Hengda Car Logic Fog Spreads: Xu Jiayin Five Steps Down The "Big" Bureau

Xu Jiayin is serious about making cars.

In November 12th, Xu Jiayin, chairman of the board of directors of Hengda Group, appeared for the first time in the capacity of "car maker". He spent nearly half an hour in the whole process to introduce the goals, plans, positioning and Strategies of Hengda new energy vehicle.

On the same day, Hengda Group held a grand summit of Hengda new energy automotive global strategic partnership in Guangzhou, and signed a strategic cooperation agreement with 60 global auto parts enterprises at one go.

Xu Jiayin uses a string of numbers to show Evergrande's determination to build cars: invest 45 billion in 3 years, build 10 production bases globally, and develop 15 new cars. Heng Chi's first car, "Heng Chi 1", will be officially unveiled in the first half of next year, and plans to mass production in 2021. In 3-5 years, the annual output of 1 million vehicles has become the largest and most powerful new energy vehicle group in the world. In 10-15 years, the annual output exceeds 5 million vehicles.

Such a scale is rare in the automotive industry, and Evergrande has entered the new energy vehicle field style "big". After Hengda entered the Bureau, it launched vigorous efforts to expand buying and buying and investment production bases.

This is quite different from the traditional commercial automobile business logic. Accompanied by the external voices of doubt, Hengda automobile bureau is full of mysteries. What is the real purpose of Hengda car making? Real estate and cars have very different rules of the game. So many gold and silver coins are smashed into each other. Can Hengda build a car? What is the logic behind Xu Jiayin's chess playing in the next round?

Hengda car fog is being unveiled.

In November 12th, Xu Jiayin said Hengda had to take an unusual road to build cars. He used "buy, buy, buy, buy, buy, fit, circle, big, and good" five words to describe Hengda's road of building, and put together a huge commercial layout in the whole automobile industry chain.

Hengda's "auto Empire"

According to Hengda Group's "one base, two wings and one faucet" industrial structure, Hengda will form a development strategy based on real estate, tourism and health, and new energy vehicles. Hengda Group has put the new energy vehicle in a very high strategic position.

Hengda has great ambitions and goals for building cars. In the past 3-5 years, it has become the world's largest and most powerful new energy vehicle group. Such a grand plan is difficult for Hengda, which has no experience in automobile manufacturing industry.

"Hengda used to be a real estate company. To build a car, we want people to have no one, no technology, no experience, no manufacturing base, we have nothing, we are" poor and white ", how do we build cars and how to catch up with the world's more than 100 year old car bibcock? Xu Jiayin said bluntly, Hengda must have different road of building with other enterprises.

He used five words to describe "Hengda car making road": buy, buy, buy, combine, circle, circle, big and well. That is, Hengda hopes to form manufacturing capabilities through acquisitions, cooperation and building up friends circles, and then build a good car by reducing costs quickly and in scale.

"Buy and buy", as the name suggests, is Hengda's rapid entry into the auto manufacturing industry through acquisitions.

In June 2018, Evergrande announced that Jia Yueting, who was in charge of FF, formally entered the field of new energy vehicle manufacturing. However, it did not last long, because the dispute of mass production began in October last year.

In January 15th, just 12 days after breaking up with Jia Yueting's FF, Hengda Health announced that it had bought Mini Minor Limited shares at a price of $930 million, thereby gaining a 51% stake in NEVS. Through this acquisition initiative, Hengda's dream of building a car can be extended.

NEVS, a Swedish based new energy vehicle company, is well known by the industry for its acquisition of Saab's automotive technology and patents in 2012. In June 2015, NEVS set up a subsidiary of the state energy new energy in China, and the national energy new energy was approved by the national development and Reform Commission in January 2017 for the production of new pure electric passenger cars.

In the field of vehicle, in addition to NEVS, Hengda invested 150 million euros in January this year to become a major shareholder. According to the plan, the two sides will form a joint venture dedicated to R & D and manufacture of the world's top new energy vehicles to produce new energy super sports cars.

Outside the vehicle, Evergrande is also investing in the whole new energy industry chain.

In terms of auto sales, in September 2018, it invested 14 billion 500 million yuan to buy 40.96% stake and became the second largest shareholder of Guanghui group. In terms of power battery, in January 2019, it invested 1 billion 60 million yuan to acquire 58.07% stake in Shanghai new energy of battery manufacturer Carnegie in Shanghai. In the field of spare parts, in March 2019, it invested 500 million yuan to acquire 70% stake in Tait Electric Machinery Co., Ltd. in May 2019, acquired Protean of wheel motor technology company.

In the view of Xu Jiayin, "buy buy buy" is Hengda new energy vehicle to achieve the core technology leading path. "We can buy core technology that we can afford to buy. It's important to buy, but to buy. " Xu Jiayin said.

A series of acquisitions have laid the foundation for Hengda car making, and the layout of Hengda new energy automotive industry has initially appeared, covering the whole industry chain of vehicle manufacturing, power battery, power technology, automobile sales and so on.

However, Hengda wants to build new energy vehicles, in addition to the acquisition, it also needs to cooperate with enterprises in the industrial chain. Xu Jiayin said that engineering technology research and development, spare parts supply, parts integration and R & D, and most of the needs of the world's automotive industry cooperation in various fields, through "buy buy buy" and all-round cooperation to achieve, Hengda new energy vehicles in the core technology of the world's leading.

