Author | Shen Tianxiang

Editor | Li Guozheng

Produced by | Bangning Studio (gbngzs)

On October 14, 2024, LIXIANG ONE achieved a milestone with its millionth vehicle rolling off the production line, becoming the first new-energy vehicle (NEV) brand to reach this milestone. From the delivery of its first vehicle to the millionth, it took LIXIANG ONE 58 months, almost five years.

Meanwhile, among the new forces, NIO's multi-brand strategy has emerged. On September 19 this year, NIO's second brand, LEDAO, launched its first model, the L60. Its third brand, codenamed "Firefly," is also on the horizon and is expected to be released by the end of this year.

XPENG is focusing on bringing advanced autonomous driving technology to the masses with its new model MONA M03, which is aimed at the next decade. Priced between 100,000 and 150,000 yuan, it has received overwhelming market enthusiasm. At the same time, the company is continuously learning from traditional automakers to improve its operations.

Over the past decade of the new auto era, only a handful of new-force automakers, represented by NIO, XPENG, and LIXIANG, have survived and embarked on different development paths. During this time, they have continuously introduced innovative business models, user-centric thinking, and new technologies, earning them the title of "new forces" in the automotive industry.

A decade has passed. Are these new forces still "new"?

On the one hand, the stage of development has changed. As they reach a certain scale and volume, the previous strategies of the new forces may no longer be suitable for their current situation or the industry as a whole. They increasingly need to learn from traditional automakers, such as in supply chain management and integration, cost control, and production and corporate governance mechanisms.

On the other hand, traditional automakers are not sitting idly by. Chinese domestic brands are actively embracing the changing times. Although they may move slowly like elephants, they are incubating new brands that use the tactics of the new forces to compete with them. They are using these new brands as pilot projects before gradually transforming their entire operations.

Furthermore, the entry of Huawei and Xiaomi into the automotive industry in different ways has brought new strategies and even stronger technologies to the sector. Their aggressive entry and rapid development have caught the new forces off guard.

In the new auto era, being "new" is the norm.

New Stage for the New Forces

In 2014, Tesla's entry into the market sparked a significant and far-reaching wave of new automaking in China. Led by NIO, a large number of new automakers emerged like mushrooms after rain, with the peak number exceeding 100.

Since then, many of these "heroes" have fallen. Some disappeared before even delivering their first vehicles, while others went bankrupt shortly after delivery. Some managed to climb to the top but eventually fell, and still, others cling to life, waiting for an unlikely rebirth.

Not many of the original new forces survived. The vast majority disappeared into history, becoming mere backdrops for those who persevered. From the market perspective in 2024, only a handful of brands, such as LIXIANG, Leapmotor, NIO, XPENG, and Nezha, remain active on sales charts. Among them, LIXIANG and Leapmotor show the strongest sales momentum. Based on sales figures from January to September, LIXIANG is expected to sell around 500,000 vehicles this year, comparable to the annual sales of NEVs from some traditional automakers. Leapmotor and NIO are projected to sell over 200,000 vehicles each, while the other two are expected to sell between 100,000 and 200,000 vehicles.

In terms of profitability, only LIXIANG has achieved profitability, while Leapmotor, NIO, XPENG, and Nezha are still in the red, some even deeply mired. For these four companies, the most pressing issue is to achieve scale and improve profitability as soon as possible.

However, relying on capital markets to bail them out is no longer feasible. With the global economy differentiation and weakening, capital markets are becoming increasingly cautious. The new forces can no longer rely solely on storytelling to raise funds and gain market trust.

Following old maps will not lead to new lands. In this new stage of development, the new forces must learn from traditional automakers in areas such as scaling up and vertical integration to reduce costs and increase profits.

XPENG is a prime example. After a decade of development, autonomous driving has become XPENG's hallmark, positioning it in the first tier of the industry and creating a crucial moat for the company. However, XPENG's weakness lies in its lack of experience in management, production, and sales. Consequently, XPENG has undertaken sweeping reforms in recent years.

By partnering with Volkswagen, XPENG has gained a global perspective on automaking and learned from its quality management and corporate governance experiences. It has also brought in traditional automotive talent, such as Wei Fengying, the former deputy general manager of Great Wall Motor, to lead the reforms.

After Wei Fengying took over as XPENG's president in January 2023, the company embarked on a series of reform measures, including focusing on core product categories, restructuring marketing channels, combating corruption, and reducing costs while increasing efficiency. These measures have significantly improved XPENG's internal operating environment and efficiency.

For example, in terms of channels, XPENG has shifted from a direct sales model to a hybrid model of direct sales and authorized dealerships. This has expanded the dealer network, eliminated inefficient stores, and made the entire system more efficient, flexible, and scalable, facilitating faster market penetration.

