When a company is surrounded by huge profits, it often fails to realize how fierce the new trend can be. This is similar to how Nokia did not take the iPhone seriously back then. To compete in the all-electric market, Great Wall Motors needs a brand-new strategy and an all-in commitment to transformation.

When it comes to traditional automakers transitioning to new energy vehicles, who comes to mind?

Geely, which successfully listed Zeekr? Or BYD, which has been waging a fierce price war this year? How long has it been since you last thought about Great Wall Motors?

A few days ago, China Southern Power Grid issued a notice stating that Great Wall Motors had been blacklisted due to "serious dishonesty with adverse impacts," making it an "unacceptable bidder." This marks the first time in a while that Great Wall Motors has been in the public eye, but unfortunately, it's not good news.

Although this incident involves the Tank 500, with BYD, Zeekr, Huawei, and other new energy automakers attracting significant attention both domestically and internationally, Great Wall Motors, which has stumbled along its transformation path, indeed needs to abandon its laid-back approach.

'Blacklisted' Tank 500

Recently, China Southern Power Grid took a strong stance against Great Wall Motors.

On August 14, the China Southern Power Grid's supply chain unified service platform issued a notice titled "Announcement on the Handling of Suppliers by China Southern Power Grid." The notice revealed that Great Wall Motor Company Limited, with serial number 23, had been listed as an "unacceptable bidder" due to "serious dishonesty by the supplier with adverse impacts," with the handling period set at 24 months, starting from June 21, 2024.

As "China Southern Power Grid blacklists Great Wall Motors" trended on Weibo, the incident continued to escalate.

To quell public opinion, Great Wall Motors urgently issued an "Explanation of Great Wall Motor Company Limited Regarding Announcement No. 009 on the China Southern Power Grid Supply Chain Platform" on its official Weibo account. It stated that during a bidding process in November 2022, Great Wall Motors won the bid for 35 Tank 500 models. Due to oversight during vehicle delivery, there were discrepancies between the delivered goods and the target items. Upon discovering this issue, Great Wall Motors confirmed with China Southern Power Grid and compensated for the discrepancies, expressing sincere apologies for any inconvenience caused.

The phrase "discrepancies between the delivered goods and target items" was interpreted by industry insiders as "feature reduction," causing dissatisfaction among China Southern Power Grid.

An anonymous industry insider said, "As far as I know, it seems that China Southern Power Grid purchased pickups from Great Wall Motors, but the after-sales service was designated by Great Wall Motors. Later, it seemed that several parties no longer wanted to continue, leading to discrepancies between the delivered goods and the specifications." The insider added, "Their (Great Wall Motors') transformation, combined with the direct sales model they want to promote, should actually focus more on building the sales system."

While this incident may not seem like a major issue, a review of Great Wall Motors' attitude towards public opinion over the past few years reveals a consistently assertive stance.

Last year, Great Wall Motors publicly announced a list of bloggers it intended to sue, firing the first shot in personally "anti-black PR" efforts against automakers. Even Weibo bloggers with just a few hundred followers were sued for making negative comments about Great Wall Motors. However, the court ultimately did not support Great Wall Motors' claim for 1 million yuan in compensation, stating that "as a well-known automaker, Great Wall Motors should bear the necessary tolerance obligation when facing non-malicious criticism and doubts. Although some expressions in the defendant's questioned articles were not rigorous, they still fell within the normal scope of commentary. The plaintiff should understand and tolerate this, and cannot consider it malicious based on this alone."

Automakers' "anti-black PR" efforts have a dual impact on consumers. While some support companies defending their rights, others may perceive them as being petty. Returning to the issue of China Southern Power Grid's confrontation with Great Wall Motors, the latter has not only lost an important customer but has also suffered some brand damage to varying degrees.

Confusing electric vehicle lineup

Great Wall Motors' once most popular product was undoubtedly the Haval H6. With its high cost-effectiveness, ample space, and versatility, it had a clear positioning that appealed to many families or consumers requiring multiple uses. Even today, when discussing small trucks that can transport both people and goods with excellent cost-effectiveness, people still think of the Haval H6.

