Source: brocade
Pricing means selling more goods at a reasonable profit.
After attracting enough attention, the first product of Xiaomi Automobile, SU7, left a suspense on the core link and threw the pricing conjecture to the market.
In this case, we will deduce the pricing possibilities of SU7 from the perspective of industry background, cost and consumer intelligence.
01
General background: the era of strong subsidies has passed
After years of ups and downs, the new forces finally figured out one thing: make cars profitably.
The automobile is a manufacturing industry rather than an Internet industry, and it is difficult for users who have lost money to bring in revenue continuously. By the end of the third quarter, with zero gross profit turned positive, among the domestic listed cars, only BAIC Bluevale and Xiaopeng had not climbed out of the vortex of gross profit loss of single car.
Figure: The latest gross profit rate of listed OEMs. Source: enterprise financial report
The most obvious problem on the pricing table of Xiaomi is that the era of strong subsidies for new energy vehicles has passed, regardless of the policy level, market or expectation level:
First of all, from the external perspective, as early as a few years ago, after the "fraud compensation" storm and the popularity of shared cars, China's policy support has gradually shifted from inclusive to preferential. After the major overhaul at the policy level, the trend of industrial development has already shifted from policy to market.
On the consumer side, although the duration of the subsidy policy for car purchase has been extended, the trend of the national subsidy rebate will certainly not change. The tax exemption for passenger cars in 2024-2025 will not exceed 30000 yuan, which means that the purchase tax for models with more than 300000 yuan cannot be completely exempted. The tax reduction in 2026-2027 will only be 15000 yuan.
Globally, just in the past 12 months, Germany terminated the subsidy policy for new energy vehicles in advance, followed by the UK, and most western countries have introduced a timetable for the decline of subsidies.
Secondly, from the inside of the industrial chain, the concentration of power battery manufacturers at the core of the upstream industrial chain CR10 has increased from 54.7 GWh in 2019 to 330.1 GWh. The production capacity of power battery manufacturers is cleared, and the midstream main engine manufacturers are in full bloom. It is difficult for upstream manufacturers to be willing to reduce the ex factory price for a single brand to drive down profits.
Finally, as far as capital is concerned, new energy vehicle enterprises have quietly turned from "worse than worse" to "better than better". In the past, Weixiaoli's rivals were half hearted vehicle enterprises such as Aichi, Weima and Evergrande. Capital can always find Weixiaoli's "beauty" from worse vehicle enterprises, but the ideal of taking the lead in landing has shown to capital that Xiaopeng and Weilai have deficiencies in a certain period of time.
With an ideal annual sales of nearly 350000 yuan and gross profit of more than 20%, Xiaomi is no longer facing the standard of the new energy market four years ago - there will be no more capital willing to give a new force a profit climbing cycle of four or five years, and the expected subsidies for capital no longer exist.
However, what is discussed now is Xiaomi. For Xiaomi, its own advantage is to cultivate the capital operation of the supply chain in a long period of time, which can actually "subsidize" the production of cars with the strength of the group.
Although Lei Jun denied the list of Xiaomi's industrial chain, from the perspective of capital operation and the research and collation of several securities companies, Xiaomi has indeed planted many seeds in the transportation industry over the past decade.
Figure: Xiaomi Automobile Ecological Industrial Chain Layout Research Report, Source: Southwest Securities
There is no doubt that Xiaomi has accumulated significant advantages in supply chain control, intelligent ecological products and other fields for a long time. Of course, there is no such thing as being scared by a certain model of a certain car company and not daring to publish the price. Probably, the market is still more rational and careful to observe the changes in the market, in order to achieve the goal of "one strike, one kill".
However, from the perspective of common sense, for Xiaomi, there are two paths to choose.
02
There is a bottom line in price, but Xiaomi probably won't do this
At the Xiaomi Auto technology conference, most of the high cost new technologies released will be used in the high configuration version, which is an inevitable strategy to anchor users' brand minds. However, generally speaking, the final price tag is the decision-making mind of the left and right consumers (the dominant role of price is to divide user groups), and the corresponding version must be the low configuration version at the beginning.
At present, the configuration of the low configuration version of the SU7 is still vague, and the available information is limited. We take a few steps to list the configuration information disclosed by the major V-bloggers. Cyber takes a look at the cost of the starting price of the SU7 (low configuration version) (the following internal and external information is sorted out by itself according to the public information, which may be very different from the actual situation, so it is hereby explained):
·Battery: referring to the estimated unit price of 134 $/kWh in the UBS Securities Research Report of 82.5kWh of BYD Seal Lithium Iron Phosphate, the factory price of Verdi battery is generally 150 $/kWh. Considering Xiaomi's brand advantage and bargaining power, the total cost is estimated at about 76000 yuan by using 145 $/kWh.
·Motor: refer to Model Y 4 motor, which is also 299 horsepower with a total power of 220kW. According to the disclosure at Tesla's 2023 investor conference, the cost of this motor is about $1000. Considering that the order size of Xiaomi is far less than that of Tesla, it is estimated at 8000 yuan.
·Electronic control structure: there is no comparable object developed by Xiaomi. The cost of electronic control and structure of general new energy vehicles is 5% of the whole vehicle, and the cost of batteries is 1/9-1/10, estimated at 7500 yuan.
·Chassis: double wishbone+multi link conventional structure, the cost is about 13-14% of the whole vehicle, estimated to be 21000 yuan
·Interior decoration: the conventional cost is about 14% - 15% of the whole vehicle cost, estimated to be 22500 yuan
·Auxiliary chip: the low configuration SU7 has no laser radar, and the car machine chip is Snapdragon 8295. It is estimated that the unit price of Snapdragon 8155 will rise by 25%, which is about 600 yuan; The cost of a single NVIDIA Orin X is about 2800 yuan.
