Liu Min (pseudonym) secretly rejoiced after news of the ideal layoffs came out.

Last year, she quit her job from a joint venture car company and wanted to move to a new energy vehicle company. At the time, she had two choices: one was a new car company with a bigger salary increase, and the other was a relatively stable car brand built by a major manufacturer. Ultimately, after weighing things out, she chose the latter.

“Depending on how you choose, a 30% increase in salary means you have to accept an unstable work environment. HR will probably notify you to leave one day.” Liu was sensitive and sighed.

However, stability is only relative. In the ten months of the new company, the business direction changed by 3, which allowed her to deeply appreciate the “bloody wind” of the industry — crazy internal affairs while maintaining a high sense of crisis. “One foot of throttle, one foot of brake, once a hit model came out, we quickly expanded. When performance declined, we quickly put on the brakes.”

Now, many car companies have begun to “put on the brakes,” and news of “layoffs” has been revealed by many new energy vehicle companies.

According to the “21st Century Economic Report”, Ideal Auto is undergoing a new round of layoffs, with an overall layoff ratio of over 18%. The data shows that by the end of 2023, the number of ideal employees will be close to 31,600. Based on this calculation, the number of ideal layoffs in this round may exceed 5,600.

Tesla has also initiated drastic layoffs. According to media reports, Musk said that the company is preparing to enter the next stage of development. Reducing costs and increasing efficiency is particularly important, and requires 10% layoffs. Currently, Tesla's layoffs have been in place for more than a month, and will probably continue until at least June. China, on the other hand, was the hardest hit area for layoffs, and Tesla cancelled offers for fresh domestic graduates.

In fact, even earlier, Gaohe and Weimar had already begun to lay off employees, and the company even fell into a crisis of discontinuing production for a while. However, rumors of layoffs between the two leading car companies, Tesla and Ideal, shocked the market.

How do you objectively view the layoffs of these two car companies? It is of great value to understanding today's NEV market.

Layoffs after the storm

As early as the beginning of April, news of the ideal “layoffs” began to circulate online. On April 3, Ideal Auto issued an internal staff announcement announcing the upgrade of the current matrix-type organization.

However, the Beijing Auto Show during the May 1st period brought the popularity of new energy vehicles to its peak, and also diluted the concerns of the outside world about the pressure on car companies to operate. At the time, the L6 model that debuted at the Ideal booth attracted much attention. The interaction between Lei Jun and Li Xiang was interpreted as “Lei Jun was locked in the car by Li Xiang for half an hour”, which sparked even more controversy.

The frequent focus on the magnesium light of the traffic made people forget the MEGA controversy and its negative effects for a while.

In fact, the past few months have not been ideal. According to the latest financial data, in the first quarter of this year, the ideal delivery volume was 80,400 vehicles, up 52.9% year on year, down 39% month on month; Ideal Auto achieved revenue of 25.6 billion yuan in the first quarter, up 36.4% year on year, down 38.6% month on month.

After the hustle and bustle of the auto show gradually calmed down, the layoffs began to draw people's attention to the pressure on its performance. More layoff information shows that the number of employees in the sales and service operations department will be reduced by more than 400; the number of employees in the recruitment department will be reduced from more than 200 to 40-50; and the number of intelligent driving teams will be reduced to less than 1,000.

“Layoffs are also normal. Not to mention ideals; Tesla is making decisions.” Zhang Ting (pseudonym) lamented the author. She used to be an employee of a major manufacturer. A few years ago, she stepped on the cusp and joined a new energy vehicle company jointly built by an internet company and a traditional car company.

Over the past few years, her company has also been undergoing internal restructuring. She believes that for new industries and new companies, this is all understandable. “Look, Tesla's profit margins are so high, sales are so big, and they're also laying off employees.”

Not long ago, the fate of Tesla's overcharged team was reversed, leaving a deep impression on Zhang Ting.

On April 29, local time, Musk sent a memorandum from within the company announcing that Tesla's supercharging team leader Rebecca Tinucci and Daniel Ho, head of the new product, will leave the job with the entire team. The team has about 500 people. But it wasn't long before Tesla began to rehire some of the overcharged team employees.

According to Zhang Ting, expanding and adjusting is a characteristic of NEV companies. Compared to Tesla, the new domestic forces are under greater pressure to operate and have a stronger sense of crisis.

“The purpose of Tesla's layoffs is very clear: to reduce costs and increase efficiency.” Yan Jinghui, member of the expert committee of the China Automobile Dealers Association, explained that the development of the NEV industry has far exceeded expectations. At this stage, during the expansion process, car companies will optimize their organizational structure and adjust their personnel structure according to their own financial situation.

When talking about the ideal layoffs, Yan Jinghui said that Li Xiang is a very aggressive and calm person.

Yan Jinghui believes that Tesla is produced and managed by itself, while many new domestic enterprises are still in the stage of cooperation and OEM work. They need more expenses, and the problems they face are more complicated. He believes that the restructuring of the new car building forces requires greater courage.

Wild roll model

The layoffs at Tesla and Ideal Auto are related to the fact that performance did not meet expectations after major expansion.

Ideal Auto has always been a new domestic force that “lives the best”. In 2023, Ideal delivered a total of 376,000 vehicles, and annual revenue reached 12.85 billion yuan. Compared with 2022, it achieved a significant increase of 173.5%. What is particularly important is that the net profit exceeds 11.8 billion yuan, making it the third NEV company to achieve profit after Tesla and BYD.

