Text | Bento finance Brother Yu
Editor | Wang Jing
Wei Jianjun is about to regain the richest man in the car circle with an IPO of 60 billion yuan, but with Geely’s fifth IPO, Li Shufu will overtake in the corner again.
As of the close of November 24th, Geely Automobile ranked 31st in the market value ranking of global car companies with a market value of HK$ 100.067 billion. In contrast, BYD ranked fourth and Great Wall Motor ranked 14th. Even Wei Lai and LI, the new forces making cars, ranked 21st and 24th respectively.
Although the market value is "tepid", the enthusiasm of Geely brand to embrace the capital market has never subsided. Last year, Volvo Cars was listed on the Stockholm Stock Exchange in Sweden. In June this year, Polar Star Motor was listed on NASDAQ. And Li Shufu’s Yikatong Technology will soon go public in the United States.
Soon, Geely’s fifth IPO will come again-on October 31st, Geely Automobile announced on the Hong Kong Stock Exchange that the company had submitted a proposal to the Stock Exchange in accordance with the 15th application guideline, which suggested splitting Krypton and listing it independently.
Different from the previous low-key financing, as Geely’s "pro-son", he is desperately drawing a "pie" to the capital market.
On November 17, the customized Robotaxi car built by Krypton for Waymo (Google’s autonomous driving company) was officially unveiled in Los Angeles, USA. It is based on the Krypton M-Vision concept car and will be mass-produced in 2024-which means that the Krypton products will land in the United States in 2024.
At this point, Krypton has obtained the cooperation of three American companies, Google, NVIDIA and Mobileye, in the field of autonomous driving. Such a partner lineup, even European and American multinational car companies, is far behind.
R&D bundled American technology companies and products exported to the American market, and the "one-year-old" pole rushed to the IPO.
The first step of krypton is to take a detour. In September, 2020, the joint venture brand of Geely and Volvo, Lingke Auto, officially released the first pure electric luxury coupe concept car-Lingke ZERO concept, which is also the predecessor of the first model of the brand, Jike 001.
Originally, Geely intended to incubate pure electric vehicles within the system of joint venture brand Linke. But in the end, Geely decided to take out the polar list and make a brand-new independent brand. In March, 2021, Geely Automobile and Geely Holding Group jointly invested and established the brand Krypton, with a total investment of RMB 2 billion.
The birth of krypton, the more important task is to make up for Geely’s shortcomings in the new energy vehicle market.
In 2015, Geely announced its aggressive entry into the new energy field and released the "Blue Geely Action Plan". The goal is that by 2020, the sales of new energy vehicles will account for more than 90% of Geely’s overall sales–but the result is that Geely’s new energy vehicles will only account for 5% of the total sales in 2020, and the Blue Geely Action Plan will fail.
Due to the sloppy first time and the late admission time, Krypton is in an obvious backward state in terms of product richness and channel coverage.
At present, only two models, Extreme Krypton 001 and Extreme Krypton 009, are on sale. Not long ago, the cumulative delivery of Krypton 001 just exceeded 55,000 vehicles. In terms of channels, as of the third quarter of 2022, there were only 169 stores. Judging from the volume, the current extreme krypton can only wrestle with the new forces that build cars.
However, the "direct competitor" faced by Krypton is no longer this volume.
Aside from BYD, which can sell 200,000 vehicles a month, GAC Ai ‘an, which competes for the "first share" with Krypton, has long been far ahead in terms of market size. In October, Ai ‘an once again exceeded the monthly sales of 30,000 vehicles. From January to October, the cumulative delivery volume of Ai ‘an was 210,000 vehicles, fulfilling the annual sales target of 200,000 vehicles ahead of schedule.
It is no wonder that the popularity of Ai ‘an in the capital market far exceeds that of Krypton.
On October 20th, GAC Ai ‘an completed the Series A financing of up to 18.294 billion yuan-the largest financing in the field of vehicle in 2022, and the largest single private financing in the domestic new energy vehicle industry in recent years, and 53 investors in a single round of financing also created the largest number of new energy vehicle enterprises.
In terms of valuation, Ai ‘an has created the highest post-investment valuation of domestic unlisted new energy vehicle companies of 103.239 billion yuan. You know, the market value of Guangzhou Automobile Group is only over 100 billion. According to the current sales growth and the launch of new products, it is very likely that Ai ‘an will build another Guangzhou Automobile Group.
Since we can’t compete with sales, we simply gave up the middle and high-end Red Sea market. Directly entered the high-end car market, and tried to convince the capital market with brand power and product power.
The first task of Krypton is indeed to help Geely get rid of the cheap label.
The former "top three independent brands" were Geely, Great Wall Motor and BYD. In the era of fuel vehicles, BYD has the worst market size and revenue capacity.
But now the pattern is completely reversed. In the first half of this year, BYD increased the average bicycle price by 170,000 yuan by relying on the hot sale of high-end new energy vehicles. In the same period, the average selling price of the Great Wall was 121,200 yuan, while the average bicycle price of Geely was only 102,000 yuan-the last of the three independent brands. Even the Guangzhou Automobile Ai ‘an, which started from the network car, broke through the average product price of 180,000 yuan in September.
