On the evening of August 28th, Ideal Automobile (hereinafter referred to as "Ideal") released its first half performance report.
After the failure of Ideal MEGA, the company promptly adjusted its strategy and delayed the launch of pure electric products, and timely cut losses to ensure that its performance was not greatly affected. However, in the second half of the year, Ideal did not invest in new products, and it is still unknown whether Ideal L6 orders can continue to be popular. The pressure for the second half of the year is still enormous.
Ideal MEGA (photo by Wu Di)
Low priced cars drag down the company's gross profit margin
According to the financial report, Ideal's revenue for the first half of the year was 57.31 billion yuan, of which vehicle sales revenue was 54.57 billion yuan, accounting for 95.2% of the total revenue.
Revenue changes are related to the company's sales growth. In the first half of the year, Ideal delivered a total of 189000 vehicles, a year-on-year increase of 35.8%. Among them, the low-priced model Ideal L6 has continuously contributed to the delivery volume since its launch on April 18th, and has achieved monthly delivery of over 20000 vehicles in June.
The official downgrade in April and the addition of low-priced models have affected Ideal's overall gross profit margin for the second quarter and dragged down the company's overall gross profit margin for the first half of the year.
On April 22nd, Ideal announced an official price reduction for all its models, ranging from 18000 to 30000 yuan. The company also offered compensation to owners who purchased new models, including the Ideal Mega and the 2024 L series, before the price reduction. The company provided cash subsidies of 30000 yuan to Ideal Mega owners and 15000 to 20000 yuan to L series owners.
At the same time, in the delivery structure of the second quarter, the proportion of the low-priced model Ideal L6 gradually increased. According to calculations, the delivery volume of this model accounted for 36% of the total delivery volume in the second quarter, while the high priced models Ideal L9 and L8 were affected by the market competition of Wenjie M9, resulting in a decline in the proportion of delivery volume.
The combination of the two resulted in an average bicycle price of only 279000 yuan in the second quarter, a decrease of 22000 yuan compared to the previous quarter. As a result, the gross profit margin of the entire vehicle in this quarter was only 18.7%, a decrease of 0.6 percentage points compared to the previous quarter and 2.3 percentage points compared to the same period last year.
As a result, the ideal gross profit margin for the first half of the year was only 19%, a year-on-year decrease of 1.5 percentage points; The overall gross profit margin of the company decreased by 1.2 percentage points year-on-year to 20%.
However, the top management of Ideal still has great confidence in the third quarter gross profit margin. CFO Li Tie stated in this earnings conference call that it is expected that the company's vehicle gross profit margin will continue to rise to around 19% in the third quarter, and the total gross profit margin of the company will be about 20%.
Net profit almost halved
The decline in gross profit margin combined with an increase in the company's marketing expenses resulted in a year-on-year decrease of 46.8% in net profit for the first half of the year to 1.7 billion yuan.
Among them, the company's R&D expenses in the first half of the year increased by 42% year-on-year to 6.1 billion yuan. Ideal stated that this was mainly due to the increase in expenses to support the company's expansion of product portfolio and technology, as well as an increase in the number of employees leading to an increase in salary. The reporter found that the R&D expenses increased by about 1.8 billion yuan this time. If this increase is deducted, the company's net profit may reach about 3.5 billion yuan.
Increasing research and development investment is the trend. In the current new energy market, various car companies are "rolling" towards intelligence. For example, BYD recently announced a cooperation with Huawei to make up for its weak intelligence. Since the beginning of this year, Ideal has followed the market trend, focused on end-to-end intelligent algorithms, and formed a mass production research and development team for this purpose.
However, the return on investment and efficiency of Ideal's significant investment in intelligent research and development have been questioned by industry insiders.
Company President Ma Donghui told reporters at the performance meeting that Ideal's input-output efficiency in self driving has always been relatively high. From the market perspective, intelligent driving has had a good driving effect on the company's sales. The proportion of potential users who come to Ideal's store to test drive NOAs has also doubled, and the proportion of AD Max orders for various models is increasing, especially for models priced over 300000 yuan, the proportion of AD Max orders has approached 70%.
