Jiyue Automobile, formerly known as Jidu, is a high-end smart car brand co-founded by Baidu and Geely Holding Group on March 2, 2021. Relying on the two giants, it has attracted much attention. In the joint venture, Baidu holds 55% of the shares and Geely holds 45% of the shares, and the brand is positioned as a "high-end intelligent automotive robot", and is committed to creating intelligent and leading automotive robots through Baidu's AI capabilities and Geely's vast architecture ecological empowerment. The establishment of Jiyue Automobile is regarded as a "strong alliance" between Baidu and Geely Holding Group, carrying the dual advantages of technology and capital, and has attracted widespread attention inside and outside the industry. As a giant in the field of intelligent driving, Baidu has been backed by two giants since its birth.

However, in early December, rumors began to circulate on the Internet that Jiyue Automobile may face difficulties. At that time, the revelations of major channels did not directly name Jiyue, but were referred to as "new power car companies", which caused widespread speculation in the industry. On December 11, Xia Yiping, CEO of Jiyue Automobile, issued an internal letter announcing that the company will enter the "entrepreneurship 2.0" stage, which needs to optimize the organizational structure, adjust the supply chain ecology and reintegrate resources. On the same day, technology media Tech Planet publicly collected debts from Jiyue on Weibo, claiming that Jiyue owed it 360,000 yuan in payment to communication suppliers. On the afternoon of December 11, Xia Yiping announced at the internal meeting of all employees that due to the company's operating difficulties, employees are faced with two choices: voluntarily resign before December 16 and receive N+1 compensation; or choose to leave without pay, and do not pay social security and provident fund during the period. On December 12, Xia Yiping was besieged by employees, demanding supplementary social security payments, salary payments, and severance compensation.

From the arrears of suppliers to the announcement of dissolution, the collapse of Jiyue Automobile took only two days, which caused an uproar in online public opinion.

Elon Musk predicted in May last year that a wave of bankruptcies in the electric vehicle industry was coming, and now it seems that this prediction is not groundless. New energy vehicle companies are in trouble, and it is not an overnight thing. The reasons behind this are complex and diverse, but the most fundamental reason is the fierce market competition and the lack of its own strength.

In recent years, the number of new car-making brands that have joined the competition is too large and too crowded, which most people may perceive. There are so many new energy brands on the market that they are unrecognizable, unrecognizable, and incomprehensible. Extreme Krypton, Extreme Fox, Extreme Yue, Extreme Stone, the brand names are put together as if playing with entertainment. From a distance, it looks like a prosperous and lively place, and the public's awareness and recognition of new energy categories have indeed become higher. Up close, you will find that there are many new brands that need to do their best to divide a little market, and there is no indicator of long-term survival. According to the Wall Street Journal, in 2018, there were more than 487 new energy vehicle companies in China, but by the end of 2023, according to incomplete statistics, there were only more than 40 new energy vehicle companies left that could operate normally. WM, Aiways, Skyrim, Byton and so on.

On December 5, Hezhong Automobile, invested by "Uncle in Red" Zhou Hongyi, was exposed to arrears of more than 5,000 yuan in arrears from the public relations company and was sued in court, and on December 11, Jiyue Automobile, a high-end intelligent car robot brand jointly built by Baidu and Geely Holding Group, was even more "disbanded on the spot". At the same time, in the past year, new energy vehicle companies such as WM, Evergrande, and Gaohe have also been exposed to bankruptcy and shutdown news. This series of events can't help but ask: Is China's new energy vehicle industry about to usher in a wave of bankruptcy? Where does the future of this industry go?

As an emerging industry, new energy vehicles will inevitably have problems in their development. It can be briefly summarized as the following four challenges: The first is the price war. Since 2023, car manufacturers' prices have fallen again and again. Compared with the previous two years, the prices of many models have dropped by more than 30% year-on-year, and the node promotion of individual models may even exceed 50%. As prices get lower, so do the profits of the entire automotive industry. As of the third quarter of 2024, the profit margin of our country's automotive industry has fallen to about 4.5%, which is already a limit. If price involution continues in the future, the profits of the entire automotive industry will fall further, and most companies will suffer a wider range of losses. Continuous losses, without external financing blood transfusion, it is impossible to survive on its own profits alone, and Jiyue is a typical example.

