Produced | Explorer Travel

Author | Liao Hongjie

Editing | Feng Yu

Beauty | Qianqian

Review | Praise

On March 1, Zhiji Automobile officially announced that it had received a B round of financing of over 8 billion yuan, and said that it "provides strong financial reserves for the enterprise to deepen its intelligent strategy, build high-end intelligent driving, intelligent cabin and intelligent control technology advantages."

Earlier on February 25, the Zhiji L7 model ushered in a major replacement of 24 models, with the standard dual lidar + Orin X chip, with 299,900 yuan – 419,900 yuan product pricing.

When Zhiji Cars once again attracted the attention of the market, its sales performance took a sharp turn for the worse – the internal friction of old and new models seemed to be the biggest obstacle plaguing Zhiji’s progress.

As the "No. 1 project" of SAIC Motor Group, how to achieve a breakthrough in the qualitative vector of Zhiji Automobile has become an urgent problem to be solved.

1. The pain of SAIC’s own brand

In 1987, Shanghai announced that it would position the automobile industry as the city’s first pillar industry. At the same time, it also established the "Support Shanghai Volkswagen Construction Team" and the "Santana Localization Office" for the difficult SAIC-Volkswagen joint venture project. Even so, SAIC Volkswagen is still struggling.

The standoff between SAIC, which insists that Santana parts are made domestically, and Volkswagen, which has repeatedly claimed that SAIC parts are not up to standard, has resulted in slow progress in the joint venture project.

In order to clear the way for Santana, Shanghai brand cars were forced to stop production in November 1991, and the Shanghai automobile factory, which had independently provided localized parts for Santana, was also merged into the joint venture project of SAIC Volkswagen in January 1992. When Volkswagen saw the firm confidence shown by SAIC in the joint venture project, this eased the deadlock of SAIC Volkswagen and accelerated the localization process of the Santana project.

(Picture/SAIC Group WeChat official account)

The Roewe Automobile brand established by the acquisition of Rover failed to gain market recognition. Therefore, the development of independent brands and independent technologies has always been a heart problem of SAIC Group.

With two joint ventures of Volkswagen and GM, SAIC created the glory of China’s largest automaker. At the same time, it also lost its own technology and its own brand in the carnival of sales and profits.

But the door of reform and opening up still needs to continue to be opened, and it has to be opened wider and wider. Therefore, this is the story of Tesla’s Gigafactory settling in Shanghai. After the introduction of Volkswagen and GM failed to achieve "market for technology", we can only hope for Tesla again.

When Tesla’s super factory was in full swing in Pudong New Area, the mysterious "No. 1 Project" known as SAIC Motor Group was officially launched in December 2020. This "L Project", which had been in the works for more than two years, finally appeared in the form of a smart car jointly formed by Alibaba and Zhangjiang Hi-Tech as initial investors.

(Picture/SAIC Group WeChat official account)

In May 2022, SAIC Zhiji launched its first model, Zhiji L7, followed by two models, Zhiji LS7 and Zhiji LS6, and then launched a replacement product for Zhiji L7 in February 2024.

According to Dcar data, as of the end of 2023, the cumulative sales of Zhiji automobile brands in 2023 were only 38,300 units, with an average monthly sales of 3,187 units. Among them, Zhiji L7 sales were only 1305 units; Zhiji LS7 sales were about 14,100 units, and Zhiji LS6 sales were about 22,900 units delivered in only four months.

As the "pioneer" of SAIC’s electrification and intelligent transformation, SAIC Zhiji’s market performance does not seem to be satisfactory. If it is placed in the SAIC Motor Group’s annual sales of 5.02 million units, only 38,300 units of Zhiji cars are insignificant.

2. "Curl up" yourself

Compared with the overall poor market performance, the almost distorted sales trend of Zhiji brand’s models is even more surprising.

