A 30% pay cut for all staff, can Weimar stand up?

Author  | Mr. Dongguan Da

Produced  | Electric Guild

Weimaraner, who has been running wild for many years, begins to enter the Mercury retrograde period.

Some time ago, the founder of WM Motor made a lot of noise because of the 1.2 billion annual salary incident, and then the rumor was refuted, and the actual salary was about 2 million yuan. However, waves of unresolved problems have arisen again and again. Recently, there has been news of a salary cut from WM Motor. Although the official statement has not been made publicly, the recent news about WM Motor’s layoffs and salary cuts has been overwhelming.

On October 20, an internal employee of WM Motor broke the news to the media that the company’s financial situation was quite serious. Senior executives took the initiative to reduce their salaries by 50%, and basic-level employees’ salaries were paid 30% off.

Seven days later, the news of the salary reduction for all staff was verified again. On October 27, according to insiders of WM Motor, the large-scale salary reduction plan of WM Motor began to be gradually implemented. Before that, only some departments were affected, but this week, the human resources department of WM Motor will communicate verbally one by one. Salary reduction program.

According to more than two sources, WM Motor plans to adjust the salary by: delaying the pay day on the 8th of each month to the 25th, reducing the monthly salary by at least 30%, and stopping the payment of the annual 13th and 14th salaries. Employees also no longer have car purchase subsidies.

After the news of the salary cut for all employees came out, the public opinion overwhelmingly turned to WM Motor. Although it has not yet been hammered, the financial problems of this car company are obviously quite serious… What is more dangerous is that WM Motor’s first pure Deliveries of the electric sedan M7 have also been put on hold. Weimar, who has always been considered to have been left behind, is really going to be completely left behind this time?


The horse can’t run?

The two cores of the competition of new car-making forces revolve around “who can come up with excellent products” and “who can raise more money”.

Look at the product first.

Among the new car-making forces, Weimar is the most maverick. It is not faster than anyone else, but like a war, it is stable, accurate and ruthless. To say that among the new car-making forces, the one with the most automotive industry attributes may be Weimar.

From the perspective of management, the management of WM Motor has rich experience in vehicle manufacturing, supply chain management and system establishment. Its founder Shen Hui and its senior management team have served as core executives in many multinational vehicle companies and parts companies around the world, covering automobile manufacturing, strategic planning, and product operations.

During his tenure as director of Geely Holding Group, Shen Hui led the team to complete Geely’s acquisition of Volvo, and his work experience in BorgWarner also created the foundation for the strategic cooperation between WM Motor and BorgWarner on electric motors. The team has extensive experience in physical manufacturing and large company operations.

This has also become the key to WM Motor’s decision to insist on building its own factory from the beginning. Due to the heavy asset prepositioning strategy, WM Motor has built two intelligent manufacturing bases in Wenzhou and Huanggang, and the full production capacity is expected to reach 250,000 vehicles per year.

These two manufacturing bases are centered on intelligence, automation and quality assurance systems, which can maximize production efficiency through the best combination of automation and manual labor. Compared with Weilai, which is OEM by Jianghuai, Xiaopeng’s self-production + OEM model coexists. Weimar has chosen to build its own factory from the beginning to ensure product reliability to the greatest extent.

Back to products, WM Motor’s goal is very clear, insisting on positive research and development, to become a popularizer of smart electric vehicles. Since the establishment of the brand, Weimar has gone through 7 years, and basically completed the original intention of launching one model a year. With the launch of EX5, EX6, W6 and E.5 models one after another, WM Motor has become a new car-making force focusing on the mainstream market, and its products have covered the two mainstream categories of SUVs and sedans.

According to the plan, WM Motor’s flagship model M7 will also be launched in the second half of this year. At the same time, it will launch new SUV, sedan and MPV models based on the Caesar platform in 2023. By then, it will achieve full coverage of all types of models and products from Class A to Class B.

From the concept of car manufacturing to product planning, everything seems to be on the right track, but the reality is not ideal. Market performance is an important basis for judging whether a car company has prospects.

Data shows that by the end of 2021, WM Motor has delivered a total of 83,000 vehicles. In 2021, a total of 44,000 vehicles will be delivered, a year-on-year increase of 96.3%. That is to say, Weimar delivered an average of about 3,600 vehicles per month last year.

If the previous data is still reluctant to say in the past, then this year is really unseen. Entering 2022, Weimar officially has not announced any sales data.

We checked through third-party information. In the past September, WM Motor delivered a total of 3,003 vehicles, which is less than a fraction of that of its competitors. The cumulative sales volume in the first three quarters was only 28,000 vehicles. On average, the sales volume in a single quarter has not exceeded 10,000. Therefore, in the next four quarters, even if it is a long-term performance, the best result is at most the same as last year.

Weimar attributed the poor sales to an unfriendly environment, and believed that the rise in power battery raw materials, lack of cores, and the epidemic are important factors affecting the sales of new energy vehicles. But in fact, the core reasons are the frequent product quality problems and insufficient product power of Weimar in recent years.

The frequent spontaneous combustion accidents of the main model EX5 have damaged the brand image of WM Motor again and again. In April this year, a WM Motor EX5 in Haikou City, Hainan Province suddenly caught fire about 3 minutes after the owner left. This is the 11th time WM Motor has “spontaneous combustion”. Spontaneous combustion incidents occur frequently, and some people ridiculed that Weimar has become a “dangerous horse”.