The second is large-scale involution. The automobile manufacturing industry is a technology-intensive and capital-intensive industry, with a very large initial investment, ranging from billions to tens of billions. In the face of such a huge investment, if sales are not optimistic in the short term, it is very passive. There is already a consensus in the new energy vehicle industry that 100,000 units is a break-even point. If a manufacturer's annual sales reach more than 100,000, there may still be a chance to survive, and if the sales volume is less than 100,000 per year, it probably won't survive. However, the entire automobile market size is so large, and now the leading manufacturers are seizing more market share through price reductions. As the market share of the top players increases, it means that the market share of manufacturers below the waist will become smaller and smaller. Once the scale cannot be done, in a low-profit environment, it is impossible for the vast majority of new energy vehicle companies to carry it, and investors cannot always do charity.

The third is technical involution. Not only should the price be low, but also the technology should be good, looking at the current leading brands of new energy vehicles with good sales, they have invested a lot of money in technological innovation. Without technological innovation, there is no selling point, no gimmick, and in the end, many brands will be mediocre. However, in terms of technical involution, some small car manufacturers are simply weak and impossible to compete with the head manufacturers. The end result is that many brands have no technical highlights, only low prices, and will only be abandoned by the market in the end.

The fourth is the involution of public opinion wars. In the past, the sales of many cars were achieved through dealers, but on the track of new energy vehicles, more and more cars began to implement direct sales, which required automakers to invest more money and energy to promote their works. Especially in today's highly developed self-media, public opinion warfare is crucial to car brands. The more exposure and recognition a brand has online, the higher its sales. But this kind of public opinion needs to be based on strong funds and a strong talent team, which is the most lacking for some small brands.

Based on the above factors, what can really be afforded at present is basically those big brands or manufacturers backed by big financiers. However, from the actual situation of the current market, many small manufacturers lack strength, no technology, no public opinion advantage, no sales, and there is only one ending, no future. In the early stage, they may rely on their own funds and subsidies to barely survive for a while, but if there is no continuous sales to support them, they will fall sooner or later without sufficient cash flow as a foundation

It is foreseeable that brands with annual sales of less than 100,000 units in the whole market will most likely disappear in the next five years. So for many car brands, maybe 2024 will be sad and the involution is very serious, but this may be the best year in the next 5 or even 10 years.

point of view

The difficulties faced by new energy vehicle companies are not a day's cold, and their causes are complex, but the core lies in the fierce market competition and the lack of strength of the enterprises themselves.

In the low-end market, BYD relies on its self-developed battery technology to have obvious advantages in cost control and market share, making it difficult for other new energy vehicle companies to compete in price competition. In the mid-range market, Tesla is firmly in the leading position with its high-tech vehicle equipment, excellent brand influence and good user reputation, making it difficult for other companies to gain a foothold. In the luxury car market, Wenjie has risen rapidly with Huawei's technical support and has become an emerging force in this field, bringing great competitive pressure to other companies.

In addition, new energy vehicle companies also have the problem of insufficient product innovation and serious homogenization. Some companies use "refrigerators, color TVs, large sofas", etc. as selling points, trying to attract consumers through stacking configurations, but this practice fails to form a real core competitiveness, but leads to consumer aesthetic fatigue.

In the face of difficulties, new energy vehicle companies need to deeply reflect and seek a way out. On the one hand, we should increase investment in technology research and development, develop core technologies with independent intellectual property rights, and enhance product competitiveness. On the other hand, we should abandon simple stacking configuration and price war strategies, pay attention to product differentiation and brand building, and create products with unique selling points and brand characteristics.

At the same time, the government and relevant institutions should also strengthen support and guidance for new energy vehicle enterprises, help enterprises tide over difficulties through policy support and capital injection, and improve market supervision mechanisms, standardize market order, prevent vicious competition and price wars, and maintain fair competition and healthy development of the market.

Consumers also need to rationally view the competition and changes in the new energy vehicle market, choose suitable products according to their own needs and budgets, and pay attention to product quality and after-sales service.

Looking forward to 2024, with the intensification of market competition, some emerging car companies such as Jiyue, Gaohe, Hechuang, Yuanhang, etc. are facing an existential crisis, and Nezha Automobile is also in trouble, and former CEO Daniel Zhang has resigned. In the face of the challenge of traditional car companies, especially multinational car companies, to launch new electric models and plug-in hybrid models in the domestic market, the market competition will be more fierce in 2025, and the prospects of emerging car companies are not optimistic.