Author | Chai Xuchen

Editor | Zhou Zhiyu

In the automobile market, where wine is also afraid of deep alleys, Avita, which has been devoting itself to refining its products and brands until now, has finally waited for a large-scale explosion and has quietly entered a time of transformation.

Avita's inflection point began three months ago with the release of Avita 07. As the brand's first model with extended range+pure electric dual power, and the price dropped to around 200,000 yuan, the 07 soon became a hit after its launch. With Avita soaring, the total delivery volume surpassed 10,000 in October. After tasting the sweetness, the extended-range versions of Avita 12 soon followed, and the extended-range version of the 11 also hit the strings.

It can be said that 07 opened up the situation for Avita and became a watershed moment for the “second generation” of this company.

However, Avita's ambitions are far from over. At the 2024 Guangzhou International Auto Show, Avita President Chen Zhuo revealed to Wall Street News that the company now has the ability to sprint to 0.1 million in annual sales, and next year's goal is to reach 0.22 million units or more.

Objectively speaking, Avita's sales target of 0.1 million units last year failed to meet the target, and the final target this year was no more than 0.07 million units. The market still has doubts about whether next year's target can be achieved as scheduled. However, it is not because of Chen Zhuo's conviction and full of confidence that there have been one or two big hits, but rather that Avita has finally established a systematic ability, which will be the core of its continued strength.

Chen Zhuo said that previously, the market's perception of Avita was relatively young, mainly aimed at people between the ages of 20 and 30. After it went on sale in 07, it opened up acceptance among all age groups.They were all popular when they reached the 70s and after the 00s. Among themThe 50-year-old group is as high as 20%.

In addition to products, the effects of channel reforms are also being unleashed.

Starting in April this year,Avita has made a large-scale transformation from a self-operated store to a dealer franchise. “The retail industry specializes, and we need the best people to help us serve our customers well,” Yong Jun, vice president of Avita, explained the reason behind the transformation to Wall Street News. He pointed out that the success of 07 was also the result of strong terminal channels.

Chen Zhuo also believes that Avita should adhere to division of labor and cooperation. Like CHN's concept of cooperation, the highest efficiency can also achieve a win-win business. “Channel sales services can be replaced; understanding users and product development are irreplaceable. I don't think we can make some money; if we have this energy and money, it's better to invest in product research and development”.

Currently, Avita's other battalion accounts for 97%. According to Chen Zhuo, Avita's influence in the sinking market and growing popularity have yet to be unleashed, and channel changes will continue to increase.

On the other hand, Avita began organizational structure changes in February of this year. Chen Zhuo said that this is learning from Huawei, Ideal, Xiaomi, etc., and the ultimate goal is to be closer to consumers, standardize processes, and turn hot models into the norm.

Next, Avita prepared 17 products, including sedans, large SUVs, MPVs, etc.; second-generation Kunlun range extension technology is also being developed. Avita is preparing to compete on this track for another 6 or 7 years, and eventually transition to the final era of pure electric power. And it will also take advantage of Series C financing of 10 billion dollars and an IPO in the following years to enrich the food and start a sharp share model.

For Avita, after two years of settling down, they finally waited for a reward from the market. According to Chen Zhuo, even the best technology now will eventually become the industry standard, and automobiles will return to the logic of brand management. After the reshuffle of the industry is completed, those that will finally surface will all be differentiated players with different styles. Avita will continue to build a brand and continue to invest in design and ideas.

After clarifying her mind and finding a direction, Avita entered the fast track of large-scale release.

The following is a transcript of a conversation between Wall Street News and Avita President Chen Zhuo and Vice President Yong Jun (edited):

Q: Avita has had some channel changes before. What will the next channel pace be?

Yong Jun: Based on our insight into the industry, we made channel changes in April-June of this year, from direct management to an agent model, no transfer of property rights, and a shift in sales and delivery actions. The retail side specializes in the business, so we need to let the best people help us serve our customers well.

We found that the success of 07 was, on the one hand, the product was highly competitive, and on the other hand, it was also the result of strong terminal channels. This had an immediate effect on 07 and 12. I believe that based on strong channel capabilities, 11 can also quickly get on the fast track.

Chen Zhuo: With the launch of new products and intensive training, the terminal's morale has improved now, but there is still a worrying side.

Compared with competitors, our product capabilities have not been fully exploited. In particular, the coverage rate in third- and fourth-tier cities is only 60%. We now have about 400 companies, but we need to achieve the same coverage as our friends and merchants, and we need to reach about 700 companies. If our channels can cover more, the growth rate should be higher. Currently, it accounts for 60%, and it should reach about 70% to be reasonable.

Q: What is Avita's logic for vigorously developing dealers?

Chen Zhuo: I started my own business because there was only one product and no one wanted to invest in it. If you invest yourself, you need to have fewer touchpoints and be able to display better, so choose the self-operated business model in the business district. Currently, 97% are run by others, and only a small number of stores are kept to sense the market.

