What's the endgame of price wars?
With new car prices plummeting and automakers slashing profits to stay afloat, competitors find themselves in a prisoner's dilemma. Even though they understand this model isn't sustainable, they're forced to follow suit. The consequence of this game is mutual destruction, where companies with thin margins exhaust their last resources and are left licking their wounds in defeat.
In this unprecedented elimination race, some companies always manage to find a strategy that suits them best.
Lynk & Co's approach is to "add value."
On March 2nd, Lixiang released its first global model, the C10, with the extended-range version starting at 135,800 CNY and the pure electric version starting at 128,800 CNY, which is 16,000 CNY and 27,000 CNY lower than the pre-sale price, respectively. As a mid-size SUV, the entry-level model is even cheaper than the compact SUV BYD Song PLUS DM-i, which has surprised many with its pricing.
The launch event took place over the weekend, and I visited the local Lixiang experience center where the C10 was already drawing crowds, mainly consisting of families.
Lixiang CEO Zhu Jiangming stated at the event that every detail of the C10 is inspired by the ideal L7, and it seems they have achieved some initial success. Even before the official release, pre-sale orders have already exceeded 45,000 units.
Except for the C10, Lixiang (零跑) has also unveiled three other new models. Rather than just being a complete lineup of new cars, it's more like showcasing their prowess in technological iteration to the outside world. With features like the 8295 chip, five-link suspension, and advanced NAP intelligent driving, which typically are only found in cars priced over 200,000 RMB, Lixiang is offering them for under 200,000 RMB, directly challenging the market within that price range.
This aligns with Lixiang's slogan of "value reference", and as more and more new products are launched, Lixiang's ambition to reshape the standard for prices under 200,000 RMB is becoming increasingly evident.
The price war has finally evolved into a "value war".
The existential question of 150,000 RMB-level new energy vehicles
To be a judge of value, the first thing to look at is the technological foundation of the company.
Over thirty years ago, Zhu Jiangming was an electronic engineer. After starting his own business, he has been leading teams in technology development. The founding team of Lixiang consists mostly of R&D personnel, and eight years ago when the company was founded, Lixiang established the path of adhering to self-developed technology across the board.
The result of this approach is that it allows Lixiang to maximize efficiency in research and development and manufacturing processes. Not only can it reduce development cycle costs, but it can also increase platform reuse rates and lower costs.
For instance, models like the Zero C10, the new C11, and the new C01 all feature LEAP 3.0 technology onboard. Their advantage lies in the highly integrated electronic architecture and the integration of the CTC battery chassis.
The benefit of high integration is the ability to fully leverage performance and maximize computing power. For example, Zero pioneered cabin integration, integrating functions such as audio DSP, parking assistance, and 360-degree surround view using a single 8295 chip.
Previously, automakers typically used 2-4 chips assembled together to meet computing requirements. This multi-SoC strategy not only increases costs but also adds complexity to software coordination, leading to greater risk of malfunctions.
As a result, compared to traditional companies with larger tails, Zero is more confident in setting prices.
Now let's take a look at what "value standards" the Zero C10, priced in the 150,000 CNY range, offers.
As the first global strategic model under the Zero LEAP 3.0 technology architecture, the C10 offers both pure electric and extended-range versions.
The pure electric version has a maximum battery capacity of 69.9 kWh, with a CLTC range of up to 530 km. The extended-range version has a maximum battery capacity of 28.4 kWh, with a CLTC pure electric range of up to 210 km and a CLTC comprehensive range of up to 1190 km.
The 8295 chip onboard utilizes a 5nm process, with an NPU computing power of 30 TOPS, which is 7.5 times that of the mainstream 8155P. Currently, vehicles equipped with chips like the 8295 and Nvidia Orin, are priced at around 200,000 CNY or more.
The C10 has a body length of 4739mm and a wheelbase of 2825mm, placing it in the mid-size SUV category. Despite being positioned just one level below the Ideal L7, its price is significantly lower, more than halving the cost of the latter.
Moreover, the advanced NAP autonomous driving features, in addition to features like adaptive cruise control (ACC), lane centering control (LCC), and lane change control (ALC), enable the vehicle to actively enter and exit ramps and switch lanes on highways and urban elevated roads within the coverage of high-precision maps.