However, entering the all-electric era, Great Wall Motors seems to have forgotten that the success of the Haval H6 stemmed from its clear positioning. "I don't understand what kind of electric vehicle Great Wall Motors wants to make," is the impression most people have of their new energy vehicles.

From a branding perspective, Great Wall Motors has the Pickup Cannon series, the off-road Tank series, the affordable Haval series, the mid-to-high-end WEY series, and the female-oriented Ora series.

Having multiple brands operating independently can easily distract from Great Wall Motors' internal efficiency and combat effectiveness.

Regarding this, Zhang Xiang, Secretary-General of the International Intelligent Transportation Technology Association, and Lu Jiu Business Review shared their opinions. He believes that most of Great Wall Motors' users are from the 1960s and 1970s, predominantly located in second- and third-tier cities or even relatively remote areas, where the applicability of new energy vehicles is relatively limited. "Although Great Wall Motors has been striving for transformation in recent years, including frequent live streaming by its CEO, the results may still be limited from both the audience and product perspectives," Zhang said.

Furthermore, the brands under Great Wall Motors, strictly speaking, have relatively severe product homogenization, which naturally leads to internal competition. "When you have many children, fights are inevitable," Zhang added. In this regard, Great Wall Motors differs from automakers like Tesla and NIO, which follow a strategy of focusing on fewer but high-quality models to create blockbusters.

Additionally, Great Wall Motors' vehicle designs and naming conventions have been somewhat abstract. Most new energy vehicle models are named with a combination of English words and numbers, which is straightforward. In contrast, Great Wall Motors takes a unique approach, such as using coffee-related names like Mocca, Latte, and Blue Mountain for its WEY series and cat-related names like Black Cat, White Cat, and Lightning Cat for its Ora series.

Innovation is commendable, but it must yield tangible benefits. Over the years, the popular combination of brand names and numbers has been market-proven, as numbers can quickly convey model types and launch dates to consumers. Using beverages and animals as model names significantly weakens this established perception. Moreover, it's unclear what vehicles "Latte," "Blue Mountain," and "Cats" correspond to, lacking a clear connection between the famous names and the models, giving an abstract impression.

Conversely, the Tank series, which has gained significant popularity after Great Wall Motors' transition to all-electric vehicles, demonstrates this point. The Tank series uses traditional and recognizable model names like Tank 300 and Tank 500 combined with numbers, creating a simple and clear naming convention. In contrast, most of its other models seem to speak for themselves, lacking a unified family language.

These factors reflect in the sales figures, which present a mixed picture. In the first seven months of this year, Great Wall Motors sold a total of 650,954 vehicles, representing a year-on-year increase of 3.60%. Although this still represents a slight increase, it only accounts for approximately 40% of the company's annual sales target of 1.6 million vehicles. The pressure on sales for the second half of the year remains significant. To achieve the sales target, the company may need to intensify promotional efforts during peak seasons like September and October.

Specifically, by brand, Haval sold 299,738 vehicles in the first half of the year, up 2.42% year-on-year; WEY sold 19,867 vehicles, up 9.46%; Pickup sold 91,916 vehicles, down 10.41%; Ora sold 31,749 vehicles, down 32.87%; and Tank sold 116,038 vehicles, up 98.94%.

It can be seen that the once-leading Haval brand has experienced minimal growth, while only the popular Tank series has experienced significant growth. The remaining sub-brands have not performed notably well.

Apart from positioning and design, Great Wall Motors' continued use of traditional dealer sales channels in the all-electric era also seems to lack an "electric vehicle mindset." The company is aware of this and recently announced plans to upgrade its sales channels, adopting a "dual sales" model combining direct sales and dealerships.

Setting up direct stores is a typical "electric vehicle mindset" that can better ensure brand consistency and service quality. However, direct stores also increase sales expenses, further pressuring the company's overall profitability and cash flow.

Overall, Great Wall Motors still faces ambiguity in its all-electric transformation positioning. Clarifying the positioning of its sub-brands and forming a complete pyramid structure in terms of models and pricing is crucial.

Is There Still a Chance?

Great Wall Motors likely has limited time to figure things out.