In terms of channels, we still adhere to division of labor and cooperation, like CHN's concept of cooperation. In the end, business is win-win, and the efficiency is the highest. Some brands insist on operating their own businesses. I don't think we can make some money; if we have this energy and money, we are more willing to invest in product development.

Channel sales services can be replaced; understanding users and product development are irreplaceable. As a technology company, we don't want to do that much sales. Upgrading flagship stores in the future will still use dealer resources.
Q: Do this type of dealership partner not require a car rental?

Chen Zhuo: There are pros and cons to everything. Choosing to bet is definitely more motivated, but the grid system will be chaotic, making it more difficult to maintain brand value. In pursuit of absolute quantity and brand value, Avita is determined to stabilize the price system and maintain a good brand. However, dealers have a strong sense of the market, and we give some flexible regional promotions within a certain range to give full play to their subjective activism.

We are not a one-step investment philosophy; we follow the trend and iterate at that stage. After being really large, Tier 1 and 2 cities will need to develop separate delivery centers of tens of thousands of square meters, and they will also prefer a different business model.

We require dealers to upgrade their flagship stores in all Tier 1 and 2 cities next year, because there are too many cars. At this time, it becomes not only a kind of demand and motivation, but also the rational economic behavior of dealers. Now that the accounts are settled, he is also willing to vote. After 1 or 2 years, our system will be stable and mature, while welcoming Avita's second-generation products.

Q: What do you think of the medium- to long-term growth market?

Yong Jun: In the near future, a series of our new products will be equipped with Kunlun Extended Range. Not all products will be released. Some may only have extended-range, and some only pure electricity. We will promote suitable products according to the market and users.

The growth range is a phased product. If energy storage technology is developed again in the future, the growth range will eventually be eliminated, but the current stage growth range is just what many consumers need. Everyone wants a car to have the experience of pure electricity, and at the same time, the consumption cost of pure electricity.

The future trend is pure electrification of extended range, small fuel tanks and large batteries. It took us 3 years to develop the Kunlun Range, and the second generation is also in the process of development.

Chen Zhuo: The process of fully entering pure electricity is probably still quite long; oil trucks still have some room for them to exist. Changan has done some internal strategic research. In the end, there are several sets of data. One is 4:4:2, and the other is 4:3:3. Pure electricity will account for 40% in the future, and fuel trucks will slowly shrink to account for 3 to 2, with XEVs in the middle.

We rely on Changan and have a very solid foundation in terms of power, but why did Avita choose to increase the range to give users the closest experience to pure electricity. This generation of Kunlun Range Extender solved the problems of not being able to feed electric power and loud starting noise. The next generation will solve dynamic problems on highways, making it more and more like pure electricity.

After the user experience is solved, the rest is mentality and infrastructure issues; in the end, it is actually possible to move towards pure electricity. If you don't feel safe, we will be equipped with a large battery, a small engine, and a small fuel tank.

Q: When will the era of pure electricity arrive?

Chen Zhuo: There are several technologies that will greatly speed up the pure electricity process. Some partners are developing five-degree electricity, like power banks, which can help you go a long way; the second is to use a power exchange with a common interface to cover the whole of China. If the whole society builds large-scale public electricity exchange, the drive for pure electricity consumption will increase; third, it is overcharging technology. Huawei's liquid cooling is now overcharged very quickly.

If these few technological public facilities have sufficient saturation density, the need for growth may not be that strong. But there is a process. We plan to sell second-generation products for another 5 years, and the next generation products will have a life cycle of at least 6-7 years.

Q: Recently, the personnel structure of Deep Blue's organization has been adjusted quite a bit. What lessons can we learn from it?

Chen Zhuo: Since February, Avita has continued to design and research the organizational structure.

This round of Huawei and Xiaomi's entry into the market is a downgrade attack. We have restarted the market ourselves. Previously, it was a ToB industry. Communication and understanding were not that efficient, we did not directly face users, and we couldn't get feedback back. The automobile industry has been stable for so many years, and now, after disrupting the situation with intelligence, the faster industry has more advantages.

Product management awareness needs to be integrated from end to end to form higher efficiency. Our product strength lies in the fact that IPD, PDS, and product development processes are very complete, but this product, from front-end user insight and definition to monetization of back-end sales, is not completely linked in the curing process, but is achieved through functional cooperation.

The future will be driven by process standards, and independent closure will enable efficient decision-making and open up. The opening of IPD and IPMS by Huawei to monetize the market from end to end is an ability we must learn and possess, and Avita will soon have similar actions; the second is digital links with users and face-to-face communication and insight, which must be reflected in the rapid iteration of products. This ability is also something we originally lacked, and we need to make up for these things in the process of organization and tool development.

