Ideal Auto must strategically disengage from its past triumphs in the extended-range sector and redefine its aspirations for pure electric vehicles.

Produced by | NPL Finance Author | Wu Wenwu Cover Image Source | Woshi Power Train

The launch of the Ideal i8 witnessed numerous scenes of viral popularity. However, Ideal's past success in the extended-range market may not directly translate into the pure electric realm. It is imperative for Ideal to set aside its extended-range achievements and forge a new path for pure electric vehicles.

01 The Ideal i8 Unveiled: A Viral Success

Following the underperformance of last year's high-end pure electric MPV model MEGA, Ideal, now focused solely on pure electric vehicles, unveiled its first pure electric SUV, the Ideal i8, on July 29th.

In terms of vehicle features, the Ideal i8 boasts numerous highlights, excelling in range and aerodynamics. The company's autonomous driving architecture MindVLA debuted on the i8, and significant investments were made to revamp its exterior design.

Regarding pricing, the Ideal i8 demonstrated sincerity. Offering three models priced between 321,800 yuan and 369,800 yuan, it is approximately 20,000 yuan cheaper than the previous pre-sale price range of 350,000 yuan to 400,000 yuan.

Ideal Auto extensively preheated the launch of the Ideal i8. Li Xiang, the founder and CEO of Ideal Auto, made a high-profile appearance and was active on social media platforms. Li Xiang even drove the i8 to attend a Scottish Premier League match, generating buzz on social media.

Ideal Auto accorded great importance to the launch event of the Ideal i8, which was grand and luxurious, lasting the longest time. Li Xiang himself noted that it was the largest venue Ideal Auto had ever rented and the most extensive launch event it had hosted.

The Ideal i8 is a significant new pure electric model launched by Ideal this year. It holds great significance for Ideal Auto, a venture that brooks no failure. The Ideal i8 marks Ideal's second test in the pure electric race.

As a listed company, Ideal Auto swiftly received feedback from capital markets following the launch of the Ideal i8. Public data reveals that Ideal Auto's share price declined by over 15% over three consecutive trading days, erasing approximately HK$60 billion in market value.

Last year, after the underperformance of the Ideal MEGA, Ideal Auto's market value also dwindled by 50 billion yuan in two days. Judging solely from the perspective of capital markets and stock price movements, the scene from last year's MEGA launch was repeated after the unveiling of the Ideal i8.

Nevertheless, the launch of the Ideal i8 sparked another heated topic. During the event, a safety collision video between the Ideal i8 and a Chenglong truck was shown. After a collision at a relative speed of 100 km/h, the i8's A-pillar to C-pillar remained undeformed, and all nine airbags deployed. Conversely, the truck exhibited separation between the cab and cargo box, with all four wheels popping up.

Subsequently, Ideal Auto and Chenglong Auto exchanged messages, which swiftly turned into an internet meme. Netizens created various humorous images of collisions with aircraft carriers and trucks, easily reminding everyone of the meme trend that followed last year's Ideal MEGA launch.

A senior automotive industry insider told NPL Finance that some friends or car buyers currently hold a negative perception of the Ideal Auto brand. After all, anyone with a basic understanding of cars would not believe that the Ideal i8 could prevail in a collision with a truck.

In a statement titled "Explanation on the Safety Collision Test of the Ideal i8" issued on Ideal Auto's official Weibo account late on August 3rd, the company responded that the used Chenglong second-hand truck utilized in the test was merely a mobile obstacle without guiding evaluation, and its accidental involvement in the controversy was unintentional. Clearly, Ideal aims to swiftly mitigate the negative impact of this incident.

02 Ideal Auto Must Reinvent Its Vision

Ideal Auto, a company that has navigated fierce competition in the new energy vehicle sector and even teetered on the brink of failure, has evolved into a leading new energy automaker and the first to achieve profitability, a rare feat indeed.

When Ideal Auto was just starting out, it chose a different path from NIO's high-end luxury pure electric vehicles and XPeng's tech-savvy young and trendy vehicles. Instead, it placed all its bets on the extended-range route.

At the time, the extended-range route was perceived as a backward approach by the outside world. Now, from a certain perspective, betting on the extended-range route initially has contributed to the success of today's Ideal Auto. Even Li Bin of NIO recently remarked that if he could travel back in time, he would first manufacture extended-range vehicles to generate revenue.

Apart from the extended-range route, another pivotal factor in the success of today's Ideal Auto is its extreme productism. Li Xiang, the founder of Ideal Auto, was one of the first few prominent Tesla owners. Therefore, in terms of vehicle products, Ideal Auto adheres to an extreme product approach.

When NPL Finance first laid eyes on the teaser image of the Ideal ONE a few years ago, I initially mistook it for a fuel vehicle. The design seamlessly blends fuel vehicle concepts with modern technology, striking a balance between conservatism and cutting-edge ideas, taking a path that does not seek to stand out but to be the most reliable.

Later, the Ideal ONE gained immense popularity, and Ideal's subsequent L series extended-range vehicles also adopted a familial "clone" design, with different models targeting diverse consumer groups based on their positioning and pricing.

Ideal Auto employs the extreme product mindset of Tesla and Apple to manufacture vehicles, eschewing the "more models, better chances" strategy adopted by competitors.

Interestingly, Ideal Auto also draws inspiration from Starbucks. In an interview with Chinese Entrepreneur in February 2023, Li Xiang compared NIO to Haidilao, while Ideal is more akin to Starbucks... For instance, if Li Bin invites me to dine or chat, the venue we choose is akin to a NIO House. I would opt for Starbucks, which offers professional coffee, with the rest being self-service. Our store construction model, including renovation costs, is modeled after Starbucks Reserve for large stores and regular Starbucks for ordinary stores.