Dcar data shows that in January 2024, the Zhiji car brand sold about 5,001 units in a single month. Among them, Zhiji LS6 bicycles contributed 4,612 units, accounting for 92.22% of the total sales in the month. Zhiji LS7 sold only 388 units in a single month, accounting for about 7.76% of the total sales in the month. After four consecutive months of low single-digit sales, Zhiji L7 sold only one new car in January, accounting for as low as 0.02%.

It can be seen that the market performance of Zhiji LS6 will directly determine the future of the Zhiji brand.

(Picture/Zhiji Car WeChat official account)

But it is worth noting that the sales of the "not bad" Zhiji LS6 fell by 55.31% month-on-month in January 2024, directly halving. Although the Xiaopeng G6, a competing model of Zhiji LS6, also saw a significant decline, the Xiaopeng G9 and Xiaopeng P7 still have a certain sales base, and the X9 has achieved good market performance. Therefore, the decline in sales of the G6 single model has little impact on the entire brand of XPeng Motors.

And the Zhiji brand, which is highly dependent on the single model of Zhiji LS6, has cut sales by half, directly bringing the entire Zhiji brand into the downward spiral.

Of course, it is difficult to see the overall direction of a brand with one or two months of market performance. "Explorer Travel" has compiled the monthly sales volume since the start of delivery in June 2022 and found that Zhiji cars have experienced three market cycles:

From June 2022 to December 2022, with the mass production and delivery of Zhiji’s first model, L7, the monthly sales of Zhiji cars also rose from 203 units in June 2022 to 1,019 units in September 2022, and then fell back to 455 units in December 2022.

From December 2022 to July 2023, with the mass production and delivery of the second model, Zhiji LS7, the sales share of Zhiji L7 in the Zhiji brand fell from 100% to 1.44% in just three months. The launch of Zhiji LS7 also sent the monthly sales of Zhiji brand to 2,000 units.

3. From September 2023 to the present, with the mass production and delivery of Zhiji LS6, the monthly sales of Zhiji automobile brand hit a record high in December 2023, reaching a maximum of 10,400 units. Zhiji LS6 also contributed more than 90% of the sales for the Zhiji brand for four consecutive months.

The three stages of Zhiji Car coincide with the mass production and delivery of the three models. Although Zhiji’s overall sales are on the rise, the brand’s over-reliance on bicycles has become the biggest problem in Zhiji’s growth.

Zhiji’s over-reliance on a single model is like the "monkey breaks the corn" in the fairy tale – once a new car is launched, the old model is immediately abandoned.

Of course, it is also a good choice to make products according to the idea of creating a hit, such as Apple’s mobile phones and Tesla’s cars. They all win the attention of the market through the rapid explosion of single products, and use one or two models to occupy the entire market segment, thus reaching a height beyond the reach of their peers.

However, judging from the three models of Zhiji Auto, it seems that they are not taking the boutique route of Apple and Tesla. In just one and a half years, the three models have been mass-produced and delivered one after another. The "high overlap" of LS7 and LS6 directly denies the product strategy of "building a single product". The main reason why the new model is immediately eliminated as soon as the old model is delivered seems to be "own death".

This is most evident in the LS6.

3. Success or failure belongs to LS6

In October 2023, Zhiji’s third model, LS6, ushered in "delivery on the market", and the final price of 214,900 yuan – 276,900 yuan directly converted the 30,000 owners who were blind before the market into the first batch of owners of Zhiji LS6.

With the advantages of "200,000-level pricing", "quasi-900V silicon carbide platform", "standard lidar for all systems", and "standard Orin X high computing power SOC for all systems", Zhiji LS6 has become a dark horse in the pure electric market.

The "popularity" of the Zhiji LS6 even exceeded that of Xiaopeng’s new annual G6 model, which also pushed the Zhiji brand to a new historical height.

(Picture/Zhiji Car WeChat official account)

"Delivered on the market" and "Pricing far beyond expectations", it is clear that this new LS6 is ready to hit the explosion.