Now we are reforming, to a certain extent, a place where we are learning about Huawei, studying ideals, and learning Xiaomi to take the lead and succeed. More than 50% of Avita users are Huawei users. Through the identification and insight of users in other fields of Huawei, we can help us take a deeper look at this.

The intermediate product has been realized. The two sides have already made it through the first-generation product. It is actually a clash of ideas in terms of marketing and promotion. There is absolutely no right or wrong in marketing; it is good to be able to use communication methods that real users can understand and communicate well to bring out products and brands.

Q: What is the unique point that Avita is looking forward to taking the lead in investing in Huawei? What are the latest developments so far?

Chen Zhuo: We are the first company to invest in real money of 115 billion dollars, and we still have 10% priority. Over the past five years, from conceptual design to the implementation of first-generation products, we have worked closely together, and the run-in of mutual trust and mutual cooperation is a promising investment.

Everyone knows that with our system, investment control is still quite strict. This is the first time in history for Changan that this large equity investment. However, internal research and voting are all willing to continue cooperating with Huawei. As reflected in the product, the three-laser system is currently only used by Avita, and it is estimated that in the future, it will bring more safety to users.

However, sometimes the chairman criticized us for “turning gold into straw,” and our communication skills and transmission of expression are still a bit poor.

In the next cooperation, we will go even closer. Under the HI Plus model that has already been released, the joint team will participate deeply from front-end user insight and product definition to the final IPMS marketing. When 07 went public this time, we had already tried a lot, and the mutual value was great.

Q: Will we use other Huawei technologies in the future?

Chen Zhuo: As long as it meets the needs of users, we will use it. For example, in the future, in terms of light, lights, etc., we will all adapt, depending on whether users need it or not.
Q: From over 3,000 to over 10,000 now, what did Avita do right?

Chen Zhuo: The user level has changed quite a bit. Previously, Avita 12 users were very young; those in their 30s and 20s were the two peaks. After it went on sale in 07, we found that the age group covered by this car had changed a lot. Nearly 20% of people around the age of 50, and even the 70-year-old retired chairman; many of the younger ones were post-90s and post-00s.

Everyone says that Avita is relatively young, but in fact, acceptance by all age groups has opened up.

The second is a change in their values. Originally, it was relatively aggressive, but after the 07 launch, some people who were more restrained still chose this model. What he valued was the Kunlun Extended Range, the Huawei Smart Drive, and the chassis. They directly chose all the configurations, and the appearance didn't deviate at all from my style. This kind of user is a very rational decision maker, and they put the emotional elements far behind.

After the launch in 07, the brand audience became richer, but at the same time, the overall image remained sharp enough. Avita's products and users are still different from other brands; this is the brand's success. Different people have different concerns, such as Kunlun Zengcheng, Shenxing Battery, etc. Through a few buff combinations, the coverage is large enough to really open up the crowd.
Q: Isn't the sales pressure the group is putting on you that strong now?

Chen Zhuo: Our goal has always been a wild struggle. The goal given to us by the group is actually very high. Next year's sales target is 0.22 million+. Avita's goal of 0.1 million last year was unmet.

Lei always has the ability to achieve this, but for us, it is a startup in every aspect of the channel, brand, product, audience, user base, etc., but we are still pursuing a very fast pace. I estimate that 0.07 million should be hopeful this year. The 0.1 million capability is already there.

That goal is of great significance to Avita. Achieving that amount means that Avita will basically solve the problems of survival and scale security. Raising 20,000 in a single month means crossing the break-even line. If cost control, sales structure, and high-end products are made better, it may also be achieved more quickly. Next year, we will launch 17 products, including sedans, 5-seater/6-seater SUVs, and MPVs.

Q: After entering a 10,000 car club and then moving up, how should the next luxury story be told?

Chen Zhuo: Although Avita has now reached 10,000 units, it is still a startup platform. Organic traffic is a little but not enough. Brand building is a long-term process. I think it is necessary to at least achieve the success of two consecutive generations of products before this brand can basically survive and have a certain influence. Xiaomi is strong because the Xiaomi brand has been built up for more than ten years, and Avita has not gained popularity yet.

Now is a competitive reshuffle stage. The normal market cannot accommodate so many brands. After the shuffle is over in 2 or 3 years, the main players will surface. They will have their own style positions, providing different differences for different groups of people. Everyone essentially divides their location moderately. At the beginning, Avita wanted to determine its own positioning, and then continue to build up its own user pool and user base.

Luxury consumption is actually unnecessary consumption. In this case, it is more about the value of the brand. Brand value is not a “label” or an expression of identity; it is more an endorsement of its value philosophy. Avita has always insisted on two points: one is to lead the transformation of cars through forward-looking design; the other is to be warm, technological, and caring for people.

We hope that in the future, users who agree with our brand values will choose you because of brand identity. Because in the end, leading technology will become standard, but different cars have different personalities and values. Cars will return to the logic of brand management, and we must stick to being a brand.