What's wrong with me being a rich man?

Chapter 679 Summary (4k)

The atmosphere was rather somber during the lunch that XPeng Motors executives had with Mr. Yu in Lingang.

Although He Xiaopeng, Xia Yan, and others tried to showcase the energy of the startup team and worked hard to find common ground, they felt something was missing. By the end of lunch, they were prepared to face criticism from General Manager Yu, but the expected storm didn't come; General Manager Yu had other things to do in the afternoon...

Xia Yan was both disappointed and relieved, and said to He Xiaopeng with a wry smile, "President Yu's criticism is not something you can just get whenever you want."

He Xiaopeng shook his head and said, "There are still many people on the internet who make fun of Shanfeng and President Yu's 'One Qi Transforms into Three Pure Ones' technique, but when you actually meet him, such guidance is truly rare."

Xia Yan smiled and said, "You can see President Yu's skill in the details. The success of Carbon Silicon Kyushu is not accidental."

He Xiaopeng nodded. He had already made many predictions about the work on silicon carbon, but what the other party had done was clearly more extensive and in greater depth than he had expected.

The two discussed the current problems and the underlying factors they revealed, but neither of them mentioned the purchase price of Fuyao Glass.

That evening, He Xiaopeng returned to his hotel room alone and carefully and seriously considered the situation. Instead, he made phone calls to people outside the company, intending to find a third party to provide a price for sourcing goods from Fuyao Glass.

Taking glass as an example again, the design of the XPeng G3 is non-standard size, turning the sunroof into a canopy with a total area of ​​1.2 square meters. According to the company's internal quotation, its price is 917 yuan per square meter.

Mr. Yu previously mentioned 850 yuan per square meter, and this also includes the premium for non-standard products. Considering that Xiaopeng does not offer discounts for small-batch purchases.

These two pricing options represent a margin of approximately 8%.

As a startup, G3 chose to use lower-cost glass in order to reduce the final selling price. Now, this one component alone costs 8% more, making it hard not to reconsider the entire company's situation.

He Xiaopeng knew that President Yu was not making baseless accusations. After asking for help, he waited patiently in the room. However, to his surprise, the price quoted by the third party was 5% higher than the company's price, reaching 1155 yuan. In this light, the internally proposed purchase price seemed reasonable again.

But then he thought about how familiar Mr. Yu was with prices, and, not believing it, he asked someone to inquire about Fuyao's prices again. This time, however, it was a completely different mid-range price.

So, when you do the math, the four parties actually have four different prices.

He Xiaopeng looked at the message on his phone and inexplicably laughed.

There are many intricacies involved in procurement, a truly vast array of them!

He tossed and turned all night, pondering the matter. He concluded that it was best to clarify things through President Yu's channels before deciding on the next step. As for how to bring it up appropriately...

The next morning, He Xiaopeng, sporting dark circles under his eyes, called Yu's secretary, Zhang Yangxu, to find out Yu's schedule for the day and expressed his desire to discuss work privately.

“Mr. He, Mr. Yu briefly shared his views on the G3 with me on his way home last night. I’ve also compiled them here, you can take a look.” Zhang Yangxu said calmly. “Mr. Yu is going to the city today and may not return to Lingang until tonight. Also, if you are interested in the purchase price of some parts, Mr. Yu asked me to take you to see our supply chain director, Ke Yuke.”

He Xiaopeng was surprised to find that President Yu had already made arrangements.

He sighed inexplicably. Since President Yu had made such arrangements, he must be very confident in the price he offered, which naturally proved that there was something fishy about the other offers.

As expected, after meeting with Ke Yu, the director in charge of procurement for silicon carbon, He Xiaopeng personally overheard his communication with Fuyao.

There were no middlemen, no subsidiaries, just direct contact between the two parties. They were discussing a 1.2-square-meter non-standard size double-layer tempered glass product with heat-insulating PVB film and a double silver Low-E custom heat-insulating coating.

According to Fuyao's description, this is a product supplied at the same level as Tesla, not just a low-end product with 99% UV protection like the G3.

Taking into account the cost amortization of mold development, the cost increase due to production yield loss, and the premium for processes and raw materials, the price of this glass is 734-846 yuan per square meter, which translates to 820-950 yuan per set.

The final amount depends on the impact of car sales on the allocation of mold-making costs.

However, no matter how you calculate it, the price of such a set will not exceed 1000.

