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Thin profit margins will save bullets.
Source: Fixed Focus One by I hope I can help you.
Source: I hope you can help me.
I hope you can help me.
On March 10th, Zero Run released its latest quarterly financial report, revealing the mystery of profitability. Zero Run’s 2024 annual revenue was 32.16 billion yuan, with a net loss of 2.82 billion yuan, narrowing by 1.4 billion yuan from the previous year, and touching the threshold of profitability in the fourth quarter, realizing a net profit of 80 million yuan. Zero run, with three years of counterattack to become the second profitable new force, the profitability progress is later than the ideal, earlier than the azure small peng . Zero run sales rose to a monthly average of 40,000 units in the fourth quarter, the gross profit margin rose to 13 3, squeezing out a net profit of 80 million yuan, proving the feasibility of the thin profit strategy. Zero Run’s annual loss reduction is the result of a two-pronged approach of revenue growth crushing expense growth and extreme cost-cutting.
On March 10, Zero Run released its latest quarterly financial report, revealing the bottom of the profitability puzzle.
Zero run 2024 annual revenue of 32.16 billion yuan, net loss of 2.82 billion yuan, narrowed 1.4 billion yuan compared to the previous year, the fourth quarter touched the threshold of profitability, realizing a net profit of 80 million yuan.
Zero Run, with a three-year comeback to become the second profitable new force, the progress of profitability is later than the ideal, earlier than Azure Xiaopeng .
Zero run sales rose to a monthly average of 40,000 units in the fourth quarter, the gross profit margin rose to 13 3 , squeezing out a net profit of 80 million yuan, proving the feasibility of the thin profit strategy.
Zero Run’s annual loss reduction is the result of a two-pronged approach of revenue growth crushing expense growth and extreme cost-cutting.
1
Thin profits and high sales.
The lifeblood of the revenue of the new car-making forces also depends on the sale of cars.
Zero Run delivered 293,700 vehicles in 2024, firmly in the top three of the new forces. Doubling sales supported the revenue chassis, Zero Run’s annual revenue of 32.16 billion yuan, up 92 percent from 16.75 billion yuan in 2023 .
In terms of business, for the full year of 2024, Zero Run’s revenue from car sales was 31.63 billion yuan, accounting for 98 3 .
Zero Run’s revenue per vehicle decreased to $109.5 million from $116.2 million in 2023. Sales growth rate of 103 8 Revenue growth rate of 92 Single-vehicle revenue growth rate of 58, indicating the existence of Zero Run price for volume.
Zero Run used to go to volume, sell a loss of 20, starting in 2023, T03 pushed to overseas markets, relying on exports to digest low margin models, but the current export sales accounted for a small percentage of the average selling price of the impact is limited.
In 2024, Zero Run’s product structure is more thoroughly adjusted, mainly pushing the C series in the 100,000 200,000 range, but affected by the price war, it had to reduce the price.
Compared to the head new forces, Zero Run’s gross profit margin still has a gap. Ideal The gross profit rate of Xiaopeng Ulai in the third quarter of 2024 was 20 9 15 3 10 7 The 2024 financial reports have not yet been announced , and the gross profit rate of Zero Run in the same period was 8 1 .
New energy vehicle practitioner Zheng Qi told the media that Zero Run’s gross profit margin performance in front of BYD 20 Tesla 8 4 still belongs to the loss of money, but confirms the feasibility of the mass market strategy of thin profits and high sales.
Zero Run’s gross profit per vehicle increased from about $555 in 2023 to $9,163, an increase of 16 times.
The gross profit of 2.61 billion dollars brought by the doubling of sales, Zero Run, although the full year of 2024 is still a net loss of 2.82 billion yuan, but the net profit in the fourth quarter turned positive to 80 million yuan .
Zero run losses are decreasing, especially in the fourth quarter began to profit, becoming the second single-quarter profit among the new forces.
On the whole, the core logic of Zero Run is to exchange volume for profit through cost-effective models, such as the C series, to quickly capture the market, and use the scale effect to dilute the cost.
2
Desperate to save money
Zero Run’s profitability is a full year of loss reduction in the fourth quarter net income of 80 million, the bottom of the profitability is earned out or saved out?
The key to narrowing the full-year loss is the gross profit growth rate to crush the expense increase, gross profit from 80 million to 2.69 billion, compressed the operating loss from 4.38 billion in 2023 to 3.17 billion.
