Wang Chuanfu's Key Battle for Luxury Cars Dream

Author | Zhou Zhiyu

Editor | Zhang Xiaoling

Two years ago, when BYD took over the leadership of Tengshi, the market had doubts about the future of this BYD and Mercedes-Benz collaboration brand; and Wang Chuanfu's ambitious goal of turning Tengshi into a luxury brand was met with skepticism.

After the launch of the Tengshi D9, it sold well and has achieved monthly sales of over 10,000 units for four consecutive months this year, posing a threat to the dominant position of the Buick GL8 luxury MPV. The brand awareness of Tengshi has also rapidly increased, which is impressive.

It can be said that the D9 has helped Tengshi gain entry into the "luxury club," and the N7 is Tengshi's killer move to showcase its capabilities.

On July 3rd, the N7 was officially launched, and Tengshi has moved from the niche MPV market to the broader SUV market. At the same time, as BYD's first mass-produced model with advanced driver assistance functions, the Tengshi N7 has sounded the horn for BYD's foray into intelligence.

Luxury and intelligence have always been BYD's weak points. Now, with the launch of the Tengshi N7, Wang Chuanfu's dream is beginning to become a reality.

On the eve of the launch of the Tengshi N7, Zhao Changjiang, General Manager of Tengshi Sales Division, had an in-depth conversation with Wall Street News. He revealed that the N7's target is to achieve monthly sales of over 10,000 units by the end of the year. With the continuous expansion of Tengshi's vehicle lineup, the overall monthly sales exceeding 50,000 units "would be considered passing."

By then, Tengshi will also be able to claim a significant share of the luxury car market.

This is a crucial battle for Wang Chuanfu to realize his dream of luxury cars and change BYD's inherent image. Tengshi shoulders a heavy burden and must rise to the challenge.

Emerging

In the 2023 new energy vehicle market, there is a brand that cannot be ignored: Tengshi.

By relying on differentiated competition, Tengshi has carved out a path in the already saturated MPV market. As of early July, the cumulative orders for the D9 have exceeded 100,000 units, with nearly 80,000 units delivered. In the just-concluded June, it set a new record with 11,058 units sold.

Such remarkable achievements have laid a solid foundation for BYD's entry into the luxury market and accumulated a good reputation.

Seizing the opportunity, the Tengshi N7 made a high-profile debut and entered the most fiercely competitive segment of the market. It is a mid-size SUV with a price range of 3.018-3.798 million yuan. Currently, only the pure electric version has been launched, rather than BYD's relatively more advantageous plug-in hybrid models. It directly competes with popular mainstream models on the market such as Tesla, NIO ES6, JAC iEV7S, and Avita 11.

Last year, Tesla sold 315,000 units, leaving its competitors far behind in the Chinese mid-size SUV market.

To stand out in such a competitive market, the Tengshi N7 must demonstrate its true capabilities and find its own way of playing the game.

In this regard, Zhao Changjiang is very confident. He said that the Tengshi N7 is positioned as a sporty SUV, emphasizing performance and intelligent luxury. It combines the advantages of a sedan and an SUV, making it a versatile vehicle.

This strategy also follows the approach of the Tengshi D9. Zhao Changjiang stated that the D9 created a new application scenario that caters to both commercial and personal use. The Tengshi N7 also hopes to use this logic to differentiate itself and appeal to a younger audience. Tengshi N7 hopes to become the second car for families, focusing on urban commuting. This is different from the usual scenario of SUVs for family outings and long trips, and complements the scenes where SUVs and MPVs are the main vehicles.

According to Wall Street News, currently 30% of the pre-orders for Tengshi N7 come from Tengshi D9 users who are upgrading.

The configuration of Tengshi N7 also has differentiated advantages compared to competing models on the market. It is the first in the world to feature the Diwaray sound system, the Yunlian A intelligent air body control system is mass-produced for the first time, and the dual-gun fast charging technology solves range anxiety, among other features. Zhao Changjiang bluntly stated that what others consider as top-of-the-line is standard for Tengshi N7.

With this set of hardware configurations, Tengshi N7 is capable of competing against its rivals. However, in order to cope with fierce competition, N7 has made some trade-offs in pricing. Zhao Changjiang revealed that based on the current pricing, the initial gross profit margin of N7 is around 10%, which can increase to around 15% as the scale expands in the future.