The W6, which was once hoped by WM Motor, also focuses on intelligence. It is advertised that it can realize L4-level unmanned driving, but it still fails to attract consumers to pay for it. The annual sales in 2021 will only be less than 8,000 units.

Nowadays, the old models of Weimar are slowly unable to keep up with the times, and it is still unknown whether the new models can withstand the fight, and the horses are running slower and slower.


Listing at a loss becomes the final choice

After talking about the product, let’s look at financing.

WM Motor’s financing capabilities, among many new car-making forces, if calculated by the amount of financing before listing, WM Motor is among the best.

According to public information, from February 2017 to September 2020, Weimar conducted a total of 8 rounds of domestic equity financing, and from October 2021 to March 2022, the company introduced D round of financing, with a financing amount of 596 million US dollars. From the start of the A round of financing to the end of the D round, WM Motor has raised a total of about 31.5 billion yuan, and the company’s valuation has reached 47 billion yuan.

According to Weimar’s financial report, Weimar investors include Agile Group, Baidu, Chengcheng Capital, Guangzhou Nansha District Xinde Houwei Venture Capital Fund Partnership (Limited Partnership) under GF Securities, China Tobacco Control’s Hongzheng Junfang, Tencent Holdings , Xinde Group, PCCW, Shandong Expressway Finance, Central Enterprise Rural Industry Investment Fund Co., Ltd., Lucky Palace Investments Limited controlled by Liang Anqi, Goldrank Limited under the Li Ka Shing Foundation and other star shareholders and individual shareholders gathered.

Not only has it obtained large Internet giants, major listed companies, private equity investment and state-owned assets, but Weimar has also attracted the blessing of Hong Kong’s richest people.

In comparison, the cumulative financing amount of Xiaopeng Motors before listing was 18.8 billion yuan, Li Auto was about 12 billion yuan, and Weilai’s financing amount before listing was only about 15 billion yuan. Most of the financing of the three leading car manufacturers basically occurred after the IPO. Leapmotor, which is in the same price range as WM Motor, has disclosed financing of about 12 billion yuan, and Nezha Auto is about 18 billion yuan.

WM Motor has a strong financing ability, but at the same time, its ability to burn money is also very prominent, especially when it adopts an asset-heavy model – self-built factories. WM Motor said that the reason for using the asset-heavy model to build the factory is that it hopes to invest in the front, and this cost can be diluted after increasing car sales in the later stage.

From the perspective of cash flow, Weimar is indeed relatively short of money. Since 2019, Weimar has lost 4.044 billion yuan, 4.225 billion yuan and 5.363 billion yuan respectively, with a cumulative loss of 13.632 billion yuan in three years. At present, the cash flow in Weimar’s hands is only 4.156 billion yuan, which is pitiful compared to Wei Xiaoli’s cash reserve of 40 to 50 billion yuan.

In this case, the IPO will be a lifesaver for WM Motor.

The battle for new energy vehicles is a battle that cannot be broken. Whether it is a rising new force or a technology company that builds cars across borders, all of them are rushing on their horses to compete in this trillion-dollar market.

“Wei Xiaoli”, which has almost the same starting time as Weimar, has been listed in Hong Kong and the United States. Weilai has even completed its third listing in Singapore, while Weimar, which was once ranked in the “four little dragons” echelon, has Has been wandering outside the IPO door.

In 2020, when Xiaopeng and Ideal went public in the United States, WM Motor also prepared for the listing on the Science and Technology Innovation Board, and was determined to become the “first stock of automobiles on the Science and Technology Innovation Board”, but it finally stopped at the stage of submitting listing materials. Since then, there have been some voices about Weimar’s “falling behind” in the industry.

To this end, WM Motor also held a media communication meeting in Beijing. The founder, Shen Hui, responded positively to the topic of “lagging behind”: “New energy vehicles are a long-term track. To use an analogy, it is like playing football. , Now the first 15 minutes of the first half have not been played, and we still don’t know who will win.”

On June 1 this year, the Hong Kong Stock Exchange disclosed a new batch of IPO applications, and WM Motor was on the list, with Haitong International, CMB International and Bank of China International as their sponsors. This means that WM Motor began to attack the Hong Kong Stock Exchange.

For the current WM Motor, listing and financing is an imminent top priority. After listing, it will be a brand new beginning. For the new energy vehicle market, this is the final call of the first stage of the first stage of the new force. .

However, China’s new energy vehicle market is highly competitive and electric vehicle demand may be cyclical and fluctuating. In its prospectus, WM Motor also admitted that it is difficult to evaluate the company’s business and future prospects, emphasizing that technology development and investment may not produce the expected results. At the same time, the operation of the company requires a large amount of capital, and if sufficient financing cannot be obtained on acceptable terms, it may have a material adverse effect on the operating results.

The new car-making forces in China have ushered in a watershed of development. A new pattern needs to be gradually formed in the big reshuffle. The battle for mass production of the new car-making forces in the first half has basically settled, but the competition is far from over. Vehicle quality is still a protracted battle that new forces in car manufacturing must face.

In addition to car building, new forces are spreading to the capital battlefield. The capital battle in the second half has just started. Whether Weimar can have the last laugh, everything is unknown.

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