Summary of the Key Points
This article discusses a typical case of failure in the "shell purchase for car manufacturing" strategy: Ten years ago, Yundu New Energy started as a model of mixed-ownership reform (combining state-owned assets, private enterprises, and professional teams), possessing rare "dual qualifications" approved by both the National Development and Reform Commission and the Ministry of Industry and Information Technology. It was once the second-largest seller among new entrants in the market. However, due to conflicts among shareholders and insufficient investment in research and development, the company began to decline. Later, it was acquired by Junyao Group, which operates in the aviation and dairy industries, and renamed Jixiang Automobile. Junyao attempted to complement its travel ecosystem through a "low-cost agency model" but failed due to poor product quality and changing market conditions. In the end, Junyao withdrew its investment, and Yundu returned to the control of local state-owned assets, becoming an empty shell with only its qualifications and a dormant factory left behind. This story highlights key issues in cross-industry car manufacturing, such as the fact that having the necessary qualifications does not guarantee success, and the trade-off between short-term profits and long-term investment.
Detailed Analysis
1. A Strong Start with Ideal Conditions: Mixed-ownership Reform Model and Dual Qualifications
When Yundu was established in 2015, it seemed like a perfect candidate for success:
- Strong Partners: FAW Group (state-owned), Putian State Investment (local government), the listed company Haiyuan Composite Materials (private enterprise), and the team led by Liu Xinwen, former general manager of Chery New Energy. Together, they provided financial support and expertise, making it a model of successful mixed-ownership reform—combining government backing for land and policies with the efficiency of private enterprises and professional teams.
- Competent Team: Liu Xinwen had previously managed the development of the Chery QQ3 EV and eQ (which sold 25,000 units in 2015, accounting for 12% of the pure electric market). He also brought in Lin Mi from Tengshi to oversee marketing and experienced Chery veterans to handle technology, addressing key shortcomings.
- Rare Qualifications: In 2017, Yundu obtained the "dual qualifications," becoming the 10th company in China to do so, one year before Zero Run and two years before NIO began mass production. At that time, having these qualifications, along with the ability to deliver vehicles immediately, was a major competitive advantage.
- Initial Success: The π1 model was launched in 2017, available for 80,000 yuan after subsidies, and 1,200 units were sold in the first month. The π3 model followed in 2018, with 9,000 units sold, ranking second among new entrants (behind NIO's 11,000 units).
However, these achievements were relatively modest considering that most new car manufacturers were still in their early stages of development.
2. The Collapse of a Promising Start
The fourth quarter of 2018 marked a turning point for Yundu:
- Divided Shareholders: Liu Xinwen wanted to invest 200 million yuan in developing the π7 model, which required building a dedicated platform, using dual motors, and achieving a range of over 500 km, along with establishing its own battery factory. However, shareholders had different priorities: FAW Group wanted to expand production capacity (targeting an 80% utilization rate by 2019), Putian State Investment sought short-term financial results, and Haiyuan Composite Materials wanted to cash out (their planned equity sale disrupted a 500 million yuan financing deal). With only 15.56% of the shares, the management had no veto power, and the budget was cut from 200 million to 50 million yuan. As a result, the battery factory was canceled, the R&D team was reduced from 50 to 15 people, and key technical personnel left.
- Subsidy Cuts: In June 2018, subsidies were reduced, significantly affecting Yundu's profitability. The π1 model, with a range of 251 km, saw its subsidy halved from 36,000 yuan to 18,000 yuan per unit, leading to losses for dealers and causing 17 out of 103 dealers to withdraw.
- Team Disintegration: In 2019, Liu Xinwen resigned, and key technical personnel moved to companies like Xpeng and BYD. The R&D team was reduced from 200 to 80 people, and the π7 model never went into mass production. The new CEO, from a traditional car company, lacked expertise in new energy technology and focused on cost-cutting measures, leading to quality issues (127 air conditioning failures) and a sharp decline in sales: 2,600 units in 2019 and 1,800 units in 2020. By 2020, the company had lost 600 million yuan and was insolvent.
3. Junyao's Attempt at Success
In 2022, Junyao invested 450 million yuan to acquire 85% of Yundu and renamed it Jixiang Automobile. Its strategy was to build a comprehensive travel ecosystem:
- Ecosystem Integration: With operations in aviation (Jixiang Airlines) and dairy (Jixiang Dairy), Junyao saw car manufacturing as part of this ecosystem. They believed that investing in the car industry would be a worthwhile addition, even if it didn't lead to immediate success.
- Low-Cost Approach: Junyao adopted a strategy of using external partners (with Chen Zhixin, former president of SAIC, and Wei Yong, former procurement manager of Wuling, as advisors) and modifying existing models. They launched the Yun Tu in 2023 (a modified version of the π1 model for 69,800 yuan) and the AIR in 2024 (a mid-range electric sedan priced at around 150,000 yuan), hoping to leverage partnerships with airlines for discounts and benefits. However, the market had changed: while qualifications and subsidies were important in 2015, by 2022, with a new energy penetration rate of nearly 30%, these factors were no longer sufficient. The Yun Tu model was unsold, and the AIR failed to attract buyers both domestically and internationally. By the end of 2024, Junyao had reduced its stake to 15.55% and withdrew from the project.
4. Common Causes of Failure
The failures of Yundu and Jixiang are not isolated cases but reflect common issues in cross-industry car manufacturing:
- Difference between Professional Managers and Founders: Failed new car companies (such as Yundu, WM Motor, and Ai Chi) were often managed by professional managers from traditional car companies who used funds provided by shareholders, governments, or investors, leaving them with a safety net in case of failure. In contrast, founders like Li Bin and He Xiaopeng invested their personal wealth, taking bigger risks.
- Dispersed Governance: Yundu's diverse shareholders had different interests, and Jixiang faced issues with external management and lack of commitment to long-term R&D efforts.
- Devaluation of Qualifications: What were once valuable qualifications (2 billion yuan in 2017) are now worth much less. The market now values product quality and core technologies, not just regulatory approvals.
5. Lessons for Current Cross-Industry Entrants
Companies like Chuna Automobile (which acquired WM Motor's factory in Huanggang) should learn from Yundu's experience:
- Don't Rely Solely on Qualifications: Qualifications are no longer a guarantee of success; consumers prioritize range, intelligence, and quality. Without core technologies and self-developed components, having just a shell is insufficient.
- Long-Term Investment Required: Car manufacturing is a capital-intensive venture that requires sustained investment in R&D, supply chains, and marketing. Shareholders must work towards common goals.
- Founders Need to Be Fully Involved: Professional managers may be more focused on short-term gains, while founders need to invest personally to drive long-term success.
Yundu's ten-year story illustrates that even with a promising start, lack of commitment and proper strategy can lead to failure. Cross-industry car manufacturing requires not just acquiring the right qualifications but also genuine expertise, investment, and dedication.