Dong Mingzhu’s eight-year ＂Biography of Building a Car＂： ups and downs, and now it is rekindled
In 2024, the "new gambling game" between Lei Jun and Dong Mingzhu once again ushered in the acceptance moment.
Dong Mingzhu took another step forward in building cars.
Enterprise investigation shows that on October 11th, Shanghai Gree Automobile Technology Co., Ltd. was incorporated, and its legal representative is Zhong Chengbao. At present, he is the assistant to the president of Zhuhai () Co., Ltd. and the general manager of Zhuhai Gree Intelligent Equipment Co., Ltd.. The company has a registered capital of 20 million yuan, and its business scope includes research and development of auto parts, manufacturing of auto parts and accessories, manufacturing of industrial robots, and sales of industrial robots.
According to the equity penetration chart, Shanghai Gree Automobile Technology Co., Ltd. is jointly owned by Shanghai Jieyingtu New Material Technology Co., Ltd. and Zhuhai Gree Intelligent Equipment Co., Ltd. under Gree Electric. This move is regarded by the market as Gree once again overweight the layout of new energy car tracks.
In 2016, after Dong Mingzhu personally held shares in Zhuhai Yinlong New Energy (hereinafter referred to as "Yinlong"), he began to formally set foot in the car-making business. Yinlong gradually became a holding subsidiary of Gree Electric, renamed Gree Titanium New Energy, and deeply cultivated the business technology of new energy buses and lithium titanate batteries. However, in the eight years since it was acquired by Dong Mingzhu, Yinlong’s performance began to decline in 2017. As of June 30, 2024, the total debt of Gree Titanium New Energy was 24.786 billion yuan. Dong Mingzhu, who makes cars across the border, has been filling the "pit" of Gree Titanium. "The pit has a process of filling, which I think is very promising." Dong Mingzhu had previously said.
As early as 2013, Dong Mingzhu and Lei Jun gambled on their operating income ten years later. In 2019, Dong Mingzhu shouted to Lei Jun: "Don’t want 1 billion yuan, gamble for another five years": bet on who can make the world really fall in love with China manufacturing because of their products and technology; Second, bet on who can become the world leader in his own industry. In 2024, the five-year "new gambling game" between Lei Jun and Dong Mingzhu once again ushered in the acceptance moment.
"Building a car is a century-old track." Lei Jun, who started to build cars across the border three years ago, believes. For Dong Mingzhu, who also has her own topic, Gree’s car-making business failed to have the positive blessing of traffic like Xiaomi’s, but Miss Dong was unwilling to let go easily.
Eight-year "Car Bureau": Input, Loss and Acquisition
Dong Mingzhu and Lei Jun’s billion-dollar bet continued from air conditioning to building cars. Xiaomi, who has been building cars for three years, has become a dark horse in China auto market this year, while Gree, who has been working on the car-building track for eight years, has not yet entered the harvest period.
As early as 2016, Dong Mingzhu had the idea of building a car, only one year later than today’s star new car company Ideal and Weilai. At that time, Dong Mingzhu wanted to buy 100% equity of Zhuhai Yinlong New Energy with 13 billion yuan, but failed to pass the collegial meeting of shareholders on November 16th. In Miss Dong’s view, small and medium-sized shareholders are "shortsighted", and she firmly believes that "although we didn’t succeed in the acquisition, we must be a new energy vehicle."
Less than a month later, Dong Mingzhu still "put all your eggs in one basket" and took a stake in Yinlong with his personal assets. At the same time, she also brought Dalian Wanda, Jiangsu JD.COM Bangneng Investment Management Co., Ltd., () and other enterprises to jointly increase the capital of Yinlong by 3 billion yuan.
At that time, some new car-making enterprises in the new energy vehicle market began to emerge, and traditional car companies such as Geely, BAIC, Jianghuai and Changan were all testing new energy sources. Why does Dong Mingzhu prefer Yinlong, which was established only eight years ago?
Yinlong once made a difference in the new energy bus track. In 2016, Yinlong’s business was mainly the manufacture of new energy buses and lithium batteries. On the track of commercial vehicles, there is a blessing for the development prospect of new energy vehicles, and Dong Mingzhu is firmly optimistic about the future value of Yinlong. In the next two years, Yinlong proved Dong Mingzhu’s vision with sales. In 2017, Yinlong New Energy Bus ranked fourth in the country with an annual sales volume of 6,626 vehicles; In 2018, its sales volume increased to 7,278 vehicles, second only to Yutong and (), ranking third.
