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Despite the Strong Performance of NEVs in China, WM Motor Postponed the 10,000 Vehicles Delivery to 2019
COVID-19 and China

Dec 18, SHEN Hui(沈晖), the founder and CEO of WM Motor, implied that the company may fail to deliver on the 10,000 vehicles promises in an interview with Yicai. SHEN attributed the reasons to delivery part, not production capacity.

WM Motor's plant has manufactured nearly 2,000 units in the year to mid-November. The capacity is escalating gradually and estimated to reach a daily record of 200 units in November. What the company unexpected is complications in delivery. Rattling by the phasing-out subsidy policy and clamors concerning the exact delivery date, WM Motor did roll out Fast Pass Plan to address the issues and explore corporation with road assistance company Allianz Worldwide Partners to bring better user experience.

According to SHEN, WM Motor have not foreseen this situation from the beginning and reclaimed the 10,000 vehicles goal can be achieved very much likely in the first month of 2019.

Why the number 10,000 is so important? Because it's a break-even point which most EV startups needs to sell, from where profit margin is set to pick up rapidly after it achieves more scale and starts making money on services. Xpeng, joined the fray with its G3 smart SUV this month, pointed out the volume as well. Xpeng has raised more than CNY 10 billion (USD 1.4 billion) from investors including Alibaba, Foxconn and Xiaomi Corp. founder Lei Jun. Startups like Xpeng and WM Motor have no clear going public plan, the key remains how much volume they could deliver.

Competitions coming outside China is looming, Tesla indicated that it aimed to bring portions of Model 3 production to China during 2019 and to progressively increase the level of localization through local sourcing and manufacturing in its third-quarter report. YING Yong(应勇), the mayor of Shanghai, visited the project site in the Lingang(临港) development zone in southeastern Shanghai and encouraged Tesla to accelerate construction, according to a statement on the city's WeChat social media account on Dec 5. Tesla is working on obtaining loans from local banks to fund the new plant, which will help Tesla to avoid some of risks involved with importing vehicles, such as higher tariffs caused by trade tensions between China and the US.

SHEN did not take this event as a threat, saying that with Tesla marching into Chinese car-selling market, EV manufacturers are likely to win over customers from diesel car manufacturers. WM Motor has a healthy cash balance that can sustain the company through this “winter”(also refers to recent bankruptcy waves happening in China). SHEN worried more about how to attract critical customers and catch up with market trends according to the interview.

Retail sales of sedans, multi-purpose vehicles and sport utility vehicles dropped 18% (YoY) to 2.02million units last month, the China Passenger Car Association said on Dec 19. Sales in the first eleven months of 2018 fell 4% (YoY) to 20.15 million units. This ups the pressure on automakers. The only other bright spot was new energy vehicle (NEV) sales, which increased by 58.6%(YoY)  to 129,522 units, adding up to 845,845 (YoY growth rate: 89.4%) units as of 2018. Despite the strong performance of NEVs, the consecutive monthly declines in total vehicle sales in six months have caused many industry observers worried.

WM Motor is set to launch the EX6, a mid-size 6-seat all-electric SUV with a 2-2-2 seating arrangement into market in the fourth quarter next year. The model is designed to lure young consumers with a dynamic body and trendy LED light.  

Even the NEV market seems promising and the company keeps launching new models, WM Motor still needs to ramp up delivery efforts to meet consumers’ needs.

——Author: LinYan.Write to LinYan at LinYan@EqualOcean.com 

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