At this point, He Xiaopeng, his face dark with anger, disregarded his pride and directly asked Director Ke Yu for his opinion on any possible shady dealings.

"Mr. He, well..." Ke Yu hesitated, looking at the BOSS's secretary who had accompanied He Xiaopeng, before continuing.

Zhang Yangxu gestured with his eyes, indicating that there was nothing he couldn't say.

“XPeng’s car isn’t in mass production yet, so the price quote is just that – a quote.” Ke Yu carefully chose his words. “Normally, we source directly from the manufacturer, meaning we deal directly with Fuyao. But if the situation is urgent, such as needing to rush mass production, ensure delivery, or secure exclusive compatibility, then the price will naturally fluctuate, which is perfectly normal…”

He Xiaopeng interrupted, "President Ke, what do you mean by 'exclusive adaptation'?"

“For non-standard sizes like G3, the curvature of the glass, the installation interface, the optical parameters, and the certification requirements can be deliberately made to be non-standard requirements that only one company is willing to meet. This makes it impossible for the mature solutions of large manufacturers to adapt, and there may not even be a need for open bidding.” Ke Yu explained the situation. “There will be no problem in terms of process, since only one supplier can adapt. However, for products like glass, Fuyao’s quality is not a problem globally.”

He Xiaopeng fell silent for what seemed like the umpteenth time. He had been quietly reviewing the company's documents the night before, and it was decided that the windshield and sunroof glass would be imported from Italy.

Why not use domestically produced glass? Why go through all the trouble of importing it?
He Xiaopeng asked, "Are there any well-known automotive glass suppliers in Italy?"

Ke Yu was taken aback: "Italy? Uh, no, there is deep processing and coating there, but Saint-Gobain is French. Other manufacturers probably have factories there, but I don't know the specifics."

He Xiaopeng shook his head, saying that ambiguity is the best way to make a fuss.

The different pricing schemes offered by Fuyao Glass already reveal significant internal problems, which will hinder XPeng Motors' future competitiveness in the market.

He Xiaopeng and senior management had previously reached a consensus that the current goal is to build a car from scratch. At the same time, in order to improve decision-making efficiency, the power of the supply chain, procurement and production system is highly concentrated in the hands of a few people.

Looking back now, it seems that this internal company operation should be changed.

He Xiaopeng sincerely thanked Director Ke Yu for contacting Fuyao directly and for answering his questions.

On his way back, he said to Zhang Yangxu, who represented President Yu, "There are many things you won't know until you see them, and only those in the know can understand them. President Yu has sharp eyes. He sent me to Lingang so that I could see the problems within the company!"

Zhang Yangxu said quietly, "Mr. He, there's still the car issue..." He didn't realize his boss meant that; there were still many problems with the car.

Zhang Yangxu handed over the in-depth test drive experience report he had compiled the day before to He Xiaopeng, expressing his strong doubts about whether the company could actually manufacture cars.

He Xiaopeng took the two pages of paper and quickly scanned them, finding a variety of questions.

He then spoke quite frankly, saying, "The G3 needs careful refinement. Mr. Zhang, please thank Mr. Yu for me. He was willing to point out the problems, which is invaluable. He is my mentor in this car."

In ancient times, a teacher could teach a single word; now, a teacher can teach a whole cartload.

It's not just about the car, but also about the company's problems at this stage.

He Xiaopeng brought the opinions back to the hotel and studied them repeatedly.

It's obvious that this is what Mr. Yu described verbally, so it sounds very colloquial. For example, he mentioned the storage space as a useless feature, as things are easy to fall out and difficult to retrieve, and the central control screen as having an anti-human design, requiring multiple pages to access the desired function.

Mr. Yu also mentioned other manufacturers, including BYD, believing that some of their designs are too mechanical. Functions on the screen could clearly be placed on the first-level page, but instead they are placed on the second or third-level page, in positions furthest from the driver.

The document consists of two pages. The first page presents the G3 mule from the perspective of an ordinary car owner, but the second page addresses a very serious issue.

Why does this car use a battery from China Telecom?
"That's quite strange. Let's talk about it when we meet. Isn't Liandong Tianyi a factory that makes batteries for telecom operators?"

Seeing the vivid question in President Yu's eyes, He Xiaopeng realized that he found it difficult to answer the question fundamentally.

Therefore, he discovered once again that he completely lacked control and in-depth understanding of the company's products.

Why is it a collaboration with China Telecom?

Because it has Panasonic's technology license.

This doesn't seem to be enough to answer Mr. Yu's question.

