What's wrong with me being a rich man?

Chapter 510 The Final Round

The consortium from Europe expressed strong investment interest on the first day of their visit to the Silicon Carbon Group in Lingang.

This is an excellent sign, but frank communication is still necessary before the cooperation between the two parties is finalized.

The following day, following factory visits, test drives, and high-level interactions, Yu Xing, Cui Zhiyu, Hu Zhengnan, Thomas, and others discussed the ongoing work of the Silicon Carbon Group in more detail in the conference room.

On the one hand, there is the construction of sales systems in key cities and provinces across the country, and on the other hand, there is the ramp-up of mass production at the silicon carbon plant.

Silicon Carbon Group completed trial production of the final assembly line in the first half of the year. At that time, the single-shift capacity could reach 500 vehicles per month, and a digital management system was introduced to improve production efficiency. The current task is to increase the capacity to 2000 vehicles per month and further solve the problem of battery pack assembly accuracy.

Cui Zhiyu showcased a series of standards and safety tests that "Jiuzhou" had passed domestically, but a minor incident occurred during this segment.

Paxson, an industry consultant accompanying the consortium, raised questions upon witnessing the crash test.

"In this 25-degree frontal offset collision, the maximum intrusion into the 'Kyushu' passenger compartment was less than 13cm. Is this data inflated?"

"The Nissan Murano, as a model with the highest IIHS rating in the United States, had a 13cm intrusion in its door hinge pillar and a 7cm intrusion in its dashboard, for a total intrusion of 20cm. This is already the best-performing model in the market after a crash test. Now you're telling me that the cars you build are better than the Nissan Murano?"

“I have reason to suspect that this model has been specially reinforced for crash testing.”

Paxson was very serious and raised his own reasonable questions.

He then explained the necessity of such questioning, stating that the Murano was already the best performance. In fact, the average intrusion of mid-to-large SUVs in the industry during a 25-degree frontal offset collision is 25-30cm, and some models, such as the Jeep Cherokee and Hyundai Santa Fe, have an intrusion of over 35cm.

Based on Kyushu's performance, the Nissan Murano could have received the highest score from the IIHS, but that's because there's only one maximum score available.

Moreover, conducting crash test enhancements is not uncommon in the industry.

"As a newly established automotive company, we place the highest priority on safety," Yu Xing stated, explaining the principles of the Silicon Carbon Group. "Because of this, we chose to use integrated die casting when we were hesitant about it, and for the same reason, we temporarily chose lithium iron phosphate batteries."

He added, “I understand Paxson’s question. In fact, the first 25-degree frontal offset crash test in the Chinese market was conducted by another company under my name. I appreciate the importance that the IIHS has promoted in the past two years. Regarding automotive safety, as a new company that actively uses high-strength steel, we hope to use the performance of our models to drive the application of new materials and new processes.”

Yu Xing did not take Paxson's questioning as offensive, but rather as a way to deepen their communication.

After he finished speaking, Thomas took over the topic and explained how Kyushu applied new materials and processes. The steel-aluminum hybrid structure used in the crew cabin, combined with aluminum alloy energy-absorbing boxes, not only reduced its own weight but also increased its impact resistance by nearly 50%.

Meanwhile, the heat-free aluminum alloy independently developed by the Silicon Carbon Group in China has higher tensile strength and a thermal conductivity that is 25% higher than that of die-cast aluminum, ensuring both strength and optimized heat dissipation.

Paxson raised a reasonable question, and Thomas gave a reasonable answer.

Thomas took over the work that Cui Zhiyu had not finished and continued to present the crash test results of 'Jiuzhou'. In addition to the offset crash test, its performance in the side pillar crash test also achieved the same [Good] rating as the Volvo XC90.

Under the Euro NCAP side pole impact test standard, the Kyushu's body dent depth was only 26cm in a 32km/h collision, which is 35% less than that of conventional models in the industry, while the Volvo XC90's dent depth was 30cm in the same test.

Whether it's 26 or 30, such a rating is [Good], but Volvo's chest protection score is a moderate [A], which is inferior to the 'Kyushu' which uses a steel-aluminum hybrid cage body and a rigid base for the battery pack.

As for the impact performance of the integrated die-cast floor, that goes without saying.