NIO's multi-brand strategy is also aimed at achieving scale. While this approach may seem resource-intensive, it can better leverage cost advantages. The automotive supply chain encompasses multiple links, and a multi-brand strategy can facilitate resource sharing, reduce costs, and achieve economies of scale more quickly. This is a path that many major automakers, especially Chinese brands, are pursuing.

As the new forces reach a certain scale, improving operational capabilities in supply chain management and production systems becomes a significant challenge. Whether XPENG, NIO, or other companies, they must learn from traditional automakers to enhance production efficiency, quality management, and cost control.

From a marketing perspective, all new automakers face a common trend: they are no longer at the center of public opinion. To some extent, LIXIANG is avoiding public opinion risks. Its founder, Li Xiang, has repeatedly sparked online controversies due to inappropriate remarks, even facing online harassment. Some have described this as a backlash against his high profile. While Li Xiang himself may not agree, the former "King of Weibo" has not posted sharp comments on social media for a long time.

For many years, the new forces have been the focus of media and internet users' attention, saving them significant advertising costs. Many marketing professionals in traditional automakers have observed that "it's not that the new forces are good at marketing, but rather that they don't need much marketing to garner natural attention."

However, the limelight has dimmed with the entry of Huawei and Xiaomi into the industry. The new forces are no longer the main protagonists in public discourse, as their fan bases and influence pale in comparison to those of Huawei and Xiaomi. Meanwhile, other Chinese brands have brought more innovative marketing approaches, making it difficult for the industry to emulate Xiaomi but easy to learn from marketing masters like Chery and Wuling.

As the new forces lose favor, it has become increasingly difficult for them to enjoy free traffic like before, leading to a new challenge: how to compete for attention.

New Forces, New Trends

The reasons why the new forces are no longer "new" are threefold: they increasingly resemble traditional automakers in their new stage, traditional automakers are becoming more innovative, and new players like Huawei and Xiaomi have overshadowed the new forces.

Over the past decade, while the new forces have risen, traditional automakers have also collectively ventured into new territories. Some have upgraded existing brands, like FAW Hongqi, while others have created new brands like Dongfeng Horyon. A new force, represented by brands like SAIC Motor's IM Motors, GAC Motor's Aion, Beijing Automotive Group's ARCFOX, Changan Automobile's AVATR, and Geely's ZEEKR, has gradually emerged.

These new forces share similar characteristics: they are spun off from traditional automakers and operate independently, dedicated to building new energy and intelligent vehicles. Neither starting from scratch nor burdened by the weight of traditional automakers, they are more agile and rapid.

Speed is a significant change in the new auto era.

Traditional business is like the ocean, seemingly calm on the surface but with a cruel underworld where the strong prey on the weak. However, the business competition in the past decade of the new auto era has manifested differently. It's no longer about "the big fish eating the small fish" but rather "the fast fish eating the slow fish." The rapid development of the new forces has dragged traditional automakers into the "fast fish era."

Facing the new forces, traditional automakers are also innovating. Most of their new brands were launched around 2019, with some established later but long in the making, and their product deliveries mostly starting around 2021.

By then, the new forces had just completed another round of weeding out. In 2019, NIO, XPENG, LIXIANG, and WM Motor crossed the threshold of delivering 10,000 vehicles annually. Shortly after, Leapmotor and Nezha joined the ranks in 2020.

From 2014 to 2019, although the industry's views on them were cautious and conservative, they quickly progressed from PPT presentations to mass production and delivery, shocking traditional automakers like never before.

Tesla, the biggest "catfish" in the NEV industry, sold 50,000 new vehicles in China in 2019 and expanded to 137,400 in 2020. More alarmingly, in June 2020, Tesla surpassed Toyota for the first time to become the world's most valuable automaker by market capitalization.

Chinese traditional automakers began to fight back. New brands, born with golden spoons in their mouths and standing on the shoulders of giants, grew rapidly. To some extent, they mimic the new forces, learning from their business models, mechanisms, channels, marketing, and technologies. The two camps share many similarities, meaning that the tactics of the new forces are becoming more widespread, diminishing their uniqueness.

Moreover, these new forces are endowed with many "privileges"—they can access all the new technologies developed by their parent groups, which represent decades of automaking experience and technological achievements.

The ranks of these new forces continue to grow. Traditional automakers now typically have 3-5 new brands under their umbrella, each operating with a light asset model to expand market share and elevate their brand positions. "It used to be said that the new and old forces were on different tracks, but now everyone says that NEVs have brought us back to the same track. People no longer specifically distinguish between the new and old forces," said a senior industry insider to Bangning Studio. "Brands like LIXIANG, ZEEKR, AVATR, and Horyon currently have no clear winner over the others."

Today, the confrontation between the new and old forces is no longer clearly defined. The new forces are no longer new, and traditional automakers are no longer conservative. They are gradually converging on the same track of the new auto era.

Going forward, it will be an even more brutal competition of survival of the fittest. Whether new forces or traditional automakers, only those that endure will be the true powers of the new auto era.