He Xiaopeng intended to ask He Tao and Xia Yan for advice, but this would significantly erode his trust in them, prompting him to consider the choices he might face.

On June 9th, in anticipation of Silicon Carbon Technology Day, many industry professionals, including representatives from GAC Group and NIO, had already gathered in Lingang.

The status of the head of Silicon Carbon in the financial world is a topic of casual conversation, but Silicon Carbon is now a leader in China's new energy industry, and Kyushu has the same halo as its name.

At this juncture, everyone wants to see for themselves what this manufacturer is planning for the future.

That same afternoon, He Xiaopeng finally saw President Yu again after two days.

"Mr. He, you look radiant!" Yu Xing greeted him with a smile.

He Xiaopeng waved his hand: "President Yu, please stop teasing me. I wish I could take the G3 apart and study it, but I can't."

Yu Xing laughed and said, "Why can't we dismantle it? We dismantled it on its very first night in Lingang."

He Xiaopeng exclaimed in surprise, "Huh??"

“We’re a car manufacturer, taking apart and reassembling isn’t an easy task.” Yu Xing handed over a cigarette. “We also fixed your malfunctioning air conditioner. We were all wondering why you were using Liandong Tianyi batteries.”

He Xiaopeng took a breath and explained seriously: "President Yu, the cylindrical ternary lithium battery cells of Liandong Tianyi have achieved mass production and are also supplied to JAC, Haima and FAW. They have automotive-grade verification and are willing to cooperate with us in battery cell adaptation, testing and supply. However, CATL's business terms are too strict and its production capacity cannot be fully guaranteed."

Yu Xing nodded thoughtfully, "That's something I didn't expect. Your company really has no say at all. CATL is not what it used to be."

He Xiaopeng immediately said, "Yes, Mr. Yu, CATL is demanding huge advance payments. We've only just started our Pre-A round of financing. Moreover, Liandong Tianyi has Panasonic's technology license, and Panasonic supplies batteries to Tesla."

Yu Xing shook his head: "These are two different things, two different technologies. Your problem is very serious."

He frowned and continued, "What do you mean by supplying JAC and FAW? How many new energy vehicles are they actually selling on the market? And how many of those new energy vehicles actually use Lianhe Tianyi's batteries? They have absolutely no experience in large-scale passenger vehicle supply. The stability of this supply chain and quality control are both problems. You dare to go this far, it's just..."

Yu Xing couldn't help but shake his head again and asked, "Who made this decision?"

“It’s General Manager Xia and General Manager Yang.” He Xiaopeng lowered his voice a bit. “They want to push for the rapid mass production of G3 and try to seize the market position first.”

Xia Yan is the president, Yang Chunlei is in charge of the three-electric system, and He Tao is in charge of the supply chain implementation.

Looking at He Xiaopeng's expression, Yu Xing smiled and said, "Mr. He, I have another question now. What exactly can you do at XPeng? What decisions do you make? I can say that you made a mistake in battery selection. You can try to win over CATL, but the so-called technology of Liandong Tianyi that is the same as Tesla's is just a gimmick. It is a problem of ability not to recognize this gimmick. If you recognize it and still insist on it, then you need to think about it carefully."

He Xiaopeng had to say, "Mr. Yu, I don't have enough experience with new energy vehicles, and I'm worried that my decisions might cause problems."

“Then let’s set up the framework for the company’s operation and keep the supply chain under our control,” Yu Xing said without hesitation. “Supplier access, pricing negotiations, quality control, and auditing are all common practices. Don’t throw the baby out with the bathwater.”

When Silicon Carbon was first established, it started with research on the supply chain, and Yu Xing actually has quite a bit of experience in this area.

He Xiaopeng pondered, "Now that I've transitioned from being an investor, I also need to consider their perspectives on this aspect of the setup."

Yu Xing didn't want to use such words to describe his competitors, but he couldn't help but say it: "Naive. When it's time to break the mold, then break it. You have to start by breaking the mold of your company's GAC Iron Triangle. You can't just think about being a chairman who only thinks about doing nothing; you have to be a real president."

“You don’t have anyone here, but I do. I’ve mentioned before that we can do joint procurement of some common parts. You can decide for yourself.”

He Xiaopeng felt he didn't need to think much about it, but as President Yu just said, a framework still needed to be established. However, in any case, using the problems exposed by this procurement to launch an attack was indeed a good opportunity.

(End of this chapter)