For the planning of future end-to-end autonomous driving, the company's senior management stated that since the launch of the Thousand Person Early Bird Test Plan in July, the iteration speed and performance of the model have exceeded expectations. "We believe that the development of autonomous driving has undergone fundamental changes, shifting from hardware iteration to model capability iteration, and the iteration speed highly depends on a large amount of high-quality data, powerful computing power, and automated simulation testing programs. We plan to launch a large-scale testing plan in September, covering about 10000 users, to further promote the end-to-end VLM system.
In terms of sales, general and administrative expenses, the company's expenditure in the first half of the year reached 5.8 billion yuan, a year-on-year increase of 46.5%, mainly due to the expansion of the ideal sales and service network, rental expenses, and other expenses.
It is reported that the first batch of flagship retail centers of the company landed in Beijing, Shanghai, Guangzhou, and Shenzhen in January. As of the first half of this year, Ideal has 497 retail centers in 148 cities and operates 421 after-sales maintenance centers and Ideal authorized sheet metal spraying centers in 220 cities.
In the second half of the year, the main focus will still be on selling cars
The second half of the year will be a tough battle to meet our ideals.
At the performance meeting, Ideal CEO Li Xiang provided guidance on the company's delivery volume and revenue for the third quarter. It is expected that the delivery volume for the third quarter will be 145000 to 155000 vehicles, an increase of 33% to 42% compared to the 109000 vehicles in the second quarter. Based on the current known data, the delivery guideline is not considered high. It is known that the ideal delivery for July is 51000 vehicles, and according to the latest weekly sales data, it is expected to deliver 51000 to 52000 vehicles in August, which means that the delivery volume for September may be between 42000 and 53000 vehicles. Based on this calculation, there may be a month on month decline in delivery volume in September.
In terms of revenue guidance, the company expects its third quarter revenue to be between 39.4 billion yuan and 42.2 billion yuan. According to analysis by Changqiao Securities, if other business revenue is estimated at 1.38 billion yuan, the implied unit price of the automotive business in the guidance is only 263000 yuan, a further decrease of 16000 yuan compared to the previous period, indicating an ideal future or further price reduction and volume increase.
Ideal car store (photo by Zuo Yu)
As early as the first quarter performance meeting, Li Xiang had informed that the company would not launch any new products in the second half of the year, and the launch of pure electric products would be postponed to 2025. This means that the Ideal L6 is the last new car launched by the company this year, but there are more and more models in the same class in the market, and the price is also better than the Ideal L6. Even its old rival, the WENJIE, has re launched the WENJIE M7 Pro version for 240000 yuan, once again competing for market share.
As a direct opponent of Wanjie, the dividend period of Ideal L6 has also recently ended. The Ideal L6 was launched in April and became a direct competitor to the Wenjie M7 Pro version due to its low price of around 250000 yuan; In May, the release of the updated version of the WENJIE M7 cancelled the WENJIE M7 Pro version, with an overall starting price of around 280000 yuan, which gave the Ideal L6 an opportunity to boost sales.
The good times didn't last long, or if sales declined after leaving low-priced models, Wenjie chose to upgrade and launch the Wenjie M7 Pro version again, with upgraded configurations and a price of 240000 yuan, once again forming a direct competitive relationship with the Ideal L6. With the return of the Wenjie M7 Pro version, it is uncertain who will lose or win in the second half of the year.
Li Xiang said frankly, "I think HarmonyOS is our strongest competitor in the market, and I believe we will coexist healthily in the long run
Faced with the return of competitors and the gap period of products, Li Tie said that the company is confident in achieving the delivery of 500000 vehicles for the whole year. As of July, Ideal has delivered a total of 240000 vehicles this year. If calculated based on delivering 500000 vehicles throughout the year, Ideal needs to complete 260000 vehicles in the remaining 5 months, with an average monthly delivery of 52000 vehicles.
How to maintain or even increase sales without launching new cars will become the main focus of the ideal second half of the year.
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