“Investors Network” Ye Xin

Due to high-end technology, failure to meet sales targets, and continuous loss in net profit...

On March 18, Maverick Electric (NIU.O) released its 2023 annual report. According to the report, in the financial report for the fourth quarter and full year of 2023 as of December 31, revenue for the fourth quarter was 478.7 million yuan, down 21.8% year on year; net loss was 130.2 million yuan, compared with net loss of 37.1 million yuan for the fourth quarter of 2022.

For the whole of 2023, Maverick Electric's revenue was 2,651.8 billion yuan, down 16.3% from 2022; net loss was 271.8 million yuan, compared to 49.5 million yuan in 2022. According to non-US GAAP, the adjusted net loss was $224.2 million, compared to net profit of $8.8 million in 2022.

In recent years, Maverick Electric's performance has gone beyond losses. It has not “returned to a growth trajectory in 2023,” as Maverick Electric CEO Li Yan said, and its sales target of one million has not been achieved. Profitability is doubtful. In addition, Maverick Electric is positioned as a high-end product, and there are frequent problems with product quality.

Sales fall short of the target of one million

Maverick Electric was founded in 2014 and is mainly engaged in the electric vehicle business. On June 1, 2015, Maverick Electric officially unveiled its first smart electric model, the “Maverick N1”. Since its establishment, Maverick Electric has launched several series models such as N, M, and U.

From 2016 to 2018, Maverick Electric continued to lose net profit, with a cumulative loss of 767 million yuan. In 2018, Maverick Electric was successfully listed on the US NASDAQ, and Maverick Electric only began to achieve profits in the following few years.

However, the good times did not last long. In 2022, Maverick Electric lost 49 million yuan in net profit, and losses continued to expand in the first 9 months of 2023, with losses of 142 million yuan.

Despite profit difficulties, Maverick Electric is confident in its sales development. Li Yan, CEO of Maverick Electric, once said that despite pressure from the consumer market to recover, the company is still confident through the launch of new products and is expected to return to a growth trajectory in 2023.

Previously, Maverick Electric set a sales target for 2023. The sales volume for the full year of 2023 was between 1 million and 1.2 million units, once again sprinting to the target of 1 million units.

However, it backfired. According to the latest data, the cumulative sales volume of Maverick Electric in 2023 was only 709,800 units, a year-on-year decline of about 14.65%. Among them, the cumulative sales volume in the Chinese market was about 601,000 units, down 15.42% year on year; total sales volume in the international market was 108,800 units, down about 10.12% year on year.

Judging from this, Maverick Electric's sales target of 1 million units in 2023 has not been achieved.

As for the decline in both net profit and sales, Maverick Electric attributed this to rising costs caused by the increase in lithium battery prices. Li Yan once said, “From 2022 to 2023, the price of lithium batteries increased by 70%. This single cost item accounts for 40% to 70% of the total vehicle cost, which is bound to have some impact.”

Confined to high-end

Demand in the electric bicycle industry has been strong in recent years, and the decline in sales of Mavericks electric is in stark contrast to the overall growth trend of the electric two-wheeler market in recent years.

According to the data, sales volume of two-wheeled electric vehicles in China in 2022 was about 50.1 million units, an increase of 15.2% over the previous year. The market size of two-wheeled electric bicycles in China is expected to reach 54 million units in 2023.

According to data from the annual report on commercial electric vehicles, by 2023, the number of two-wheeled electric vehicles in China has reached 420 million, and about every 3 people will own a two-wheeled electric vehicle.

It is worth noting that although sales and performance of Maverick Electric, which focuses on the high-end market for two-wheeled electric vehicles, have declined, leading two-wheeled electric vehicle companies that focus on the middle- and low-end markets have shown impressive sales performance.

According to public data, in 2023, Yadi sold a total of 14 million new cars throughout the year, Emma sold 11 million new cars, and Tai-Ling sold a total of 8 million units.