The business situation is excellent, making the ideal car, which has always been known for its prudence, “somewhat superior”.

In June 2023, in a letter to all employees, Li Xiang said that in the next few years, Ideal Auto aims to be the number one in sales of all luxury brands in the Chinese market, with a delivery volume of 1.6 million vehicles per year. Entering the fourth quarter, Ideal Auto has set a goal of selling 800,000 vehicles by 2024.

Selling 800,000 cars a year, double that of 2023, requires the deployment of a larger team to achieve this. At the fall strategy meeting in September 2023, the ideal plan for large-scale recruitment was determined, and then various departments began to speed up recruitment.

According to public data, the ideal sales and service operation department has a team size of less than 200 people in July 2023, but by the beginning of 2024, it had reached nearly 1,000 people; the smart driving department had only about 600 people in early 2023, and reached nearly 1,000 people in early 2024.

“New energy vehicle companies are very similar to internet companies. When things go well, they quickly race horses to the ground.” Liu Min analyzed it to the author.

According to Liu Min, the strategy of internet companies is not to miss any trend. When new concepts and models are introduced, they recruit people in a big way and pull up the team. “Education and training are popular; games are popular are games; AI is popular, AI is used for AI. It works best. If they can't get it done, the team disbands as is.”

New energy vehicle companies have transplanted this business idea; however, the crazy layout is not a new business, but a model.

“Raging models” have become a characteristic of today's NEV companies. Previously, it often took a long time for traditional car companies to launch a model. A Camry was sold for more than 40 years. However, this cycle was greatly shortened by new energy vehicle companies. Lei Jun spent three years “out of thin air” to create the Xiaomi SU 7, which shocked many industry insiders even more.

“Cars are almost being made into FMCG products. We used to launch a new car in three or four months, but now we can't help but release one every month.” Liu was sensitive and sighed.

Crowd tactics are a guarantee that new models can be launched quickly, but not every new car sells well, and if sales of new cars are poor, the team behind them will also be affected.

Today, in the context of the “food circle” of new energy vehicles, it is full of uncertainty as to whether a new car can get out of the market. MEGA was originally a pure electric MPV with high expectations, but it was suddenly compared to a “coffin board” by netizens, causing its sales to hit Waterloo. Outsiders also generally believe that ideal layoffs are related to MEGA's poor sales.

In fact, unlike internet companies, the cost for car companies to promote new models is much higher, the development cycle is longer, the industrial chain involved is more, and there is less room for trial and error.

After getting off the table, there was no hope

“The company will not release pure electric SUV products this year; it will be in the first half of next year.” On May 20, Li Xiang announced this decision at Ideal's first quarter earnings meeting.

Meanwhile, at the Beijing Auto Show a month ago, Li Xiang also revealed that pure electric products will be released in the second half of the year. In fact, after MEGA met Waterloo, Ideal Auto began a phased reflection.

On March 21, Li Xiang wrote in an internal letter: “Paying too much attention to sales and competition makes desire surpass value.” During the Beijing Auto Show, Liu Jie, president of Ideal Auto Product Line, also said, “Originally, our judgment was too optimistic, and we were also too optimistic about our own estimated growth, so we must first return to healthy growth.”

“I feel like the whole industry is more 'superior.' When sales volume rises, expansion is accelerated and people are robbed at high prices; once performance declines and new products do not meet expectations, they press the deceleration button to shrink and lay off people.” Liu was sensitive and sighed.

However, although ideals and Tesla's layoffs have poured cold water on the “boom” in this industry, “volume” is still the key word in this industry.

The “price war” that has continued for more than a year has not reached an inflection point, and many car companies are still holding on; the official launch of the Xiaomi SU 7, which is popular, has begun to allow traditional car companies to face the challenges of technology companies crossing borders; the exit of Lei Jun, Zhou Hongli and others has also made the entire industry “complete the price boss.”

However, as far as talents are concerned, they are still what many car companies are looking for. In particular, talents in the smart driving and battery fields are in high demand, and even if they are laid off, there will be no shortage of ways out.

In fact, at the same time as large-scale layoffs, Ideal Auto is also hiring at the same time. On the recruitment platform, they have recruited as many as 2,000 jobs, covering various fields such as technology, products, sales, operation, marketing, and supply chain.

Yan Jinghui analyzed that in addition to production costs, the initial R&D costs for new energy vehicles are also high. This means that NEV companies need to pursue scale effects. Only after sales reach a certain scale can they flatten R&D and production costs, break through the break-even point, and achieve profits.

Prior to that, car companies mainly relied on financing to maintain operations. It was like stepping on a steel wire, and they could “die” at any time.

In recent years, the development of the NEV industry has greatly exceeded expectations. Outsiders agree that the break-even point will arrive much faster than expected, which has led many people to be blindly optimistic. However, in reality, at the same time as rapid development, competition is also intensifying. Most NEV companies are still bleeding to expand, and some have even gone down.

The ideal is to be the only new domestic power with a net profit of over 10 billion dollars in 2023, but its ability to continue to make a profit is still being tested. For NEV companies, staying safe at all times is not a bad thing.

“In the process, you have to clench your teeth when it comes to price cuts. If you can't hold up and get off the table, there's no hope at all.” Yan Jinghui said.

Editor/Jeffrey