But the blow followed. In January 2018, Yinlong was repeatedly exposed to arrears in supplier payment, and there was a problem in the capital chain. By November 2018, Yinlong exposed its "dirty laundry" and publicly disclosed that its major shareholder Yinlong Group, actual controller Wei Yincang and former executive Sun Guohua were suspected of encroaching on the company’s interests by over 1 billion yuan. In 2019, the sales volume of Yinlong New Energy Bus declined in a cliff-like manner, with the annual sales volume of only 2,708 vehicles, down 62.76% year-on-year. The following year, Yinlong began to lose money continuously, and even began to be auctioned by Zhuhai Intermediate People’s Court. By the end of 2020, Yinlong’s liabilities had exceeded 22.5 billion yuan.
Although "Yinlong became a hole", Dong Mingzhu still insisted on buying Yinlong. In August, 2021, Gree acquired 30.47% equity of Yinlong New Energy for 1.83 billion yuan through public bidding through judicial auction. In addition, 17.46% equity previously held by Dong Mingzhu was entrusted to Gree, and Yinlong officially became a holding subsidiary of Gree Electric, and was later renamed Gree Titanium New Energy (hereinafter referred to as "Gree Titanium").
Gree’s blood transfusion also failed to rejuvenate the sales of Gree Titanium. In 2022, Gree Titanium sold 1,789 buses, down 11.65% year-on-year. In the same year, the sales of new energy buses in (), Suzhou Jinlong and () ranked in the top three with 11,515, 5,306 and 5,032 respectively.
Dong Mingzhu said in March 2024 that she believed Gree Titanium New Energy could turn losses into profits that year. According to Gree’s mid-year report in 2024, as of June 30, 2024, Gree Titanium New Energy had a total debt of 24.786 billion yuan and a net loss of 1.905 billion yuan. However, according to Gree Electric’s financial report, the net profit of home appliance business can still cover the loss of car-making business, but the commercial vehicle track, lithium titanate battery and hydrogen fuel power battery technology bet by Gree Titanium have not yet entered the harvest period.
For entering the field of new energy vehicles, Dong Mingzhu has publicly stated that he has no regrets. The newly established Shanghai Gree Automobile Technology Co., Ltd. once again confirmed Dong Mingzhu’s determination.
"The pit has a process of filling up, and the dawn is ahead."
The road of building cars is a new way out for Gree by Dong Mingzhu. Gree has been seeking diversified development since 2012, which is also a strategy that Dong Mingzhu vigorously promoted when he took over Gree.
She is keenly aware that the era of high growth of household air conditioners is gradually coming to an end. According to the data, from 2010 to 2015, the year-on-year growth rate of Gree’s operating income gradually declined. Dong Mingzhu’s task is to lead Gree to find a new growth curve. To this end, she has tried mobile phones, small household appliances, new energy, medical care and even prepared vegetable tracks.
Dong Mingzhu started with car air conditioning business. After personally taking a stake in Yinlong, Dong Mingzhu said that Gree Electric had been studying automobile air conditioning three or four years ago and had fully mastered the technology of this product. In 2017-2018, Yinlong, which was in full swing, made Dong Mingzhu see the hope of Gree’s transformation, and also planned to enter the new energy car track vigorously in the future.
Dong Mingzhu attaches great importance to the layout of battery business. Except for the new energy bus business, Gree Titanium has always chosen lithium titanate as its own technical route. In the field of new energy vehicles, lithium carbonate and its derivative battery products, Ferrous lithium phosphate and ternary lithium battery, are widely used at present. Dong Mingzhu’s "safer" lithium titanate battery has low energy density, so its application space in domestic transportation field is relatively small. "We chose this project not to make money, but to do it because of future development needs." Dong Mingzhu has publicly stated.
However, Gree Titanium, which insists on the lithium titanate battery track, also shows signs of compromising to the market. Enterprise investigation shows that Gree Titanium is laying out lithium iron phosphate batteries. On June 11th, 2024, Gree Titanium applied for a patent named "Lithium iron phosphate battery and its preparation method". Although Gree Titanium, which went out to sea in the past two years, has gained a small number of foreign orders for energy storage business and new energy buses, its technical investment has not been realized enough.
