The sales volume dropped by 72.51%, and the extreme krypton in 2023 is very difficult!

On February 13, 2023, Geely Automobile announced that it had completed the Series A financing of $750 million, with a post-investment valuation of $13 billion. In contrast, by the close of February 16th, 2023, the market value of Xpeng Motors’s US stocks was only $8.368 billion.

On December 12th, 2022, Reuters announced that Krypton plans to land on the NYSE in Q2, 2023, "seeking a valuation of more than 10 billion US dollars". From this point of view, before landing in the capital market, the valuation of Krypton easily exceeded $10 billion.

The valuation of Krypton has soared. On the one hand, it is of course because it is backed by Geely and its products are selling well. The capital has great expectations for its future. However, considering the trend of China’s new energy vehicle market and various performances of Krypton products, Krypton will face enormous challenges in the future, and it may also have a certain meaning of "speculation" to complete huge financing on the eve of listing.

01.The "Overcharged" New Energy Vehicle Market

Although the new energy vehicle market in China has been booming in the past few years, it cannot be ignored that the subsidy policy has played a vital role in maintaining the heat of the new energy vehicle market.

In this regard, Pan Helin, executive dean of the Digital Economy Research Institute of Zhongnan University of Economics and Law, once said, "The reason why many consumers choose new energy vehicles in the early stage lies in the low price concessions brought by subsidies. Once subsidies are cancelled, new energy vehicles will lose certain advantages.".

The official announcement shows that after December 31, 2022, the state will no longer grant subsidies to the purchase of new energy vehicles. In other words, after 2023, the national subsidy for new energy vehicles has completely withdrawn from the stage of history.

Reflected in the market level, many consumers are rushing to buy new energy vehicles before 2023. According to the data disclosed by China Automobile Association, in 2022, the production and sales of new energy vehicles in China were 7.058 million and 6.887 million respectively, up by 96.9% and 93.4% respectively.

Since the consumer’s demand is concentrated on the release before the withdrawal of the state subsidy, the new energy vehicle market has faced tremendous shipping pressure since then. According to the data of China Automobile Association, in January 2023, the production and sales of new energy vehicles in China were 425,000 and 408,000 respectively, down 6.9% and 6.3% respectively.

Talking about the performance of China’s new energy vehicle market in 2023, Cui Dongshu, secretary-general of the Association, said, "The growth of new energy sales has reached a bottleneck stage. After the delisting of the new energy subsidy policy in 2023, the sales growth will be a serious problem."

The ceiling of the market is gradually emerging, and it is difficult for players in the industry to be immune.

Since 2023, the sales of many new energy vehicle companies have shown signs of year-on-year decline. The inventory of the delivery volume of the new brand of car-making power that understands the statistics of car emperor in January 2023 shows that the sales volume of only one car company in Tengshi has increased positively month-on-month, and the sales volume of other car companies has declined both month-on-month and year-on-year.

02. WrongLose a short window period

Since the first product was launched in April 2021, the above market trend has brought a big challenge to Krypton, that is, the market window period is extremely short.

It is true that the first product, Kykrypton 001, chose to take a differentiated electric hunting car route, which won it a certain development window. But the problem is that Krypton’s arrogant attitude towards the consumer market has also put great pressure on Krypton 001.

In fact, with its differentiated market positioning and highly competitive price, Krypton 001 has won the market’s pursuit.

According to official data, in 2022, a total of 71,941 vehicles were delivered, with an average monthly delivery of nearly 6,000 vehicles. Among them, in December, the delivery volume of Krypton 001 was 11,337 vehicles, up by 198.7% year-on-year, and it was the "sales champion of pure electric vehicles of China brand with more than 300,000".

However, it is worth noting that the delivery volume of Krypton 001 is not soaring, but swaying repeatedly. For example, in December 2021, the sales volume of Krypton 001 was 3,796 vehicles, an increase of 88.67% from the previous month. However, by the beginning of 2022, the sales of Krypton 001 began to decline.

According to official data, from January to March, 2022, the sales volume of Krypton 001 was 3,309, 2,910 and 2,795 respectively, down by 8.59%, 6.92% and 38.44% respectively.

This is mainly because krypton has repeatedly hurt consumers’ feelings.

For example, in mid-2021, the price of Krypton 001 WE quietly increased, and the price before subsidy rose from 281,000 yuan to 299,000 yuan. In addition, some users have found that there are still some problems in the Krypton 001, such as quietly replacing Japanese motors with domestic motors, the WE version of the car has no privacy glass, and the charging of 800V is reduced to 400V V.

