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Over-interpretation! Li Bin: there is no "gambling agreement" between Weilai and Hefei

2024-07-14 Update From: AutoBeta NAV: AutoBeta > News >


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On December 9, Li Bin, founder of Xilai, attended the 2023 (21st) Annual meeting of Chinese Business leaders hosted by China Entrepreneur Magazine. In response to the previous hot rumors that Weilai bet 120 billion yuan with Hefei, the response said: there is no gambling agreement between the two sides, and it has been over-interpreted. Li Bin said that Weilai bought back some of its shares six months after signing a cooperation with the Hefei government, with a repurchase amount of more than 8 billion yuan from 2020 to 2021. Hefei has a good return on investment.

It is worth noting that this is not the first time Li Bin refutes rumors of a gambling agreement. As early as last year, when Li Bin participated in the CCTV "Dialogue" program, he refuted rumors about the bet between Weilai and Hefei, saying: after the industry guidance funds in Anhui and Hefei invested in Lailai in 2020, it is very important for Weilai to develop. But Weilai also bought back some of its shares in 2020 and 2021, so there is no problem of losing the bet.

At the same time, it also said that Hefei uses return funds to continue to support the development of the new energy vehicle industry chain, and has set up a fund to support the development of new energy vehicles. Many enterprises have already settled in Hefei through the investment of this fund. Therefore, Anhui and Hefei are very comprehensive and long-term in terms of promoting industrial development through funds, and they are not gambling as everyone wrote.

At the meeting, Li Bin also recalled that Hefei saved Weilai from the intensive care unit at that time, saying that Hefei has the geographical advantages of talent, logistics, industrial base and the integration of the Yangtze River Delta. Li Bin said that the cooperation between the two sides is a coincidence. What I want to say most is that even in the most difficult times, it makes sense to do some long-term thinking.

Looking back at the situation of Xilai Motor at that time, it was founded in November 2014 and was initiated by Li Bin, founder of the barter car. The first model, the ES8, was launched in December 2017. In September 2018, Ulai was listed on the New York Stock Exchange in the United States. On December 15, 2018, the second production car, ES6, was put on the market. In 2019, Xilai Motor is mired in financial crisis and faces elimination with a loss of 10 billion yuan. At the same time, there was also negative news such as spontaneous combustion recall, layoffs and executive departures, which led to a sharp fall in the share price of Weilai at that time, and the lowest share price went to $1.19 per share, close to the Nasdaq delisting red line of $1.

In order to survive, Weilai also approached Beijing Yizhuang Guotou and the government of Wuxing District, Huzhou, Zhejiang, to discuss financing issues, but both ended in failure. Under the background that the market was not optimistic about Weilai, Hefei extended a helping hand to Weilai. On April 29, 2020, Weilai reached a strategic cooperation with Hefei state assets. Hefei state assets invested 7 billion yuan in China and 4.26 billion yuan in Weilai, which held 24.1% and 75.9% shares in China, respectively.

At that time, some media reported the content of the gambling agreement mentioned by Li Bin. According to the report, Hefei investment is required, first of all, it submitted the IPO within 48 months after receiving the investment, and completed the listing within 60 months. In addition, in addition to IPO, Weilai also needs to fulfill performance commitments, that is, revenue of three models listed in 2020 is 14.8 billion yuan, revenue of 6-8 models listed in 2024 is 120 billion yuan, total revenue from 2020 to 2025 is 420 billion yuan, and total tax revenue is 7.8 billion yuan. If the above requirements are not met, Xilai will need to buy back 7 billion of the Hefei government's investment at an annual interest rate of 8.5 per cent and bear the risk of default.

It is undeniable that only with the financial support of the Hefei municipal government can we save the company that stepped into ICU at that time. Li Bin also said: "Hefei let Weilai out of ICU, not only gave us funds, more importantly, gave us confidence", and Hefei also made a lot of money because of the rise of Weilai Motor, winning the title of "the best venture capital institution".

After Hefei's success in rescuing Yulai, it is also speeding up the layout of its products. At present, there are many mass-produced models such as ES8, ES6, EC7, EC6, ET7, ET5/ET5T and so on. Although there are many models in layout, the sales data are inconspicuous. Relevant data show that the sales volume of Lulai was 15959 in November and 142026 from January to November, lagging behind the ideal car that started in the same period. As a reference, the cumulative sales of ideal cars this year is 142026.

In addition, from the third-quarter results released by Weilai, the situation of Weilai is not optimistic. According to the financial report, the net loss of Weilai in the third quarter was 4.557 billion yuan, an increase of 10.8% over the same period last year, and the gross profit margin of the whole vehicle of Lulai in the third quarter was 11%, down 5.4% from the same period last year.

Of course, Xilai is also taking some measures to adjust it. For example, 10% layoffs were launched in November. At the same time, with Changan Geely reached a power exchange business cooperation agreement, the two sides will unify the battery package and jointly establish a power exchange system. Most importantly, Xilai acquired its own production qualification this month by acquiring some of its Jianghuai assets. For Ulai, obtaining production qualification will not only improve production efficiency, but also help to reduce subsequent production costs. Reducing costs and increasing efficiency will also play a positive role in the follow-up development of Lai Automobile, which is the main theme of the adjustment of Lai Automobile in the short term.

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