However, by 2024, it didn’t seem to be going well. Before the big sale of Huawei Smart Choice models, after the unexpected Kaesong of Xiaopeng Smart Driving, plus the smart driving models launched by Baidu and Geely, BYD also used the momentum to unlock its own "Eye of the Gods" smart driving system… Major car companies have revealed their own smart driving plans and practical tests.

The Zhiji LS6, which came standard with lidar and Orin X chips, did not seem to show any special advantages in this round of smart driving competition. What’s worse is that the large-scale "car and machine failure" of Zhiji LS6 at the end of December 2023 directly placed Zhiji in the whirlpool of "life and death".

In early 2024, a large number of LS6 owners complained of car system failures on major network media platforms. For example, the main interface does not display information such as speed and gear position, radar does not alarm, and streaming media rearview mirrors do not display. The collective appearance of various bugs has seriously affected the normal travel of car owners.

In this regard, Liu Tao, co-CEO of Zhiji Automobile, acknowledged and apologized on Weibo on January 3. "Recently, some vehicles have experienced the problem of missing display information and reversing prompt tone. On behalf of Zhiji Automobile, I would like to apologize to the users for the inconvenience and trouble caused to everyone."

Zhiji Auto made a timely solution to the bug and publicly apologized to users. Although the problem was solved quickly, this "low-level mistake" also brought a lot of pressure to the slightly improved Zhiji brand.

The most direct manifestation was that January’s sales halved month-on-month, ending a four-year streak of growth. Although January was the off-season, this "turning point" had to be suspected of being due to car buyers’ doubts about the Smart Own brand.

Perhaps in order to eliminate the buyer’s doubts about the failure of the car machine, perhaps in order to restore the downward trend in sales, or just for the Spring Festival promotion, Zhiji Auto opened a round (as of February 5) of price reduction at the end of January, and gave a cash discount of 12,000 yuan to Zhiji LS6 models listed for less than half a year.

(Picture/Zhiji Car WeChat official account)

Originally a "table" pricing, there has been a price reduction of 12,000 yuan, standard Lidar Zhiji LS6 will start price down to 217,900 yuan, but also forced Xiaopeng G6 starting price down to 199,900 yuan. At the same time, there is news that Zhiji LS6 is also about to usher in the 2024 update.

In less than half a year since the new car was released in September 2023, first the car and machine malfunctioned, then the overall price was reduced, and then the new one was released… The timely feedback from Zhiji Car in dealing with the problem is indeed worthy of recognition, but the excessive response measures seem to have confused the target owner.

Considering the impact of the Spring Festival and rain and snow in the past February, the sales performance of Zhiji cars may have to be "halved" again.

4. Conclusion

The over-reliance on a single model of the smart car has also brought the entire brand into the quagmire after the problems of the LS6.

Compared with the obvious decrease in the price of the new L7 model, the improvement of the L7 product power and market recognition after the replacement are more worthy of attention. After all, for the smart brand, the product power seems to be reflected only in the new car. And this time, in addition to the dual lidar, the city NOA commuting mode will be launched in the first quarter and the opening of 100 cities throughout the year, which is more worthy of everyone’s expectation.

(Picture/Zhiji Car WeChat official account)

At the same time, the Zhiji LS6, which is known as the "King of Smart Driving", does not seem to have seen much publicity in terms of smart driving. In contrast, Xiaopeng, the rural road smart driving in the world, can be driven from "Kaesong" to the whole country beyond expectations, the first CCO pure visual smart driving in China, and the unlocking of BYD’s "Eye of the Gods" smart driving… In the face of the direct competition of all smart driving models, it is the main intelligent, and the Zhiji LS6 with standard lidar has been unknown since its launch.

L7 urgently needs a new one, and Zhiji also urgently needs to hand over a satisfactory answer sheet.

* The title image in the text comes from: Zhiji Automobile’s official website.