·Others: other costs such as manufacturing wire harness are about 7% of the cost of the whole vehicle, and the reverse is about 10500. Other exterior accessories such as curtain glass and calipers are optional.
Figure: Cost estimation of basic SU7 (data is estimated based on the caliber of the same or similar models in the market), source: Brocade Research Institute. Click to see a larger picture
Figure: Xiaomi SU7 optional project (part), source: Ministry of Industry and Information Technology
Therefore, on the premise of not including a series of options, the cost of Xiaomi SU7 low configuration limit working condition is calculated as 15% of gross profit, which is theoretically possible to be compressed to about 200000 yuan.
Of course, this is the lowest cost that is currently launched based on the specification information disclosed by the Ministry of Industry and Information Technology and the reference of cars at the same price. Especially before the scale has not formed, there are many hidden costs that have not been measured. This is just a statement here, which does not have reference value.
If the price is calculated from 199000, the price ratio (per 10000 yuan of endurance mileage) of the low configuration version of Xiaomi SU7 will reach 335KM/10000 yuan. In the range of 32-41KM/10000 yuan, there have been many popular cars in the past two years, such as Dolphin, AIONS, AIONY, and Yuan PLUS, which are all pure electric top level sales.
However, the difference is that Xiaomi's first model is a C-class car, and its luxury level is higher than the aforementioned models. With the brand power Xiaomi has accumulated in the field of intelligent hardware, it is doomed that it will not lower its value in a large probability. On the first car, it won market attention with such a radical pricing strategy, and participated in nearly red sea style commercial competition.
That is to say, theoretically, it is possible to achieve about 200000 yuan for a C-class electric vehicle; But in our opinion, Xiaomi probably won't go this way: after all, with its Jianghu position and global market positioning, its competitors anchored in the car building won't be the second tier brands or models, and even the first tier is just the bottom line - its main potential competitors must be Tesla, which faces the global consumer market, and Apple in the future.
03
What Xiaomi wants is to make fashion
Without exception, there are only two ways to become large-scale consumer goods: the ultimate cost performance ratio and the ultimate brand power, which is the first way familiar in the era of Xiaomi mobile phones; However, if Xiaomi Automobile wants to benchmark Tesla, or even Apple in the future, it must take the second path - manufacturing popularity.
David Ogway, the "Godfather of Advertising", put forward the brand management idea of finding consumers' mental space in the book "The Source of Brand". Every advertisement, every product, even every sentence of the entrepreneur is a long-term investment in the brand image. This kind of long-term investment will eventually hit the minds of consumers and form popularity after widespread recognition. Once popularity is formed, it will naturally create the ultimate brand power.
Consumers' minds follow two main lines:
·People only look at the things they want to see, and reject the things that are not equal to consumption habits
·People tend to accept things that match their values, accept "upward domination", pursue superior superiority and are willing to pay a premium for it.
For Musk, Tesla's products themselves are contrary to traditional consumption habits. Users who choose electric vehicles need to accept more inequalities - there is no convenient energy supplement facilities and no broad choice space.
But Musk grasped the second thread of consumers' minds and told them the grand blueprint of environmental protection, hard technology and even Mars. If you accept Musk's upward dominated values, you will accept Tesla's products.
Just like the slogan "Build for any plants" of the latest mass production model Cybertruck, the electronic adaptive air suspension supports Cybertruck to be able to drive in harsh ground conditions, the armored glass can withstand the impact of Level IV hail, the medical level air filtration system can filter 99.97% of the air particles, and the illumination distance of the vehicle mounted searchlight reaches 480 meters
Figure: Screenshot of vehicle promotion on Tesla official website, source: Tesla official website in China
It seems that this car is really built for traveling on Mars. On second thought, it feels absurd
However, the product characteristics of hard core and heavy science and technology are rooted in consumers' minds. In addition to the entrepreneurial image that Mask has established for a long time, many consumers are willing to contribute to products with a strong sense of science and technology and a sense of future mission. This is the logic that Tesla products can become popular from the perspective of consumer psychology.
What Xiaomi wants is actually the same. First, we will hold a technical conference to show our technical strength to the outside world, forming a benchmark effect, and then release products to form a popular trend.
However, the author feels that the story told at Xiaomi's technical conference has not completely broken away from the previous stereotype. In fact, there is more room for polishing: the essence of this conference is not separated from the car product. Anchoring Tesla or Porsche requires not only comparing products, but also comparing Tesla and Porsche, In terms of brand mental shaping, the most essential care for human nature - whether it is the stimulation of vitality, or the stimulation of life quality beyond the universal lifestyle.
04
epilogue
Summarize the logic of pricing Xiaomi cars:
First of all, Xiaomi has a keen sense of market smell and industry awareness. The era of great subsidies has passed, and it is impossible for Xiaomi mobile phones to subsidize the C-end products in the early days.
Secondly, Xiaomi should be more inclined to follow the popular manufacturing path of Tesla and Porsche. Its internal competitors may be Tesla and Apple in the future. However, due to the degree of involvement and market expectations of the current new energy market, the low configuration SU7 also reserves the cost space to become a mass market vehicle.
Finally, in the name of technology release, Xiaomi tested the market's acceptance of its hard technology and new technology premium ability - after all, in the current domestic pure electricity market, there is no model with a starting price of more than 300000 and its annual sales volume has exceeded the basic threshold of 100000.
Can Xiaomi become the "exception"? We expect it to be.
(Statement: This article only represents the author's view, not Sina.com's position.)