Back in 2016, Great Wall Motors secured the second position among domestic brands with sales of 1.0745 million vehicles. Back then, NIO, XPeng, and Li Auto were still insignificant players, and even the combined efforts of Geely and BYD couldn't compete with Great Wall Motors.

So, why hasn't Great Wall Motors succeeded in its all-electric transformation?

Looking back at Great Wall Motors' all-electric journey, it seems the first step wasn't steady.

In 2018, Great Wall Motors launched its first new energy brand, Ora (ORA), with its first mass-produced model, the Ora iQ (starting price of 89,800 yuan), selling over 3,000 units that year. Launching in 2018 wasn't late for the transition, and with Great Wall Motors' existing brand and traffic, it shouldn't have performed poorly if it had chosen the right path.

Pursuing uniqueness is understandable, but the first model's positioning was too niche. Targeting the "female" market might have been driven by the emerging "she-economy" and a lack of female-oriented car positioning in the industry. However, the differences in demand between female and male drivers when selecting cars are not significant, with performance, appearance, and cost-effectiveness being the primary considerations. While Ora positioned itself in the female market, its innovations, such as "Warm Man Mode" and "Goddess Mode" to adjust in-car lighting, temperature, and ambient lighting, seemed somewhat forced.

In contrast, NIO's later popular "Queen Seating" and Xiaomi's recent "Sun Protection Function" in the SU7, which didn't explicitly target the female market, were more appealing to female drivers with their thoughtful details.

Choosing a narrow niche and failing to execute innovations effectively, Great Wall Motors stumbled at the first step of its transformation. However, its competitors didn't stop. Traditional automaker BYD has already declared "electricity is cheaper than oil" and aims to capture the under-100,000-yuan market through price wars. Geely's Zeekr 001 has gained popularity through performance and cost-effectiveness, and its sub-brand has completed its IPO. In the new force arena, Li Auto's "dad car" has stood out, while NIO persists in high-end services...

Meanwhile, in the intelligent driving aspect, which is the endpoint of the "competition and evolution" of new energy vehicles, Great Wall Motors also seems to lack confidence. Zhang Xiang mentioned that "most of Great Wall Motors' funding is used for new model development, while investment in intelligent driving may not be significant, adopting more of a 'follow-up tactic.' Of course, the benefit of this approach is low cost and risk, as each automaker has limited resources, and it's up to them where to allocate them."

Zhang Xiang also discussed the industry situation regarding joint ventures. "Although Great Wall Motors' current position should be compared with traditional automakers like Chery and Geely, its performance in joint ventures is not as good as the latter two. For example, apart from its own brands, Chery has launched joint venture models with brands like Land Rover and partnered with the Israel Corporation to create a brand called 'Qoros,' which have contributed to the elevation of its main brand. However, Great Wall Motors is relatively weak in external cooperation."

While Great Wall Motors is still struggling to decide which path to take, domestic electric vehicles have already entered the "final round." As electric vehicle penetration rates continue to rise, both electrification and intelligent innovation have encountered bottlenecks, leading to intense price wars, which are not good news for Great Wall Motors.

This is because Great Wall Motors' gross margin is not high to begin with. In the first quarter of 2024, its gross margin was 5.43%, which is not impressive for a brand with a product pyramid that includes high-end models. In this situation, participating in price wars may increase sales but reduce profits, while not participating would mean lower profits and sales. It's a catch-22 situation.

So, what should Great Wall Motors do?

Ultimately, Great Wall Motors' lagging behind is not a recent development but a long-standing issue where its concept of "selling cars" has not kept pace with market developments. While Great Wall Motors once attracted fans with "performance" and "durability," consumers now emphasize features like refrigerators, TVs, aesthetics, AI interaction, and assisted driving, while Great Wall Motors still emphasizes performance and durability.

When a company is surrounded by huge profits, it often fails to recognize the ferocity of new trends, much like how Nokia initially dismissed the iPhone. In the new wave of the all-electric era, Great Wall Motors appears stubborn. To compete in the all-electric market, Great Wall Motors needs a brand-new strategy and an all-in commitment to transformation.