Introduction

Introduction

Let's wait and see how it goes.

"The wind has come, and the cake is right there. Everyone wants a piece of the new energy vehicle pie!"

First, let's take a trip down memory lane to about a decade ago. The opening sentence of this article perfectly captures the mindset of many newcomers to the industry. Following this, a swarm of ambitious and imposing newcomers entered the fray—the new force in automobile manufacturing.

I'm sure many readers remember this image. According to incomplete statistics, at its peak, there were over 300 registered brands, but most of these automakers ultimately met with failure.

Yes, after rounds of shuffling, eliminations, and fierce competitions, it has become increasingly clear who is swimming naked in the brutal red ocean. The aftermath of their collapses has left countless tales of wreckage and despair.

Today, a decade later, the list of new forces in automobile manufacturing that are still standing and thriving can be counted on one hand. And it's not an exaggeration to say that, given the current environment, more collapses and dropouts are inevitable. Take HiPhi, for example, which suffered a major setback earlier this year.

The reason I've devoted so much space to discussing the above is to make a point: "For those still aspiring to ride the wave in China's auto market, the game is practically over."

Yet, despite these dire warnings, there are still those who refuse to believe. And just last week, news broke that Dreame, known for its household appliances like robot vacuums, smart floor washers, cordless vacuums, and high-speed hair dryers, is also getting into the automobile manufacturing game.

Yes, you heard that right. It's the very same Dreame that you know and love.

In fact, as early as July this year, rumors emerged that Dreame had already started recruiting automotive engineers on relevant platforms, specializing in areas like chassis electronics, suspension systems, and steering systems. This move sparked speculation throughout the industry.

Last week, the news became even more concrete: the entire automotive manufacturing team consists of around 200 people, and their first new vehicle is an extended-range electric vehicle (EREV) currently in the demo stage. There are also plans to export the new vehicle to Europe, and optimistic estimates suggest it won't be ready until after 2026.

Meanwhile, according to insiders, Dreame's foray into automobile manufacturing will be operated with minimal investment and capital.

For reference, similar "predecessors" like NIO and BYD, Xpeng and GAC Motor, and Jishi and Beijing Automotive Group have all adopted this strategy. One party provides product specifications, technology, marketing, and channels, while the other is responsible for qualifications, production, and manufacturing.

However, it's worth noting that regardless of whether it's NIO, Xpeng, or Jishi, their post-launch performance has been dismal at best. In particular, NIO, helmed by Li Yinan, even collapsed on the eve of success, leaving its future uncertain to this day.

On the other hand, Jishi, which has close ties to the household appliance brand "Stone", has only sold 510 units of its sole model, the Jishi 01, an EREV mid-to-large SUV capable of light off-roading, last month.

"Do all the companies making robot vacuums want to get into automobile manufacturing now? They already have all the necessary hardware like lidar, cameras, sensing equipment, and algorithms. They just need to find mature suppliers for batteries, motors, and chassis, integrate everything, and start selling."

This isn't just made-up talk; it's a genuine complaint from a friend of mine. In his eyes, the latest entrant, Dreame, faces a grim future.

Moreover, while the intensifying trend of electrification has lowered the barrier to entry for automobile manufacturing, allowing companies like NIO, XPeng, Huawei, and Xiaomi to emerge, it's important to recognize the massive investments they've made to achieve their current success.

In other words, the level of spending is not something everyone can afford.

To quote Li Bin, CEO of NIO, "In the past, it might have taken 20 billion yuan to build a car company, but now you can forget about it without 40 billion yuan."

And in this crucial dimension, there's no sign that Dreame is doing anything out of the ordinary. It's precisely against this backdrop that today's article title feels all too apt.

Zooming out, let's borrow a quote from Wang Chuanfu, Chairman of BYD: "This is an era where the fast fish eats the slow fish, not the big fish eats the small fish. If automakers don't rise to the top in the next 3-5 years, they'll miss their chance. And over the next 3-5 years, the overall auto market and its various segments will continue to engage in price wars."

In simpler terms, the survival space for the weak in China's auto market is shrinking even further. In stark contrast, the leading players are snowballing their advantages.

Here's another quote from Li Xiang, CEO of Lixiang One: "By 2028, the penetration rate of new energy vehicles in China could reach 90%. If only four or five companies survive in the industry, BYD, Tesla, and Huawei will definitely be among them. To stay in the game, we aim to sell over 3 million vehicles in a single year, doubling our original target of 1.6 million vehicles by 2025."

To paraphrase, as time goes on, the "cake" may look increasingly tempting, but in the end, there will only be a limited number of slices to go around. So there's no such thing as a peaceful existence; we must remain aggressive in the long run. Of course, resources and benefits will continue to concentrate in the hands of the top players.

In summary, let me condense the above two quotes into one sentence: "In China's auto market, the winner takes all."

To put it bluntly, mergers, acquisitions, closures, and suspensions will become the norm in the industry. And given the current timing, circumstances, and people involved, it's a risky move for Dreame to enter the automobile manufacturing game. Let's wish them luck, the protagonists of today's article.

Let's wait and see how it goes...