What's wrong with me being a rich man?

Chapter 506 Hedging Expectations
Due to the existence of cash subsidies, the Silicon Carbon Group has a lot of room for flexibility in pricing its first model.

Setting prices towards the lower limit naturally leads to higher sales, which is common knowledge. However, the expected reduction in subsidies will inevitably have a strong impact, which is also common knowledge.

At the same time, there is diminishing marginal returns to cost reduction through economies of scale. The reduction is greater in the early stages and less in the later stages. The former can rely on fixed cost amortization and discounts from large-scale purchases, while the latter can only rely more on fine-grained optimizations such as logistics efficiency and material loss.

Furthermore, it must be able to achieve an effective scale.

Therefore, only Yu Xing, the founder, can bear the responsibility for this pricing.

As for the responsibilities of other senior executives, their strong expressions of opinion are commensurate with their salaries to some extent; they can't really be held responsible for setting the price with a gross profit of less than 9%.

Yu Xing made these unabashed speculations only when chatting with Liu Wanying alone.

"No, Mr. Yu, your thinking..." Liu Wanying hadn't considered the stance behind the other executives' statements at all, and said with some astonishment, "Aren't you being a bit too ruthless?"

"It's not about being ruthless," Yu Xingle said. "That's how the company is. When it's time for one person to make a decision, that person has to make the decision. When it's time for everyone to brainstorm, we have to give full play to the power of the collective."

Liu Wanying is an investor and a short seller, but she has never actually held a position like Yu Xing's, so there are still some doubts about her claims.

However, as Yu Xing's side initially established a general price, the previously heated opinions quickly disappeared, and everyone seemed to start working quickly around the pricing, making the situation seem a bit... delicate, as if they were really waiting for the boss to make the final decision.

The sales plan should be promoted, the financial loan policy should be studied, and the cash subsidy should be clarified...

After hearing Yu Xing's account of the working conditions of the senior executives at the Silicon Carbon Group, Liu Wanying was truly impressed.

She only remarked on one point: "They also have stock options."

“President Liu, I think you should be the one who understands this the most.” Yu Xing feigned surprise. “You were the one who orchestrated the short selling of your own company by Volkswagen CEO Martin. Don’t you know what human nature is like?”

Under the shadow of the mountain peak, Martin turned around and shorted his own company, a move that, once exposed, undoubtedly plunged him into an abyss.

In terms of individual performance, this is the most impressive one since the peak of the mountain peak was shorted.

Liu Wanying was silent for a moment: "That's true. It's rare to find someone who doesn't consider their own personal interests, or perhaps they can weigh the long-term and short-term interests."

Yu Xing smiled and nodded, showing no emotional fluctuation as to what the executives might be considering.

Liu Wanying asked a question: "If you really price it like this, you will definitely be able to improve your market competitiveness in the short term, but the subsidy reduction will happen slowly but quickly. What will you do then?"

“We even had a meeting yesterday to discuss this,” Yu Xing said with a smile. “This is also a direction for everyone to quickly advance the work. We need to establish the positioning of ‘Jiuzhou’. The reduction of subsidies will definitely have an impact, so we will try to offset this impact by upgrading the technology and building the reputation of the models. There is still a lot of room for improvement in the research and development of electric vehicle technology.”

This is a relatively unified opinion within the Silicon Carbon Group.

After thinking for a long time, Liu Wanying said, "So, all the things that the Silicon Carbon Group does ultimately come down to the quality of your own cars, such as economies of scale, subsidy reduction, profit leverage, market reputation..." Yu Xing nodded seriously, "Who can argue with that?"

Liu Wanying asked, "So, are you confident?"

“If you asked me as an investor, I would be 100% confident.” Yu Xing hesitated for a moment. “If we talk about it privately, it’s about 50/50. But no matter how much we talk, without market feedback, confidence is all just empty talk.”

Liu Wanying didn't mock the answer; instead, she nodded and said, "Half of it is already very good."

Yu Xing thought for a moment and corrected himself, "Originally it was only half, but I have an amplification function, so it can be 60% later."

Liu Wanying listened attentively.

“Once the funds you’ve raised are in place, we won’t be able to spend them all at once. We’ll use some of the money to buy stocks, which could hedge against the anticipated rise in lithium carbonate prices,” Yu Xinghe revealed.

Liu Wanying was stunned for a moment. Seeing that he looked serious and not joking, she exclaimed in astonishment, "Still buying? Hey, Mr. Yu, do you really think you're some kind of Warren Buffett?"

“The price of lithium carbonate is bound to rise. Do you think the subsidy policies only drive our car companies?” Yu Xing expressed his opinion. “It’s not just our 30 yuan cars that get tens of thousands of yuan in subsidies. As long as hybrid models meet the range requirement of tens of kilometers, they will all receive subsidies, and pure electric vehicles will receive even more subsidies.”

"There are limitations for ordinary passenger cars, but those 6-meter and 8-meter buses can achieve extended range. There will definitely be a concentrated release of battery installations this year and next year."

"Lithium iron phosphate batteries are low-density and relatively inexpensive, so the vast majority of batteries installed in equipment will inevitably be lithium iron phosphate batteries."

"This basic supply and demand relationship is affected by policies and industry development. You can study it. Upstream supply adjustments also take time."

Yu Xing gave a very serious analysis, explaining that the reason why battery installations will be released in a concentrated manner is because everyone needs time to manufacture cars, and cash subsidies will inevitably give rise to a group of models that chase subsidies.

Subsidies can serve as a safety net to maintain a portion of profits, a lever to amplify profit scale, or an incentive to commit subsidy fraud.

Liu Wanying then asked, "Were you this serious when you analyzed Alibaba before?"

Yu Xing was surprised that Xiao Ying didn't believe him at all: "Hey, this is my honest opinion from the industry. The price in August was 33,000 yuan/ton, and this month it's already 39,000 yuan/ton. Ducks are the first to know when the river warms in spring. It will definitely rise again, and it's very likely to rise sharply."

Liu Wanying maintained a skeptical expression, but then said, "You don't need to explain to me, just explain to the people in your company... Yu Feite."

Yu Feite sighed, looking up. Using the stock market to hedge against potentially rising battery supply costs was not the idea of ​​the company's executives, but rather a product of his deep contemplation when considering how to deal with the reduction in subsidies.

This time, unlike his previous subconscious trust in Alibaba, it was a serious analysis based on his understanding of the industry situation and emerging trends.

A carbon-silicon Buffett isn't out of the question; it can be a goal to pursue when necessary.

(End of this chapter)