In the absence of high-precision maps, the Urban NAC uses perception to identify road signals, crosswalks, lane curvature, obstacles, etc., automatically adjusting the speed based on navigation and perception information, allowing the driver to steer without needing to control the pedals, thus facilitating straight driving, turning, and U-turns on urban roads.
Additionally, Lixiang's Urban Navigation Autonomous Driving is also under development and is expected to be launched in the second half of 2024.
With the support of LEAP 3.0 technology, Lixiang's value proposition becomes evident, making it easier for even non-car enthusiasts to ask the right questions when choosing a vehicle.
For a car priced at around 150,000 CNY:
In 2024: Surpassing NIO, ascending to second place?
On the day of the launch event, upgrades were also introduced for the C11, C01, and T03 models, with all except the T03 featuring the LEAP 3.0 technology.
The advantages of the C10 are also present in the all-new C11 and C01.
The all-new C01 pure electric version is priced between 139,800 and 158,800 CNY, with the extended-range version priced between 136,800 and 155,800 CNY, representing a reduction of around 10,000 CNY. The long-range 606km and 717km pure electric versions have been discontinued, leaving only the 525km pure electric version, with new options of 525km and 625km ranges.
The all-new Lixiang C11 and C01 feature an upgrade from a 12-inch to a 14.6-inch central screen with a resolution of 2.5K and ultra-narrow bezels, resulting in a larger screen-to-body ratio.
The intelligent driving version models are all equipped with a 128-thread laser radar and NVIDIA Orin chip, enabling advanced NAP intelligent driving system. The four-wheel drive intelligent driving version is equipped with front and rear dual motors, performance green card calipers, 20-inch sport wheels, and exclusive exterior badges, with an acceleration of 3.94 seconds per hundred kilometers.
Additionally, the price of the Zero Run C01 has been reduced to 136,800 to 158,800 CNY, with new exterior color "Songlan Gray" and new interior color "Camel Velvet Brown," totaling 17 configuration upgrades.
The T03 is the smallest model in the Zero Run lineup, competing against micro-cars such as the Wuling Hongguang MINIEV, Chery Qimao Ant, and Geely Panda Mini. The purpose of the T03 is clear: to become the preferred urban commuting vehicle, priced at 49,900 to 69,900 CNY.
In terms of configuration, the 2024 models have upgraded to integrated high and low beam headlights, multi-petal style wheels, optimized seat thickness and width, seat cushion tilt angle, and 12 other configuration upgrades and 14 seat optimizations. It has directly entered the commuting car market and will also be exported to the European market in large quantities later on.
It's evident that Zero Run aims to redefine its pricing system with high value, whether it's below 100,000 CNY or between 100,000 to 200,000 CNY.
This seems to be the most fiercely competitive market, with the sub-200,000 CNY segment traditionally being the battleground for traditional automakers. At the beginning of this year, BYD successively launched several "Glory Edition" models, promoting the slogan "electricity cheaper than oil," with other new energy models following suit.
However, according to Zhu Jiangming, Zero Run's competitor is not BYD.
He believes that low-range plug-in hybrids are neither economical nor provide good driving experience, while extended-range models have more advantages. "In some aspects, we are learning from the Ideal L7, and even aiming to do better."
Previously, Ideal CEO Li Xiang stated that Ideal would only focus on the market above 200,000 CNY in the next five years. This has provided more opportunities for Zero Run—to replicate Ideal's success in the under 200,000 CNY market through extended-range routes.
Currently, there are not many players in this niche market, but they are strong enough, such as Changan Bluecore, Geely Galaxy, etc.
However, Zhu Jiangming is confident. Besides blooming in overseas markets, this year's goal is to advance at least one place in the rankings of new carmakers.
In 2023, Zero Run officially announced delivery of 144,155 vehicles, with a year-on-year growth of over 29%, lagging behind Ideal and NIO, ranking third.
In 2024, Zero Run's sales target is 300,000 to 400,000 vehicles. Once achieved, it will likely surpass NIO and become the second-largest new force player after Ideal.