Thomas briefly touched on the rear floor, but remarked with great emotion: "We initially researched integrated die-casting technology. Because of the requirements of this technology, the company sought out scientists and universities in China to develop a heat-free aluminum alloy. Then, because of its better tensile strength and thermal conductivity, we continued to apply it to the entire vehicle structure."

"Without the initial investment and dedication to this new technology, Kyushu would probably be no better than Volvo today."

This is an unexpected bonus in the process of technological development. At least for Thomas, the work he is doing now has surpassed his previous performance at Volvo.

Paxson then gave a thumbs up: "Improving car safety requires investment, and I'm delighted to see this today."

When Cui Zhiyu heard Paxson's expression change from skepticism to admiration, he suddenly realized something, picked up his pen, wrote a sentence on the document, and handed it to his boss—"He was just doing his job for money by questioning me."

They publicly questioned the collision data in the conference room, but only based their questions on solid industry data. Considering the new processes and materials showcased during yesterday's factory visit, their performance today shouldn't be too unacceptable.

and so……

Yu Xing glanced at President Cui's understanding, smiled slightly, and nodded.

We're all out here trying to make a living, and once we get paid, we have to demonstrate our value, otherwise it'll be harder to get jobs next time.

Mutual understanding and mutual respect.

The European financial groups present were clearly very satisfied, judging from their expressions.

The consortium that came to meet this time consisted of four institutions from Germany, Belgium, and Hungary, and the leader, Jonas, had experience working at the Volkswagen Group. After digesting the performance of the new materials and processes for a while, he raised a key question.

"Cost, Mr. Yu, whether the six-seater vehicle can be accepted by the market can only be known after actual deployment," Jonas said seriously. "But lower cost relative to quality will always have an advantage, and your current cost per vehicle is too high."

He only learned about the cost of 'Jiuzhou' bicycles last night, and even considering that it was a new company, he couldn't help but feel worried.

Subsidies do exist in the Chinese market, but automakers won't just accept subsidies for two or three years and then stop; the subsequent risks must be taken into consideration.

“Jonas, I know what you’re thinking. We have a supply chain advantage here in Lingang,” Yu Xing said with a smile. “The Silicon Carbon Group can rely on the regional capabilities of the Yangtze River Delta. Within a 200-kilometer radius of us, there are more than 300 automotive suppliers, covering core components such as motors and electronic controls. This cluster effect will play an even greater role as the entire industry develops.”

He held up his fingers and calculated: "Based on our expected sales next year, there is at least a 10% reduction potential for batteries, at least 8% for motors and electronic controls, 5% for chassis and body, 15% for R&D and manufacturing amortization, and 5% for other costs. Our goal for next year is to reduce the cost per vehicle to 29.5."

“We need time, and the market needs time, but fortunately the subsidies can give us that time.”

"The city of Shanghai alone provided us with excellent initial support."

“The actual on-the-road price of one of our standard 'Kyushu' cars can reach 22 yuan, which is less than 2.9 euros. We believe that many consumers will be willing to try it out. And there are three cities that can also provide unique support.”

Jonas didn't hear this yesterday, and now it sounds like boasting. However, the documents already issued by Shanghai serve as the strongest evidence.

The implicit value brought about by the license plate auction mechanism has undoubtedly greatly increased 'Jiuzhou's' competitiveness in this city.

Jonas discussed it with Marcus next to him for a while, then shook his head and said, "You guys are really going all out with subsidies. Silicon Carbon Group is doing this, Tesla is doing this too. In the US, there are federal tax credits, California is giving state subsidies, and there's also credit trading..."

Marcus added, "California also offers license plate benefits for zero-emission vehicles, which grants them priority right-of-way on highways. Considering the value of commuting time, this alone could amount to $2000 a year."

Yu Xing smiled and said, "Everyone is committed to protecting the Earth and promoting the development of clean energy."

Jonas frowned: "I get a headache just hearing the word 'clean energy' now. Diesel, that supposed clean energy, is really doing a lot of harm."

He had clearly thought of Guoshanfeng again.

Jonas suddenly had a thought: "Mr. Yu, I've heard that Mountain Peak is operated by people from your China. Do you have any leads about it in your country? Who are they?"

Yu Xing countered, "Jonas, do you think I could know? Do you think I could?"

