sales service will be extended to all provinces and municipalities except Hong Kong, Macao and Taiwan, the end of the year is expected to reach 100 cities nationwide.
What is the right cash flow?
On the issue of high-profile funding, Mr Lee said that by giving him $1bn, he would be able to achieve positive cash flow. In August last year, Ideal Motor announced that it had completed a $530 million C-round financing, bringing the cumulative financing of Ideal Cars to $1.575 billion (about 11.1 billion yuan). On April 8 this year, Li said the company had achieved positive cash flow in March this year, cash flow is currently enough to spend 36 months, and C round of financing is still not moving, the company 50% of the funds for research and development, 30% for the construction of factories, 20% for personnel and sales.
According to media statistics, the cumulative financing amount of NIO is now as high as 54.3 billion yuan, the cumulative financing amount of Weima Automobile reached 23 billion yuan, xiaopeng Automobile’s cumulative financing has reached about 16.8 billion yuan. Both the financing and sales volume, all three companies are much higher than the ideal car, and all say they are improving the efficiency of the capital, but for now only ideal cars have said that the cash flow is positive. Lee wanted to go into no detail sly about how to do this, emphasizing that the company has strict cost controls, such as requiring that anything be understood by a mathematical model.
“The ideal cash-on amount may be money that contains financing, but cash flow, which is commonly used in the industry, refers to cash flow from operating activities, two different concepts.” “One investment analyst told The Economic Observer. However, ideally, li wanted to refer to cash flow from operating activities, according to a reporter for The Economic Observer.
Industry analysts say that the ideal car cash flow is positive, in addition to focusing on cost control, it may be less investment. In addition to the early self-built factory, the first model of research and development investment, the next ideal car because of the new car planning less, in the new car research and development level of the pace of investment can also be relatively slow. At the same time, unlike NIO, Xiaopeng self-built power station or super charging station, the ideal car does not emphasize the external investment in the field of energy supply.
In addition, in March, when Li wanted to declare cash flow positive, the end-consumer market was still depressed by the impact of the outbreak, compared with other car companies to pay additional costs “fancy” mining new orders, the ideal car only need to produce digested seed user orders, and at this stage the smaller offline channel size also decided to spend less.
But the outbreak has also put extra pressure on the ideal car, Li said, after the outbreak of the company suffered a lot of user orders, because the global outbreak trend is still uncertain, full-year delivery is difficult to predict.
Mr Li said he would continue to maintain positive cash flow. However, in the case of only one car in three years, how to continue to effectively establish new orders through OTA upgrades will become an important issue for the ideal car. In addition, as deliveries increase, channel expansion and user operations will further test the ability of the ideal car to operate capitally.
In January,media reported that Ideal Car had applied for an IPO in the United States, and the ideal car responded to the media said it was not aware of it. However, since 2019, ideal car has repeatedly adjusted its equity structure, planning an IPO is no secret. Li would like to refuse to answer the progress of the IPO, saying, “The company is better at operating cash flow positive, so there is no need for external blood transfusions to solve business problems, and there is enough cash reserves.” Mr Li said the company had no financing plans in the near future.