Krypton 001, the first car of Krypton brand, is positioned as a "luxury hunting coupe". However, the starting price of this car is 299,000 yuan, which is far from the luxury car. Even the high-end car is slightly reluctant-the high-end model defined by the Association must start at more than 300,000 yuan.
Extreme Krypton 001 Source: Extreme Krypton official website
This pricing strategy is mainly for the convenience of Krypton 001 to meet the price threshold requirements of state subsidies, so the minimum model is set below 300,000 yuan. Even with this explanation, the average large order amount of Extreme Krypton 001 is only 336,000 yuan, which is lower than the average bicycle price of 430,000 yuan from Weilai.
When the second car was launched, Krypton did not choose to lower the price in exchange for a larger market scale. Instead, we will continue to launch a higher-priced MPV model, Extreme Krypton 009, with a price range of 499,000-588,000 yuan. The price of nearly 600,000 yuan is an unprecedented height of Geely in its own brand.
However, it is worth noting that the so-called high-end of Krypton 009 is more like a high-end that is forced to help.
Because in the high-end version of Krypton 009, Contemporary Amperex Technology Co., Limited CTP3.0 Kirin battery was first equipped, and the capacity of this battery pack reached an astonishing 140kWh. Even with the low version, the battery pack capacity has reached 116kWh. According to the current cost price of power battery, the cost of battery pack for low version alone is as high as 150,000 yuan, and that for high version is as high as 182,000 yuan, accounting for 30% of the total car price.
Of course, this does not consider the hidden cost behind the initial mass production of Kirin battery.
In fact, putting heavy and expensive batteries on pure electric MPV models is a rather aggressive attempt. Because pure electric MPV, compared with hybrid and fuel vehicles, has the advantage of better space utilization and certain improvement in driving comfort. However, the original MPV has a large space, and the relative space optimization will not be too obvious. The improvement of driving comfort is difficult to quantify and make users feel.
On the contrary, the shortcomings of pure electric MPV models are very obvious, one is the cruising range, and the other is the convenience of recharging. Judging from the existing scheme, Krypton adopts the "old method" of stacking batteries to improve battery life. But a larger capacity battery means a longer charging time.
In the propaganda copy, Krypton only mentioned the charging time of 140kWh battery pack-10% to 80% takes 28 minutes. The 140kWh Kirin battery takes longer. According to the feedback from the previous owners of 100kWh Krypton 001, it takes 2 hours to fill it normally from 0%. The charging time of krypton 009 with larger capacity battery will be a very big problem.
Extreme Krypton 009 Source: Extreme Krypton official website
You know, the MPV is either a leader or a family member. It is obviously an unpleasant thing to wait with them in the charging station for an hour or two. Especially when you are on a high-speed road, you have to grab charging piles with hundreds of thousands of other electric vehicles, which is extremely inconsistent with the luxury positioning.
Of course, the Krypton brand has no intention of taking measures at this stage.
"I still insist on not doing things on the premise of pursuing sales." Jason Lin, vice president of Krypton Intelligent Technology, said in an interview that Krypton is not pursuing pure high-priced cars, but building the best cars in market segments with creative value to satisfy that market. He also said: "to meet the high-end, it is not the amount of money to measure the high-end, but whether you can represent the most important products in that market."
Perhaps Krypton 009 can convince some consumers, but it is difficult to convince the capital market.
The reason why Krypton can go today is entirely due to Geely’s "selfless dedication".
In September, 2020, Geely Automobile delivered the watch in science and technology innovation board, and successfully held the meeting that month. At that time, Geely’s new story to the capital market was the high-end pure electric product line.
However, with the adjustment of policies and the reorganization of Krypton brand, Geely made a major decision-Geely Automobile withdrew its IPO application in science and technology innovation board in June 2021, and announced that the board of directors of Krypton Intelligent Technology had decided to explore different external financing schemes for the sustainable development of Krypton Intelligent Technology.
Last August, an undelivered Krypton received $500 million investment from ecological partners such as Contemporary Amperex Technology Co., Limited, Billie Billie and Intel Capital in the Pre-A round of financing, corresponding to 5.6% of the shares. According to this calculation, the post-investment valuation of Krypton is close to 60 billion yuan.
It is also possible to double the valuation of krypton if we add the delivery results in the past year or so. However, can this brand really be valued at nearly 100 billion?
Theoretically, the valuation reflects each investor’s expectation of the company’s growth. For car companies, raising the valuation is nothing more than doing three things well: sales volume, core technology and brand value.
As far as the core technology is concerned, krypton is far from any imagination at present. In the two intelligent fields, intelligent driving and intelligent cockpit, there is no full-stack self-research capability, but it relies on mature suppliers to complete the push-intelligent driving, which is handed over to Mobileye；, an autonomous driving technology company owned by Intel; The smart cockpit is taken over by Geely’s Yikatong Technology.