Jonas chuckled self-deprecatingly, saying that if he had said that, it would have caused a global sensation long ago.

Yu Xing picked up his cup and tactically drank some water.

His statement regarding the potential for cost reduction did not receive full support, as it is based on sales volume, and achieving 5 units in sales is not easy. However, the more substantial support measures presented today have boosted confidence.

The first day was practical, the second day was theoretical.

Regarding the informal discussion that day, Yu Xing mentioned a more compelling argument: the Silicon Carbon Group would attempt to launch its IPO by the end of next year or the year after, hoping to secure secondary market financing before the end of the clear cash subsidy policy.

This would certainly mean more money for Silicon Carbon Group, but bringing it up in this context actually reduces the psychological risk to the other party.

Automakers don't just accept subsidies for two or three years and then stop. However, once they go public, investors can have a better exit strategy before the subsidies end.

The fact that Silicon Carbon Group can't run away doesn't mean that the investors can't run away.

Jonas found that the young car company CEO opposite him was actually quite experienced.

That evening, during dinner, he learned the reason for the other party's expertise: in addition to the silicon carbon group that was rushing to the market, this Mr. Yu already had a lot of experience in market competition and had sold many projects.

Even the initial capital for the Silicon Carbon Group was acquired through a sale.

Clearly, Mr. Yu is quite adept at understanding the positions and conditions of both parties in a transaction.

On the third day, more investors were brought into the conference room of the Silicon Carbon Group. In addition to the European consortium that had been in talks for two days, Matrix Partners China and FountainVest Partners, who had previously hesitated and were observing, were also invited to join this round of exchanges.

Zhang Ying of Matrix Partners China had long expressed interest in investing in new energy projects. He had communicated with Yu Xing through Liu Wanying's introduction, but he hesitated this time because of the high valuation of the silicon carbon group.

Tang Kui from FountainVest Partners is a bit more nuanced.

He originally wanted to explore financing opportunities for Douyin, and there were some instructions from senior executives of Tencent to keep this third-party backup channel in mind, not ruling out deeper cooperation in the future. However, Douyin does not currently need a new round of financing, but Silicon Carbon Group kept him on.

Tang Kui had been detained in Lingang for nearly a week for various reasons, and it wasn't until today, when she met a group of foreigners, that she learned that the Silicon Carbon Group was making great strides in its Series C financing.

Moreover, it has clearly made a lot of progress!

IDG, Capital Today, Qiming Venture Partners, Zhejiang Investment Group, Shanghai State-owned Assets Supervision and Administration Commission, Red Falcon Capital, and overseas consortia—all the institutions that have secured $4.2 million in funding—were present.

$4.2 million plus a European consortium with investment intentions...

Tang Kui realized that while she was still hesitant about the high valuation of the Silicon Carbon Group, the window for this round of financing was gradually closing.

Whether to invest or not will likely be decided in the next day or two. If they don't invest, according to Mr. Yu's statement about the last round of financing before the IPO, they will only be able to meet in the secondary market afterward.

Matrix Partners and FountainVest Partners saw a European consortium worth over 4.2 million.

The European consortium was eyeing a Chinese institution with a value of 4.2 million+.

Both parties have gained a new understanding of the financing process of Silicon Carbon Group.

The conference room of the Silicon Carbon Group was bustling with activity, unlike anything seen recently.

Yu Xing didn't discuss anything new that day; he simply gave a systematic summary of the work done since the founding of the Silicon Carbon Group, how the group solved problems, and also outlined his own goals.

"Just like the name of the first model of the Silicon Carbon Group, we hope to create a new energy vehicle company that represents the Chinese market."

"What's encouraging is that our work is now on the path to achieving this goal."

Yu Xing did not budge on the valuation of Silicon Carbon Group, and left two days for the final decision. If a deal could not be reached, this round of financing would be terminated, and the next round would be launched after the company enters the market next year. Of course, the latter plan was not made public.

On October 25, Silicon Carbon Group completed a $900 million Series C financing round.

A consortium from Europe contributed $3.5 million, Matrix Partners China contributed $7000 million, FountainVest Partners contributed $6000 million, and together with the previously agreed $4.2 million, they jointly assisted Silicon Carbon Group in its final sprint to the market.

And this is also theoretically the last round of financing for Silicon Carbon Group before its listing.

(End of this chapter)