Perhaps because consumers began to deviate from themselves, in the second half of 2022, the above problems were solved in a targeted manner, and 8155 was upgraded for new and old car owners free of charge. Subsequently, the delivery volume of Krypton 001 began to rise steadily, and in October 2022, it entered the "Ten Thousand Yuan Club".

Unfortunately, at the beginning of 2023, Krypton began to treat consumers with arrogance and "forced to choose one".

In February 2022, "Interface News" issued a document saying that the owner of the polar krypton 001 was required to choose the 2023 polar krypton 001 at the end of 2022, giving up the two rights of lifetime warranty and state subsidy; Either choose the 2022 Extreme Krypton 001 and keep the rights and interests, but the car must be delivered before the end of March, otherwise the order will be changed to the 2023 model (the manufacturer does not cover the whole country and has no lifetime warranty).

Although Krypton has not properly solved the incident, the consumer market has begun to vote with its feet. According to official data, in January 2023, the sales volume of Krypton was 3,116 vehicles, down 12% year-on-year and 72.51% quarter-on-quarter.

Considering that the policy-driven dividend in China’s new energy vehicle market has disappeared by the end of 2022, the repeated vacillation of krypton product strategy has actually caused a huge waste of resources.

03.Poor hematopoietic capacity is a fatal shortcoming.

Since 2023, China’s new energy vehicle market has lost its luster. In order to win certain achievements in the stock market, many players in the industry have started the "involution" competition.

For example, on January 6, 2023, Tesla announced a price cut, and the price range of its new energy vehicles was 20,000-48,000 yuan. As a result, consumers have turned to Tesla. According to the data disclosed by CMB International, from January 9 to 15, 2023, the average daily sales volume of Tesla in China market was 76% year-on-year, reaching 12,700 vehicles.

Coincidentally, on February 10, 2023, BYD Qin PLUS DM-i 2023 was officially launched, with a starting price of only 99,800 yuan. This is the first time that the price of BYD DM-i model has dropped below 100,000, which has opened a new era of "the same price of oil and electricity". Five days after listing, the order for this model reached 25,400 units.

Looking at the extension of time, car companies represented by Tesla and BYD have indeed achieved good market results. According to the data of the Association, in January, 2023, the China sales of Tesla and BYD were 66,100 and 151,300 respectively, up by 10.37% and 58.6% respectively.

The reason why these car companies dare to exchange prices for quantity is mainly because after years of operation, they have achieved large-scale benefits and have high profit margins. Taking Tesla as an example, the financial report shows that in Q4 of 2022, the gross profit margin of Tesla’s automobile business was 25.9%.

At the financial report meeting, Zachary Kirkhorn, CFO of Tesla, said that despite repeated price cuts, in 2023, the average price of Tesla bicycles may still exceed 47,000 US dollars (about 318,800 yuan), and the gross profit margin will remain above 20%. From this point of view, if the cost changes are not considered, the price of Tesla cars can even continue to decrease by 5%.

In contrast, due to the failure of consumers to buy their own products in the past two years, the gross profit margin of Krypton is only single digits today. According to the data disclosed by the CEO An Conghui, in the first half of 2022, the gross profit margin of the polar vehicle was only about 5%.

More importantly, Extreme Krypton is still trapped in a quagmire of losses. Geely’s financial report shows that in the first half of 2021 -2022, the revenue of Extreme Krypton was 2.868 billion yuan and 8.828 billion yuan respectively, and the net loss was 1.01 billion yuan and 759 million yuan respectively. In a year and a half, it lost nearly 2 billion yuan.

Considering that the products of extreme krypton are cost-effective, and in the short term, the prices of materials such as batteries and chips, which account for a high proportion of the cost of new energy vehicles, are difficult to detect, and the gross profit margin of extreme krypton may be difficult to show bright performance. This also means that it is difficult for Krypton cars to enhance their competitiveness through price reduction.

This may be the primary purpose of Krypton’s pursuit of landing in the capital market. Because Geely has achieved positive cash flow by relying on oil truck products, in the attitude of being responsible for shareholders, it obviously does not want to "burn money" for Krypton without restraint.

However, the problem is that the new energy vehicle market has entered the era of stock competition, and car companies with first-Mover advantage have spurred consumer consumption by reducing prices. On the other hand, extremely low gross profit margin cannot cut prices without restraint.

This makes krypton fall into a "scale economy is difficult to achieve without market influence;" Without a high profit margin, it is difficult to instigate the vicious circle of the market.

From this point of view, the bright valuation data before the impact on the capital market may be just to set a value target for investors.

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