For example, Krypton 001′ s intelligent driving system uses two Mobileye EyeQ5H chips, which is said to be equipped with Mobileye’s SuperVision system, which can support point-to-point assisted driving under various road conditions, such as highways, urban trunk roads, rural roads and urban roads.
However, after more than a year of delivery, even the high-speed navigation assisted driving function has not been realized, let alone the urban assisted driving function that will be launched later. In terms of intelligent driving function, Krypton is not only a generation behind Tesla, but also inferior to Geely’s "old rival" Great Wall Motor (Great Wall’s Mimo Zhixing has achieved high-level assisted driving in the city).
Extremely krypton’s partner in intelligent driving, Intel’s Mobileye, is a famous "black factory" in the automobile industry. In the early days, Tesla and Mobileye broke up because the car companies provided by Mobileye were closed black box solutions. Car companies not only could not modify the algorithms, but also could not share vehicle data with Mobileye.
Li Xiang, CEO of LI, who has always been in honest and frank, has publicly announced the reason for stopping cooperation with Mobileye-because it can’t meet the full-stack self-research needs of our intelligent driving (the most important sensing algorithm is the black box). In addition, the ET7 model has been selected and turned to the NVIDIA Orin chip platform with relatively higher "openness", and the development mode of full-stack self-developed software has been adopted.
In order to create a marketing momentum, Krypton announced that it would become the first automobile brand to use NVIDIA Thor chip, and at the same time, self-developed software based on this chip was carried out. (Thor is the latest chip released by NVIDIA this year. As the successor of Orin, the computing power of a single chip has increased by 8 times to an amazing 2000TOPS).
Originally, everyone thought that Extreme Krypton 009 would make a breakthrough in intelligent driving ability, but in fact, it is a ready-made solution from the bottom chip to the software definition. Previously, all kinds of marketing methods were just "painting cakes" again and again.
In terms of smart cockpit, Krypton also chose to "lie flat" in front of suppliers.
The cockpit of Krypton 001 is based on the whole case plan of Yanfeng Visteon. The so-called "full-case scheme" means that Visteon will provide a complete set of hardware and underlying software development completely according to the product definition and requirements of OEM, and complete the final overall integration work. Basically, it is equivalent to what we often call "outsourcing".
However, due to the limitation of research and development cycle and vehicle cost, the early Krypton 001 was inevitably limited in software and hardware architecture and performance. At that time, the most common problem of the first batch of users was that the car was stuck. In desperation, Krypton had to announce that it would replace the 8155 cockpit chip for the owner free of charge.
On the second model, Krypton 009, the whole project of Yanfeng Visteon was abandoned, but the underlying R&D capability of the entire cockpit was also supported by suppliers. Only this time it was replaced by Geely’s cockpit supplier-Yikatong Technology.
Since its inception in 2017, Yikatong’s main business scope is to integrate multimedia information digital entertainment systems for Geely Automobile. The company’s actual controller and ultimate beneficiary are Li Shufu, chairman of Geely Group. At present, almost all of the 12 OEM customers of Yikatong are brands owned by Li Shufu or Geely. For example, Mercedes-Benz, smart, Lotus, and the protagonist of this article-Krypton.
Source: Extreme Krypton official website
In order to cover up the fact that the intelligent cockpit is "not self-developed", Extreme Krypton brand didn’t mention anything about the "brother enterprise" Yikatong Technology when promoting its products.
Of course, there is nothing wrong with the new brand relying on the advantages of shareholders to grow and develop. Cooperation with suppliers can not only greatly reduce R&D investment, but also quickly adjust in the initial trial and error stage. It’s no wonder that Krypton achieved a positive gross profit margin just after it was delivered for more than a year.
An Conghui, CEO of Krypton Intelligent Technology, revealed in an interview that the gross profit margin of Krypton vehicles reached about 5% in the first half of this year. On the basis of delivering 50,000 vehicles in the second half of this year, the gross profit level will be further improved, and the second model, Krypton 009, will have a better gross profit level.
We should know that Wei Xiaoli, a new car-making force, has been "selling one car at a loss" for a long time, and in the end, all of them were listed on the market with blood and ventured ashore. With the continuous improvement of profitability in the past two years, the gross profit margin of "Wei Xiaoli" has gradually changed from negative to positive.
Of course, krypton’s loss was only transferred to Geely. According to the financial report, in the first half of 2022, Geely’s net profit returned to its mother fell by 35% year-on-year to 1.552 billion yuan, the lowest level in five years. Regarding the decline in profits, Geely made it clear that share-based payment and extreme investment have a great impact on profits. In the first half of the year, share-based expenses led to a decrease of 853 million yuan in profits, and extremely bad losses led to a decrease of 406 million yuan in Geely’s profits.
In this way, due to the "outsourcing" of R&D, Krypton’s financial statements will be quite beautiful-this is undoubtedly the biggest bargaining chip for science and technology innovation board. Therefore, among these newly established independent brands, Krypton is not necessarily the one with the strongest technical strength, but it is likely to be the "most profitable" one.
