Middle Eastern princes love Chinese cars with huge losses

There are tycoons from the Middle East again, coming to give money to Chinese cars. Recently, Gaohe and NIO have successively received investment, totaling approximately 50 billion yuan. Since this year alone, more than five new car-making companies have signed cooperation agreements with Middle Eastern countries, including brands such as Weilai, Gaohe, Skyline, and Great Wall Huaguan.

Nilai's near thirst

Distant water can dissolve

On June 20, 2023, NIO founder Li Bin announced on Weibo that NIO had signed an agreement with CYVNH Holdings, an investment institution under the Abu Dhabi government of the United Arab Emirates, and is expected to receive an investment of approximately US$1.1 billion.

Subsequently, on July 12, NIO announced that it had completed a strategic investment of US$738.5 million from CYVN.

This investment from the sponsor’s father is undoubtedly a hearty and timely blessing for Weilai.

You know, since 2023, Weilai’s life has not been comfortable.

In the first half of this year, NIO ranked first in the list of new energy vehicle losses! On average, you lose 197,000 when selling a car.

The losses are like a bottomless pit and are still expanding.

The financial report shows that in the first quarter of 2023, Weilai’s net loss was 4.7395 billion, a year-on-year increase of 165.9%.

Calculating with your fingers, it is equivalent to losing 78 million every day you open your eyes, which can almost buy 1 million Huaxizi eyebrow pencils.

In addition, NIO is far ahead in the list of new energy vehicle losses in the first half of the year.

Every time a car is sold, it loses 197,000, which is truly the king of losses.

From a sales perspective, NIO’s performance was average.

In the first half of the year, Weilai's sales volume almost fell out of the top ten, not even half of the ideal.

This investment from the Middle Eastern tycoons can be said to have solved several of Weilai’s “thirsts”:

First, Weilai has more money in its account and more abundant cash flow, so the pressure of losses may be alleviated a bit.

Regarding this cooperation, Li Bin emphasized: "This investment transaction will further strengthen NIO's balance sheet and provide impetus for our continued efforts in accelerating business growth, promoting technological innovation, and establishing long-term competitiveness. We look forward to working with CYVN to expand NIO's international business."

To put it simply, it means having money to do more things.

Secondly, cooperation with local tycoons in the Middle East can also accelerate NIO’s globalization process and expand its business territory.

NIO’s goal is to enter more than 25 countries and regions by 2025.

In October last year, Weilai announced that three models, ET5, ET7 and ES7 (named EL7 in the European market), have entered the markets of Germany, the Netherlands, Denmark and Sweden.

Leveraging the influence of local tycoons in the Middle East may help Weilai's internationalization path go faster.

After all, with just a piece of cloth on my head, I am the richest in the world. With the support of Middle Eastern tycoons, Weilai will be more confident to enter the traditional markets of Europe and the United States.

A few years before Wei came to China, he survived thanks to blood transfusions from Hefei.

This year, the wealthy people in the Middle East are receiving blood transfusions. I hope Li Bin can make good use of the money and use it wisely.

Brother Ji recommends Weilai not to make mobile phones, it is too expensive...

Middle Eastern tycoon

Prefer Chinese cars

Weilai should have made the right move when it comes to entering the Middle East market.

First of all, the automotive industry has always been a key area of focus in the Middle East:

Both CYVN and the Kuwait Investment Authority (KIA) have invested in Daimler (the parent company of Mercedes-Benz);

The Qatar Investment Authority (QIA) has invested in Porsche and VW.

Secondly, the wealthy people in the Middle East also prefer Chinese car brands.

Data shows that new car sales in Saudi Arabia will exceed 630,000 units in 2022, of which Chinese brand cars will sell more than 100,000 units.

The market share of Chinese brand cars in Saudi Arabia, Bahrain, Oman and other Middle Eastern countries exceeds 10%.

Therefore, the Middle East market is becoming the main area for Chinese car companies to go overseas, and many Chinese car companies have made a fortune in the Middle East.

In 2020, AIWAYS will enter the Israeli market;

In August 2022, BYD entered the Israeli market and won the single-model sales championship in Israel for five consecutive months;

Tianji Automobile will establish a joint venture with local Sumou Holding in Saudi Arabia at the end of 2022;

On June 19 this year, Great Wall Huaguan, the parent company of Qiantu Motor, signed a strategic cooperation agreement with Manaseer Group, Jordan's largest private company.

As for the reason why the wealthy people in the Middle East prefer Chinese cars, it is also very simple - they are cheap and big.

Majid Sahani, the Saudi dealer of Great Wall Motors, said: "Chinese cars are of good quality and affordable, so they are favored by more and more local consumers."

Each takes what he needs

Don’t lose money

Although Weilai is still in a loss-making period, the Middle Eastern prince's money does not come from strong winds, so this cooperation is still profitable.

First, the Middle East currently has an urgent need: an energy transition.

The current global energy market has begun the third international energy transition represented by renewable energy and clean energy.

The "Sustainable Development Plan" released by the IEA predicts thatThe market share of fossil energy will gradually be replaced by renewable energy.

Middle Eastern countries, which have become rich due to oil, must transform. This is an urgent need.

At the second Electric Vehicle Innovation Summit, summit director Nasser al-Bahri said: "The UAE electric vehicle market is expanding rapidly. From 2023 to 2027, the UAE electric vehicle market will develop at an annual growth rate of 27.2%."

The Saudi government has set an electric vehicle target: it is expected that by 2030, the number of electric vehicles in the capital Riyadh will account for at least 30%.

Middle Eastern countries are working hard on energy transformation, and the new energy vehicle market is a big piece of pie that they cannot let go of.

Although Weilai is still losing money, it has never been soft on technology investment.

In the second quarter of 2023, Weilai’s R&D investment exceeded one-third of its revenue.

It’s a big investment, but it’s also fruitful and blossoms everywhere.

Although it is not profitable yet, who knows what will happen in the future?

Jassem AI Zaabi, Chairman of CYVN, said:"Our strategic investment in NIO comes from our high recognition of NIO's brand position, products and technical capabilities in the smart electric vehicle market."

Therefore, the wealthy people in the Middle East value Weilai’s technology research and development capabilities.

Rather than miss any opportunity to gain a foothold in the new energy vehicle market, this may be the investment strategy of the Middle Eastern prince.

After all, they are not short of money.

Conclusion

We still have to have dreams, what if they can come true?

Same goes for cars.

You may be in dire straits of losses one second, but money will be thrown at you the next second.

I wonder who the next lucky Chinese person will be?