What's wrong with me being a rich man?

Chapter 507 Key
Silicon Carbon Group has not yet communicated with its institutional shareholders regarding the preliminary determination of the vehicle price.

Besides Liu Wanying, besides Xiong Xiaoge who was leading a team to Europe to help, besides Xu Xin who came to Lin Hong Kong to discuss Douyin and also specifically to check on pricing...

Yu Xing suddenly realized that it wasn't like there hadn't been any communication at all.

Subsidies, gross profit, sales targets, and market system.

Xiong Xiaoge hurriedly led the executives of the Silicon Carbon Group to Europe without investigating the matter in detail, but Xu Xin inevitably raised objections, the core of which was just two words—radical.

The gross profit margin is too low, and the risk after the subsidy is phased out is very high.

Most importantly, although Yu Xing intends to list the Silicon Carbon Group as soon as possible, it is actually difficult to assess when it can be listed. This means that if it cannot be listed before the subsidy is phased out, the strong impact could greatly delay the listing process, thereby amplifying the investment risks of Today Capital.

Xu Xin's stance is very clear.

Yu Xing was puzzled: "Why didn't you do this sooner?"

“You didn’t tell me earlier! The cost of your bicycle is so high, can’t you reduce it a bit?” Xu Xin focused on the cost issue. “Can’t you replace that double wishbone suspension with a MacPherson strut? Cut some costs on the interior trim, you have to leave some room for gross profit.”

Yu Xing could only go through the discussion again in detail about how economies of scale reduced costs and analyze the importance of "Jiuzhou" quality.

He also mentioned the sales and cost targets based on this pricing strategy.

The biggest uncertainty right now is what the subsidy policy will be like in 2017. The maximum subsidy next year is 5.6 yuan, and the estimated subsidy the year after is around 5 yuan. The worst-case scenario for the Silicon Carbon Group is to completely eliminate cash subsidies in 2017, which is why they have set a goal to reduce the cost per vehicle to around 28 yuan.

If the cost per vehicle can be reduced to 28 through economies of scale, with a 15% gross profit margin, the price would be 32.2 without subsidies. If the margin is 20%, the selling price would be 33.6. Optimistically, if a reputation and quality are built up over two years, it might be able to compete in the market.

The silicon carbon group wants a cost price of 28. If it can achieve sales of 5 next year, the sales target for the year after next will be around 8.5 vehicles, which is a 70% increase. If it does not reach the expectation, assuming only 4 vehicles are sold, then at least 9.5 vehicles will be needed the year after next, which is a 138% increase in sales.

If sales are low again next year, even if they surge the year after, the production line will be unable to withstand greater pressure, and we will have to expand investment or add new production lines, incurring additional time and financial costs.

Xu Xin could understand the key cost target of 28 that President Yu mentioned, but she still felt it was too aggressive.

Neither the 4+9.5 nor the 5+8.5 two-year goals are easy to achieve.

"I think it's alright. With subsidies these past two years, the cars are still great value for money. People can buy cars below cost price. The application of high-strength steel alone is top-notch." Yu Xing expressed optimism. "If we can achieve our two-year goal, I believe our customers will be even more satisfied. Moreover, we will be able to use domestically produced air suspension, and there will be a lot of technological value in this kind of empowerment."

The cost of a single vehicle from the Silicon Carbon Group is 32 yuan, while the on-the-road price for consumers is 29 yuan. The difference is covered by government subsidies, and consumers are exempt from the purchase tax required for gasoline-powered vehicles.

The "Jiuzhou" series, which will be launched next year, will only have imported air suspension on the top-of-the-line model. In the future, the domestically produced air suspension will inevitably be made available on all models.

Xu Xin asked a question that had been asked internally within the silicon carbide industry: "What if it can't be done?"

"What else can we do?" Yu Xing could only reply, "Let's weather this together. I'm a shareholder, but aren't you?"

"..." Xu Xin asked another question she had been asked before, "Are you confident?"

Yu Xing nodded: "I have 100% confidence."

Xu Xin was silent for a moment, then suddenly asked, "If such a sales target can really be achieved, will the Silicon Carbon Group break into the top ten SUV list?"

Having considered the existing risks, she now begins to think about the benefits.