The extended-range route, extreme productism, hit product approach, differentiated marketing, and precise positioning of dad-level car buyers have collectively contributed to Ideal Auto's current industry position in the new energy vehicle sector.

With an influx of new energy automakers, Ideal Auto is also confronted with an increasing number of competitors. In the extended-range sector, it faces rivalry from brands like Zero Run and Huawei AITO, as more automakers, including XPeng and other new energy automakers, enter the extended-range market. This naturally intensifies the pressure on Ideal Auto.

The aforementioned senior automotive industry insider noted that for Ideal Auto, the i8 cannot afford any missteps. Ideal Auto yearns to directly replicate its successful experience in the extended-range sector. The market highly acknowledges Ideal Auto's achievements in the extended-range field, but pure electric vehicles present a different narrative. After all, there are inherent differences in the consumer demographics for extended-range and pure electric vehicles.

For instance, the primary consumer group for pure electric vehicles comprises mainly young people, which starkly contrasts with the dad-level consumer group for Ideal Auto's previous extended-range models.

In today's pure electric vehicle market, a myriad of brands and models exist, whether MPVs, SUVs, sedans, or even station wagons. Consumers have an abundance of choices, which means that the Ideal i8 faces stiff competition from numerous models and considerable pressure.

Therefore, from multiple perspectives, Ideal Auto must strategically disengage from its past successful experiences in the extended-range field within the pure electric sector. It can even be argued that Ideal Auto needs to embark on a fresh start and redefine its aspirations for pure electric vehicles in this domain.

03 To Realize Its Pure Electric Dream, Ideal Auto Must Overcome Multiple Challenges

Undoubtedly, the pure electric market is the next frontier that Ideal Auto must conquer, but it will encounter even fiercer market competition than it did in the extended-range sector.

In the view of NPL Finance, for the time being, if Ideal Auto aims to develop its pure electric vehicle business and realize its pure electric dream in the future, it primarily needs to surmount four challenges.

The first challenge is the psychological barrier.

As mentioned earlier in this article, Ideal Auto has achieved remarkable success in the extended-range field, which has also contributed to the success of today's Ideal Auto. For Ideal Auto, pure electric and extended-range are two distinct realms. Ideal Auto must set aside its past and redefine its aspirations for pure electric vehicles.

Ideal Auto cannot rest on its laurels from the extended-range route. Many successful experiences in the extended-range field cannot be directly replicated in the pure electric realm. For Ideal Auto, it must overcome the psychological barrier, appropriately set aside its past experiences in the extended-range route, and explore new territories in the pure electric sector.

The second challenge is the brand barrier.

The second hurdle for Ideal Auto to overcome is the brand barrier. The success of Ideal Auto's past extended-range models has also etched the brand image of a successful extended-range king in the minds of the public and consumers. Therefore, as Ideal Auto now focuses on pure electric models, it needs to gradually establish the image of a pure electric vehicle brand and prove to the market that Ideal Auto is also formidable in the pure electric field.

From last year's meme incident surrounding the Ideal MEGA launch to the recent truck safety collision test incident during the i8 launch, the lack of a mosaic on the truck's steering wheel logo in the launch event video was indeed an oversight.

A brand consultant told NPL Finance that the design of Ideal Auto's two pure electric models is indeed intriguing, tech-savvy, and recognizable. Although the products are exceptional, there is indeed room for improvement in external relations and market communication.

The third challenge is the product barrier.

Similar to the ONE and L series in the extended-range field, Ideal Auto aims to continue its extreme product approach and hit product strategy, which is commendable.

In the view of NPL Finance, the Ideal i8 seeks to further tap into differentiated markets and cater to diverse car buyers. For example, during the Ideal i8 launch event, Li Xiang introduced that the Ideal i8 is an SUV + sedan + MPV, aiming to create a new vehicle category akin to the discontinued Mercedes-Benz R-Class, which is a fusion of a station wagon, SUV, and MPV.

Clearly, the new i8 model launched by Ideal Auto needs to gradually strengthen market awareness and occupy consumers' minds, which will take some time to validate.

The Ideal i8 marks a significant effort by Ideal Auto to re-enter the pure electric fray. Ideal Auto's next step is to unveil a hit model that can appeal to a broader range of car buyers, which is the product barrier.

The fourth challenge is the sales barrier.

The Ideal i8 is a newly launched pure electric SUV model by Ideal Auto, but some market observers believe that this model may not be Ideal Auto's volume driver. Instead, the market is more anticipatory of Ideal Auto's upcoming new model i6.

In mid-July, according to reports from financial media outlets such as Jinrongjie, the Ideal i6 has been included in the latest batch of new energy vehicle models exempt from vehicle purchase tax by the Ministry of Industry and Information Technology, with some parameters revealed. It offers three range options, with the longest range being 720 km.

In the pure electric field, Ideal Auto urgently needs a hit model to shoulder the primary responsibility of volume sales and profitability.

Ideal Auto's new battle in the pure electric vehicle sector has commenced once again, and it will face even fiercer market competition. However, Ideal Auto must persist in its endeavors. The market response to the Ideal i8 will ultimately be validated by sales figures.

Reference Materials:

Ifeng Auto: After the launch of the i8, Ideal Auto's share price continues to decline. Will the market buy Ideal's pure electric dream?

TMTPost: Can the Ideal i8 support Li Xiang's "pure electric dream"?

Jinrongjie: Parameters of the Ideal i6 revealed, offering three range options with a maximum of 720 km

Chinese Entrepreneur: Dialogue with Ideal: The two most terrifying things in life

The cover image and accompanying images in this article are sourced from the internet, and the copyright belongs to the respective owners. This article does not constitute any investment advice.