In addition, since this year, Xu Jiayin has visited 58 enterprises in 47 cities of 23 countries, so as to form a circle of friends planned by Hengda.

From the cooperation with 60 auto parts suppliers, we can see that Hengda has completed the original accumulation of resources in the automotive industry and started to move towards the whole vehicle manufacturing process. It is worth noting that early investment can be achieved through money, but the ability and level of vehicle manufacturing is the key to deciding whether or not Hengda road can be realized.

Hengda's ambition

Xu Jiayin has a clear goal -- the first in the industry.

The outside world holds different views on Hengda's "buy and buy". On the one hand, through the acquisition to help Hengda quickly open the door to enter the new energy vehicle; but on the other hand, the acquisition of enterprises can help Hengda break through, it will take time and market to test.

Although Hengda has acquired a large number of enterprises, many companies themselves are not strong enough. It is hard to guarantee that Hengda can form enough industry competitiveness. In November 12th, a car industry insider told reporters on twenty-first Century economic report.

In Hengda's acquisition of a series of vehicle manufacturing related enterprises, there are no real leading enterprises in the industry.

Although new energy has been built early and qualified, but it has not yet launched mass production vehicle until June this year, the country can only produce 93 of its output. Some analysts believe that the electric car based on Saab 9-3 is an "oil to electricity" vehicle. It is more like the product of the last automobile era, and has already fallen behind in technology. The greater significance of the car's downline is to prove that Hengda automobile already has the capacity of vehicle production.

Carneth energy belongs to the second echelon enterprise of power battery, and has a distance from the leading BYD and Ningde times in terms of technology and R & D strength.

Hengda's two wheel motor companies will not help Hengda in the short term in the field of passenger cars. "The technology of the two companies is ahead of schedule, but there are still many problems to be solved before we have the possibility of mass production. This project needs a protracted war." The top of an electrical company told reporters on twenty-first Century economic report.

Obviously, acquisition and cooperation are not enough to achieve the world's first goal. Evergrande without industrial foundation decided to expand its scale quickly.

In terms of production, Hengda decided to synchronize the construction of the ten major vehicle production bases in the world and layout China, Sweden and the countries along the belt.

Among them, in addition to the new energy production base in Tianjin, Hengda has decided to build Guangzhou production base and Shenyang production base. In June 11, 2019, the three major bases of Hengda new energy automotive industry settled in Nansha District, Guangzhou, with a total investment of 160 billion. In June 16, 2019, Hengda signed a strategic cooperation agreement with the Shenyang Municipal People's government, announcing that it will invest 120 billion yuan in Shenyang to build three major bases for new energy vehicles. The total investment of the two projects amounted to 280 billion yuan. In addition, Hengda will also set up R & D centers in Shanghai.

In terms of vehicle development, Hengda chose to develop 15 new cars at the same time, trying to quickly form product matrix to harvest automobile segmentation market.

Although the development of several production bases and 15 models can enable Hengda to invest more products in various market segments as soon as possible, it does not mean that the market cake will eventually be shared.

At the same time, the construction of so many production bases, the development of so many models, in the automotive industry is also rare. The business logic of most automobile companies is to develop new technologies and new models while developing the existing products to the market, forming a complete product matrix and rhythm, and gradually forming their core competitiveness. A big risk is whether diversification will affect the R & D capability of a single product, and whether it can develop a technology leading product with limited funds.

According to Xu Jiayin, Hengda's investment budget for new energy vehicles is 45 billion in three years, including 20 billion investment this year, 15 billion next year, and 10 billion investment in the next year.

It is understood that Heng Chi's first car, "Heng Chi 1", will be officially unveiled in the first half of next year, and the whole series of Heng Chi products will be fully massed in 2021. The development cycle of products has been greatly shortened compared with the traditional car enterprises' 5 years' time.

Hengda Group can provide ample capital support for Hengda car making, but this will be a long-term investment. From the experience of industry development, it is a long time for an automobile company to break even.

Tesla, after losing more than ten years, saw the possibility of profit by Model 3 in the past two years. The leading vehicle of the new force of China's automobile industry has accumulated a total deficit of over 20 billion.

Time is another problem facing Hengda automobile. The domestic new energy vehicle market is in a period of structural adjustment. On the one hand, with the rapid entry of Tesla's domestic enterprises, as well as Volkswagen and TOYOTA, the pressure of China's brand new energy vehicles has gradually increased and the market space has been compressed. On the other hand, sales of new energy vehicles have declined for 4 consecutive months due to subsidised subsidies, and the market outlook has great uncertainty in the short term.

"The business model of the real estate industry and the automotive industry is totally different. The automobile is a capital intensive industry with high technical barriers, which requires a lot of investment in the early stage, but the cycle of return is very long. It needs to be able to bear the pace and step by step and accumulate technology and experience slowly. A car industry insider said.

In the industry view, building a car is a "marathon" type of protracted war. Previously, Hengda's crossover in grain, oil and photovoltaic fields ended in a short period of rapid exit. This cross boundary car manufacturing, Hengda needs to be more tolerant. The huge investment of tens of billions of scale, Evergrande car obviously no "fast forward quickly out" retreat, but the key is to learn the rules of the automotive industry to adapt to the industry's market rules.

Hengda car path gradually clear, but for Xu Jiayin and Hengda automobile, to really open the fog to see the new energy vehicle light, is just the first step.