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On December 8, the latest production declaration information of all the models owned by Xilai was exposed on the official website of the Ministry of Industry and Information Technology. According to the declaration information, all the tail marks of all the models under the Weilai Automobile have been changed from "Jianghuai Weilai" to "Weilai". The appearance of the declaration information also means that in the future, the rear logo of the car will be replaced with the word "Weilai".

It is worth noting that a few days ago, when releasing its third-quarter results, Xilai announced the acquisition of production equipment and assets of the first advanced manufacturing base and the second advanced manufacturing base of Jianghuai Automobile. The day before, Weilai Automotive Technology (Anhui) Co., Ltd. had appeared in the credit information management system of vehicle production enterprises of the Ministry of Industry and Information Technology. At that time, the news also triggered the majority of netizens to guess that Weilai has obtained independent production qualification. This time, Weilai Guan Xuan acquired some assets of Jianghuai Automobile, which also confirmed the independent car production qualification of Weilai Automobile.

It is understood that earlier, due to the lack of production qualification, all the vehicles produced by Lai Automobile in nine years' time adopted the contract manufacturing mode in cooperation with Jianghuai Automobile, and the post-label was affixed with the word "Jianghuai Automobile." In addition, it can also be seen from the website of the Ministry of Industry and Information Technology that the previous model declaration enterprises of Weilai are Anhui Jianghuai Automobile Group Co., Ltd.

Reviewing the cooperation between the two sides can be traced back to 2016, when the two sides signed a strategic cooperation framework agreement to integrate superior resources and jointly build Jianghuai Weilai advanced manufacturing base. In March 2021, the two sides upgraded their cooperation and jointly established Jianglai Advanced Manufacturing Technology (Anhui) Co., Ltd., each holding 50%. In May of the same year, the contract time of both parties was renewed. According to the agreement, Jianghuai Motor will be responsible for the production of ES8, ES6, EC6, ET7 and other possible Lulai models from May 2021 to May 2024.

On October 19, Jianghuai Automobile announced that it planned to transfer some of its assets in order to further optimize its asset structure. Among them, it involves the two factories that Jianghuai and Weilai cooperate with, the F1 factory and the F2 factory. At that time, Qin Lihong, co-founder of JAC, responded that the transfer would not have any impact on the normal production and operation of Jianghuai and Weilai.

This time, Weilai won the qualification to build a car with 3.158 billion yuan, which is certainly good news for Weilai. As we all know, OEM needs to pay high OEM fees. Relevant data show that from 2018 to 2022, the contract manufacturing fee for Jianghuai Automobile has been paid as high as 3.038 billion yuan in the five years, which is close to catching up with the cost of purchasing car-building qualifications.

Of course, OEM had certain advantages at that time. After all, in 2016, Lulai just started, and the money had to be used again. Li Bin, CEO of Weilai, also said that as an innovative company with limited capital and resources, it is very important to make a reasonable choice. At the same time, it also points out that Jianghuai Automobile has mature manufacturing experience and is willing to implement it in accordance with Weilai's process and process standards, which is the best of both worlds.

Several years have passed, the sales of Lulai cars are also growing year by year, brand awareness has also been precipitated, in this context, their own production qualification is also a matter of time. Because it can not only reduce the production cost, but also get more initiative without the restriction of the contract manufacturing mode, which is helpful to improve the production efficiency. Li Bin also said on the third-quarter earnings call that manufacturing costs would be reduced by 10% if they were all made independently.

However, although Xilai can get rid of the contract manufacturing model, it still has to face losses and financial constraints. Relevant data show that from 2018 to the first half of 2023, the cumulative net loss of Xilai was as high as 76.4 billion yuan. In the third quarter of this year, Weilai posted a net loss of 4.557 billion yuan, up 10.8 per cent from a year earlier. In the case of capital shortage and increased losses, the acquisition of 3.158 billion yuan is also a big expense. At the same time, sales of Lulai cars in the first half of this year were not satisfactory, with figures showing that from January to June, the cumulative sales of Lulai cars were 54561. For comparison, the cumulative sales of ideal cars in the first half of the year were 139117.

If the sales volume is not good and the loss increases, reducing costs and increasing efficiency will naturally become a measure that must be taken by Lulai Motor. On November 3rd, Xilai opened about 10% of job cuts. Although layoffs can ease the financial pressure to a certain extent, the auto industry is concerned that it is necessary to return to sales in the future. after all, the qualification for building cars, coupled with scale, is conducive to further reducing losses and enhancing the competitiveness of products in the market.

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