In the field of two-wheeled electric vehicles, Yadi, Emma, and Tailing are still leading companies and occupy a large market share. However, Maverick Electric, which focuses on the high-end market, is difficult to match that of leading companies in terms of sales volume. At the same time, due to factors such as rising lithium battery prices, Maverick Electric's sales have declined in the past two years.

Recently, Maverick Electric released three new models, covering electric motorcycles, electric bicycles, and off-road electric motorcycles. Among them, the highest-equipped electric motorcycle, the NX, is priced at 30,000 yuan, and the electric bike NXT, which focuses on the domestic market, is also around 10,000 yuan, targeting the middle and high-end markets as a whole.

In the travel sector, in the current market competition for tram price reduction promotions, some new energy vehicles have dropped sharply. The price of some BYD models is only around 70,000 yuan, while Maverick Electric, which specializes in two-wheeled electric vehicles, is positioned as high-end and is very expensive. If it bucks the trend while consumption is being downgraded, can it get paid for by the market?

It is worth mentioning that, according to reports, Maverick Electric's new NXT has the industry's top intelligent ecosystem alliance, which implements a built-in FindMy search function. Users can check the battery location in Apple's smart ecosystem. At the same time, it also supports customized NFC keys for Huawei wallets, and can seamlessly project the screen with one click using Gaode's cycling navigation system. However, can this new product make Maverick Electric rise to prominence?

It is worth noting that Maverick Electric's electric scooter sales revenue from the Chinese market was 355.2 million yuan, a decrease of 20.5%, accounting for 85.8% of the total revenue of electric scooters. The main reason for the decline was the decline in sales of high-end series, partly offset by increased sales and revenue of Volkswagen's high-end series in the Chinese market.

Frequent product quality issues

Maverick Electric's product positioning is high-end, which is probably only reflected in the high price, not the quality of the product.

In recent years, there have been frequent quality problems with Maverick Electric products. For example, in September 2023, there was a media report that a consumer reported that she bought a new 2023 MQil electric car at 6199 yuan at Maoniu Electric (Zhongshan North Road store in Gulou District). At noon on September 14, she discovered that the electric car couldn't start or drive, and it was less than 4 days when fully charged.

However, on complaint platforms such as Black Cat, product quality and after-sales issues such as “the battery level showed 50%, but the power was actually interrupted while riding” and “contacting the store according to the after-sales plan provided by Maverick's customer service, but the store refused to repair it” are also common.

At the previous CCTV 315 gala, several electric vehicle brands, such as Maverick Electric, were named due to illegal modifications, and electric vehicle fires also occurred in many parts of the country. Among them, according to media reports, Maverick owners also reported that their vehicle caught fire while charging, and that the open flames destroyed many items inside and outside the house. The local fire department determined that the fire accident had “caused the fire due to spontaneous combustion of the battery,” while the forensic examination agency also believed that the vehicle battery involved had “signs of heat loss of control.”

Products are the foundation of existence, and channels are the foundation of development. Currently, the number of Maverick Electric dealer stores is declining. According to public data, as of the third quarter of 2023, the number of Maverick Electric franchise stores was 2,834, compared to about 3,100 at the end of 2022, a decrease of 266.

By the end of 2023, Maverick Electric had 2,856 franchise stores in China, and its international sales network expanded to 56 distributors, covering 54 countries.

In terms of channel layout, Maverick Electric mainly focuses on franchise stores. Li Yan revealed that Maverick Electric will accelerate the development of domestic channels and plans to add 1000-2,000 offline stores in 2024.

Maverick Electric is planning to further expand its retail network, but it is also waving a “sickle” at franchisees. According to information from the franchise fee search network, the basic franchise fee for Maverick Electric is 210,000 to 540,000 yuan.

In the secondary market, Maverick Electric's stock price fell from 53.38 US dollars/share in 2021 to the current 1.78 US dollars/share, with a market capitalization of 145 million US dollars. (Produced by Thinking Finance) ■