“You need to add a qualifier. If it starts at over 200,000, then let’s say 250,000.” Yu Xing thought for three seconds and then gave his answer. “From 250,000 to 400,000, if we can sell 40,000 cars next year, we’ll be in the top ten.”

He casually listed a few well-known models: the 2.0 Envision, the domestically produced Audi Q5 with a price reduction, the Volkswagen Tiguan with a lower price, the Mercedes-Benz GLK which is about to be replaced, and Honda, Nissan, and Toyota. Hmm, the Ford Edge is also not bad.

Hearing these familiar names, Xu Xin suddenly felt a surge of excitement and asked, "Can we really do it? Can we really beat them?"

“Their sales volumes vary greatly. The Buick Envision sells over 100,000 units a year; our production line couldn't produce that many even if we worked ourselves to the bone,” Yu Xing chuckled, then added, “But our car is the fastest, has the most features, and the experience is… well, one of the best.” Xu Xin picked up her teacup: “Why add ‘one of’ to ‘experience’?”

“The emotional value of a brand is also reflected in the actual user experience,” Yu Xing said objectively. “Can a new brand be the same as a well-known brand? The market needs time and a process to accept new energy vehicles, and this is also a problem that Silicon Carbon Group needs to face.”

Seeing that Xu Xin was deep in thought again, he drank tea instead of wine and said, "President Xu, we need to solve many problems, but many problems are not unsolvable. This is precisely the golden opportunity for our investment."

Xu Xin took a couple of sips of tea and nodded: "Okay, I got it, little stock market genius."

Yu Xing looked at Xu Xin in astonishment. This...

"Didn't you call yourself that?" Xu Xin noticed President Yu's sudden outburst.

Yu Xing was puzzled: "Huh? I only chatted with Yu Kai once, just joking around, how did you even know?"

"Losing money in the stock market is something everyone loves to talk about," Xu Xin sneered. "Yu Kai himself is a big mouth. Now people say that President Yu is a master at running a company, but a complete idiot when it comes to stocks."

Yu Xing: "..."

Seeing this, Xu Xin comforted her, saying, "Everyone has their own area of ​​expertise."

“Yes, everyone has their own expertise.” Yu Xing said, seemingly mocking himself. “It’s not surprising that people who run companies are not good at stock trading, and people who invest are not good at short selling, but Alibaba’s stock will definitely continue to rise.”

Xu Xin glanced at President Yu suspiciously before quickly looking away, as if she had been mistakenly hurt.

She didn't see anything unusual and could only joke, "A little pressure is definitely something you, President Yu, can handle. You're much better now than before. If I had come to inquire about your car prices before, you would have kicked me out. Now we can have a serious chat."

Yu Xing nodded: "Yes, before I was afraid of being swayed by pressure, so I could only kick people out. Now you can't affect our pricing at all, so everyone communicates very amicably."

Xu Xin waved his sleeve and turned to leave, taking with him the aggressive tactics of the Silicon Carbon Group.

However, as one of the few new energy investments by Today Capital, she thought long and hard before calling her father, who had been immersed in the industry for decades.

Mr. Xu has long since retired, but he still cares a lot about the development of the domestic automobile industry.

After listening quietly to his daughter's description, he unexpectedly commented, "Very good. You're in sync. When the tide of the times comes, you should be aggressive when necessary. You have enough resources, patience, and the courage to seize opportunities. This is a good thing for the new energy industry."

Xu Xin had expected to hear a more traditional analysis, and was quite surprised by her father's words.

She hesitated and said, "We've invested a lot of money, and we're afraid of making a mistake."

“You’re losing money, you’re losing money, why are you telling me this?” Xu’s father said generously. “Then I’ll give you all my retirement pension.”

Xu Xin: "..."

Xu's father then said, "Didn't they invest their own money? You're not as good as young people; you should learn more from others."

After listening to the phone call for a long time, Xu Xin's hesitation subsided, but she began to feel quite angry.

She put down her phone and glanced at her husband, who was moving quietly. Thinking of the disastrous 'real research', she calmly said, "Hey, Mr. Li, come here."

Having no other choice, Li Song had to move over, intending to discuss the target he had found in the domestic market after the storm had passed.

With a mind that encompasses mountains and rivers, what harm can raging storms do to me?
Li Song strategically appeared meek and submissive, but secretly harbored lofty ambitions.

(End of this chapter)