Behind such a large gross profit margin increase, not a sudden price increase in products, nor a sudden high-end brand, is a whole set of means to reduce costs.
The most hardcore province annual cost of goods sold 29.47 billion, up 76 8 than 2023, lower than the income growth rate of 92, that is, every additional input cost of 1 yuan, income increased by 12 yuan.
The reduction of inventory impairment provision further reduced the cost. 2024, zero-run inventory impairment provision directly cut 77 .
Zero Run used to set aside 150 million to deal with the risk of depreciation of inventory cars, but now feel that the car is better sold, directly put this money back into the pocket This alone is an additional 120 million profit, more than the fourth quarter net profit.
Zeropeng’s tighter control of daily operating expenses is also laying the groundwork for a turnaround. in 2023, its operating expense ratio will be 27.3, far lower than Xiaopeng’s 38.58 and Ulai’s 47.35, and 16.35 higher than Ideal.
In 2024, Zero Run will continue to control its sales and administrative expenses to reduce its operating expense ratio to 19 22, which is on the low side of the industry.
According to sources in the automotive supply chain, ZERO RUN adheres to a low expense ratio in all three segments of the R&D, production and supply chain.
When friends in the pile of material in the race in the volume, zero run core three electric battery package electric drive electronic control are self-research, the total investment of about 3.6 billion yuan, far lower than other new forces.
Want to sit firmly in the second chair of the new forces, zero run to accelerate in the technical track to overtake the line.
Zero Run’s R&D investment in 2024 increased by 51 percent, but the scale of 2.9 billion yuan is still lower than that of the head players. Ideal Ulai Xiaopeng 2023 R & D expenses were 10.6 billion 13.4 billion 5.3 billion.
Control of R & D expenses can accelerate the reversal of losses, the price is that the zero-run intelligent driving function lags behind the head players Huawei Xiaopeng 18 months, the city NOA has not yet landed, the pressure of the future technology competition is very big.
After the loss situation has improved, Zero Run’s cash flow situation has improved dramatically, enough to support subsequent research and development, which means that the company is no longer burning money, and began to be able to earn real money through the sale of cars and value-added services.
3
To whom the lesson
Zero run profit, for players to provide the solution to the problem , but also stepped on the pain point of many car companies.
First, the scale effect can be a straw boat to borrow arrows.
Zero Run relies on two strokes, with a lower sales expense ratio in exchange for a doubling of sales volume.
In the sinking market, the rapid expansion of the dealer model, by the end of 2024, the coverage capacity is far more than the direct mode of car companies, and the investment is far lower than peers In the overseas market, the joint venture with Stellantis to build a channel, using the other side of the ready-made network to save the cost of overseas pioneering.
Secondly, we will not outsource if we can build it by ourselves, and we will only seek the highest reuse of technology through self-research.
Zero Run claims to be self-researching in all areas, but the R&D expense rate is much lower than that of Azure Xiaoli, and the proportion of self-research is as high as 60.
It uses Lego-style car building to prove that the core weapon is the reuse of technology.
A set of architecture, a fish to eat more than one C series models 80 parts generalization rate, C10 and C16 can share the chassis, lights, seats and other core components, the development of the second car only need to add 20 30 costs.
Third, there are low-cost shortcuts for electrification transition.
Zero Run’s self-developed four-leaf clover architecture, the core of which is to use IT thinking to transform the car Through the minimalist design of one SOC and one MCU, the BOM cost is reduced by nearly 1,000 yuan, and the chip reuse rate is increased by 30%.
Not only can it reduce the cost of a single car, but it can also be quickly adapted to the needs of different models, and with the expansion of the scale, the marginal cost will be further diluted.
Fourth, the ultimate supply chain management is not to tie up the leader and not to raise heavy assets.
Zero Run’s supply chain management is very rational, the most typical performance is the decentralization of battery suppliers and suppliers to build joint ventures.
Battery link, its strategy is to go to the King of Ning to turn to the introduction of second-tier manufacturers such as AVIC lithium cell energy and other second-tier manufacturers, creating price competition, the cost of each kilowatt-hour to 65 cents, cheaper than the average price of the industry by a large margin.
Adopted the asset-light model of leasing joint venture in the plant and parts supply chain to reduce fixed costs.
In the new energy elimination race, the one who can walk to the finish line with a smile is always the one who can save the most bullets.
Zheng Qi is a pseudonym
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