In addition, when the price of a car exceeds 300,000 yuan, it is necessary to minimize any shortcomings. For BYD and Tengshi, they also need to address the shortcomings in intelligent driving and intelligent cockpit that have been criticized by users in the past.

As the first mass-produced model equipped with BYD's advanced intelligent assisted driving system "Tianshen Zhiyan," Tengshi N7 is equipped with dual lidar and NVIDIA Orin chips.

Yang Dongsheng, Vice President of BYD, introduced that "Tianshen Zhiyan" is based on the world's first vehicle computing platform completely designed, developed, and produced by an automaker, with software independently developed by BYD. The massive data accumulation from large-scale production vehicles has further enhanced the algorithm of this system.

However, compared to the intelligent driving systems already launched by Xiaopeng and Weilai, it will take some time for users to experience the high-speed and urban NOA (Navigate on Autopilot) of Tengshi N7. The Tengshi Pilot advanced version of the intelligent driving assistance system will enable high-speed NOA in the fourth quarter of this year and urban NOA in the first quarter of 2024.

By then, the market will have a clearer understanding of BYD's technological capabilities in the field of intelligent driving.

Breaking the Barrier

Tengshi N7 carries multiple missions.

It is not only the trump card for BYD's upward brand development but also the pioneering work for integrating its intelligent driving technology, which is of great significance.

Wang Chuanfu hopes that by launching the N7, Tengshi can become a benchmark for luxury brands. Just as BYD currently has absolute market dominance in the 100,000-200,000 yuan price range, it also aims to establish a strong position in the luxury car market.

In recent years, the global outbreak of new energy vehicles has put the century-old automotive industry in a situation where it needs to start over. Chinese automakers, including BYD, also have the opportunity to overtake in the luxury segment.

However, as a new challenger, Tengshi still needs time to break through.

For a long time, the luxury car market above 300,000 yuan has been dominated by BBA (BMW, Benz, Audi). In the luxury pure electric SUV market, as of the first five months of this year, only Tesla and BMW's iX3 have sold over 10,000 units, while other competitors have not been able to shake their market positions. The disruptor role is not easy to play. But Zhao Changjiang is confident. He openly stated that BBA (referring to BMW, Benz, and Audi) no longer has competitiveness in the high-end new energy market, and Tengshi (TSL) aims to "replace traditional BBA's gasoline vehicles." The speed of product iteration, technological advantage, China's local supply chain advantage, and user acceptance all provide significant development opportunities for Chinese brands.

Tengshi N7 has made a good start.

Order data shows that within 24 hours of its launch, Tengshi N7 received 11,687 pre-orders. Zhao Changjiang revealed to Wall Street News that the short-term monthly sales expectation for Tengshi N7 is over 5,000 units, with a target of over 10,000 units by the end of this year.

Zhao Changjiang does not hide Tengshi's ambition. He stated that with the launch of Tengshi's product line in the next three years, including Tengshi D9 and N7, Tengshi will have a total of seven models. Once these models are gradually released and sales stabilize, "our pass line will be around 50,000 to 60,000 units per month."

According to data from the China Passenger Car Association, from January to May this year, the retail sales of vehicles priced at 300,000 yuan and above reached approximately 1.0456 million units, a year-on-year increase of 35.1%. Among them, the sales of new energy vehicles reached 329,800 units, a year-on-year increase of 121.8%, far exceeding the market average. This provides a fertile ground for the development of Tengshi N7 and upcoming new models.

Zhao Changjiang predicts that by 2025, the penetration rate of new energy vehicles in China's high-end car market will reach 60%-70%. Based on the expected annual sales of 5 million units in this segment, there is a potential market space of at least 3 million units per year. As long as Tengshi captures 20% of the market share, it can achieve the goal of selling 600,000 to 700,000 units annually.

In addition to Tengshi's planned overseas expansion, its global sales may even exceed one million units in the future. Tengshi can join the ranks of global luxury brands and dance on the same stage as BBA and Tesla.

In the first half of this year, BYD maintained its position as the global leader in new energy vehicle sales with 1.2556 million units, including 74,300 units sold overseas, surpassing the total sales of last year. While continuing to expand its overseas presence, BYD has also laid a foundation in the supply chain, production, and distribution for Tengshi's future expansion into international markets.

Tengshi is faced with a vast blueprint, and the trend of new energy provides boundless possibilities. However, the success of a luxury brand cannot be achieved without long-term brand accumulation. Tengshi, as a "newcomer," is only taking the first step on a long journey.