In the upstream and downstream of the car-making industry, Gree also intends to lay out. In 2022, Gree Electric invested RMB 3 billion to hold () 410 million shares, accounting for 38.78% of the company’s total share capital after issuance. The latter is a leading enterprise in the refrigeration component industry, and the company’s main business is divided into two parts: refrigeration parts business and refrigeration equipment business, and thermal management business of new energy vehicles. In the field of auto parts, the main business of Gree Intelligent Equipment established in 2015 is to provide GA-GF2755 CNC machine tools for high-speed and high-precision machining of new energy auto parts. Gree Intelligent Equipment is a wholly-owned subsidiary of Gree Electric, which once provided support for Tesla parts manufacturing.
Li Bin, CEO of Weilai, said "Don’t build a car without 20 billion yuan", which is also applicable here in Dong Mingzhu. Judging from Dong Mingzhu’s car-making actions, it is still the main means to make a car with the revenue of the parent company as the guarantee, and vigorously purchasing and widely distributing it. However, the most fundamental purpose of building a car is to sell cars. Without new business income, Gree Titanium has also become the only loss source of Gree Group, and surviving is the top priority.
In terms of financing, Gree Titanium has no other sources of funds except the support of Gree Electric and Dong Mingzhu. According to the announcement, in December, 2023, Gree Electric announced that Gree Electric further increased its shareholding in Gree Titanium to 72.47%, and planned to wholly hold Gree Titanium in the future. Enterprise investigation shows that except for Gree’s increase in holdings, Gree Titanium has not gained any financing in the past five years.
It’s not too late for Dong Mingzhu to build a car, but when the industry took off, it failed to get dividends and gain market share. Instead, it gradually fell behind. "Gree Electric will not enter the field of new energy family cars for the time being." In February 2022, Dong Mingzhu said. The new energy bus track has never been the mainstream competition field of new energy. Limited by the demand for buses in the B-end market, it is unlikely that its market cake will become bigger. The report shows that the domestic new energy bus sales market will be around 40 billion yuan in 2022, and it is estimated that the market size will be 47 billion yuan by 2028.
The new energy bus industry leader appears, and its market share is further concentrated. According to the data of China Bus Statistics Information Network, in the first half of 2023, Yutong Bus ranked first in China, accounting for nearly 15% of the sales volume, followed by Foton Ouhui, BYD and Jinlong Bus, all of which accounted for more than 10% of the sales market. This also means that in the new energy bus track, Gree Titanium, which has not successfully run out of results, is under great pressure.
Consistent with Dong Mingzhu, in order to find new growth points, many home appliance industries are aiming at new energy vehicles. Midea and Haier, which have not officially built cars, also have automobile business layouts. () Through its subsidiary Weiling Auto Parts Company, it has officially entered the field of new energy auto parts. Haier Group focuses on using its industrial Internet platform and smart home technology to cooperate with car companies.
There are also many home appliances that directly enter the car. As early as 2010, Huang Hongsheng, the "king of color TV", has begun to lay out new energy commercial vehicles and passenger cars. In September this year, Skyworth Automobile, founded by Huang Hongsheng, announced that it would launch a modified model of its medium-sized SUV and the first A-class compact crossover product in 2025. According to the official data of Skyworth Automobile, the total sales volume in 2023 was 18,630 vehicles, with an average monthly sales volume of about 1,500 vehicles, while the monthly sales volume of zero-running vehicles in the same period was about 12,000 vehicles. On September 17th, this year, Sharp presented a conceptual model "LDK+" of an electric vehicle (EV) in Tokyo, Japan, and said that Sharp will officially launch the pure electric vehicle business.
Compared with peers, there is a certain gap in the performance of Gree Titanium. However, Dong Mingzhu is still optimistic. At the Gree shareholders’ meeting in June 2023, "there is a process of filling the pit, which I think is very promising." Dong Mingzhu said, "The dawn (of Gree Titanium) is ahead."
The knockout round of cross-border car-building has already started. When will the stones invested by Dong Mingzhu stir up water?