No.9 electric car： starting from the high end, trapped in the niche.

Text | Niu Dao Finance Jiang Tong

With the success of Company No.9, Gao Lufeng entered the Red Sea of electric bicycles.

The electric bicycle industry is extremely involuted, which goes deep into villages and towns in China. It is not easy to get out of many enterprises, and the secret of the success of Company No.9 is the differentiated high-end.

Not long ago, Company No.9 held a new product launch conference. Gao Lufeng, founder and chairman of No.9 Company, said, "Based on our scientific and technological innovation and market insight, we hope to make the blue ocean bigger and the red sea blue, and win-win with the market and users."

In the eyes of the public, Company No.9, which firmly occupies the high-end market of electric vehicles, seems to be the most promising king to subvert the electric vehicle market.

However, if a fish knows how to drink cold and warm, it will become a high-end company, and at the same time, Company No.9 can’t escape the niche.

For a long time, the sales volume of No.9 electric vehicle is not at the same level as that of Yadea and Emma.

According to Sina Finance, in 2022, the total annual sales volume of electric scooters and electric bicycles in Yadea was 14.01 million, while the annual sales volume of Emma’s electric bicycles and electric two-wheeled motorcycles was 10.51 million. According to the annual report of No.9 Company, as of March 2023, the cumulative domestic shipment of No.9 electric vehicles was 1.5 million.

With such a big sales gap, can Company No.9 really rely on hard-core technology to achieve counterattack?

Relying on science and technology, Company No.9 is firmly in the high-end market.

In 2012, Gao Lufeng and Wang Ye jointly founded Company No.9, mainly involved in the field of short-distance transportation.

Different from ordinary entrepreneurs, Gao Lufeng, who graduated from Beihang University majoring in aircraft manufacturing, has been focusing on science and technology and innovation since the beginning of his business.

Gao Lufeng once said: "The company’s performance growth is mainly based on continuous innovation, constantly improving the scientific and technological content of products and enabling products to land."

At that time, Company No.9 successfully earned the first bucket of gold by relying on the first generation of intelligent balance cars with self-balance status.

Around 2013, with the rapid growth of mobile phone business, Xiaomi announced the "Xiaomi Ecological Chain" plan, and prepared to invest in 100 AIoT enterprises in the next five years.

Gao Lufeng was keenly aware that this was an opportunity for the rise of Company No.9, so he reached a cooperation with Xiaomi Company. In 2014, with advanced science and technology, Company No.9 became a member of Xiaomi’s ecological chain, and received A-round investment of more than 80 million US dollars from stars such as Xiaomi, Sequoia and Shunwei.

Facts have proved that Gao Lufeng’s choice is very correct, and cooperation with Xiaomi has indeed laid the foundation for the future development of No.9 company.

On October 19, 2015, with the official appearance of the No.9 balance car at the Xiaomi conference, Lei Jun also announced that it would be sold in Xiaomi omni-channel, and the No.9 balance car quickly became popular in the market and instantly became a phenomenal explosion product.

At the same time, in order to improve the technical core strength of No.9 Company, in 2015, No.9 Company successfully acquired Segway, the originator of the world balance car. After the completion of the acquisition, Company No.9 not only owns more than 400 global industry core patents, but also becomes a global leader in the field of intelligent short-distance transportation.

Since then, with the development strategy change of No.9 Company, the balance car is no longer its core business, but its concept of product strength has not changed.

According to the data of iResearch, one of the important elements that more and more consumers consider when buying a car is intelligent function.

The No.9 electric vehicle has a strong lead over other products in software and intelligent technology. In December 2019, Company No.9 officially released its first intelligent electric two-wheeled vehicle, which not only has a product design with both practicality and recognition, but also brings a subversive riding experience with its technological sense design. Many No.9 users feel that "No.9 is Tesla in the electric vehicle industry", which will be unforgettable once it is used.

With advanced scientific and technological design, the No.9 electric vehicle has quickly occupied the high-end market of smart electric vehicles since its listing.

According to the annual report of No.9 electric vehicle, in 2020, the sales volume of No.9 intelligent two-wheeled electric vehicle will exceed 100,000 in the first year of listing; In 2021, the production and sales volume of No.9 intelligent two-wheeled electric vehicle reached 420,000, with a year-on-year growth rate of 300%; In 2022, the sales volume of No.9 intelligent two-wheeled electric vehicle was 826,000, with a year-on-year growth rate of 96.6%.

According to the data of "White Paper on Two-wheeled Electric Vehicle Industry in China in 2023", Company No.9 has always been the first in the high-end market of two-wheeled electric vehicles by continuously focusing on brand technology innovation. According to the comprehensive sales data of two-wheeled electric vehicles in 2022, among the high-end product lines of more than 5,000 yuan, the sales volume of Company No.9 is in the first position in the industry, among which among the top10 models with sales volume of more than 5,000 yuan, Company No.9 has 8 models on the list.

In October, 2020, Company No.9 was listed in science and technology innovation board, Shanghai Stock Exchange, and successfully completed a gorgeous turn of a startup.

02 high-end positioning, but in the embarrassing position of small profits.

With the rapid development of No.9 company, its revenue level has been rising in recent years.

According to the annual report of Company No.9, in 2020, Company No.9 realized annual revenue of 6 billion yuan, a year-on-year increase of 30.88%, turning losses into profits for the first time, and the net profit attributable to owners of the parent company was 73.3264 million yuan; In 2021, Company No.9 achieved annual revenue of 9.146 billion yuan, a year-on-year increase of 52.36%, and net profit attributable to owners of the parent company was 411 million yuan; In 2022, the revenue exceeded 10.1 billion yuan, a year-on-year increase of 10.7%, and the net profit returned to the mother was 451 million yuan.

However, although the operating income statement of Company No.9 is strong, its gross profit margin is not optimistic or even ugly.

According to the financial report of No.9 company, although the company’s operating income has increased year by year and the growth rate is not low, its gross profit margin has been declining all the way.

From 2018 to 2021, its gross profit margin was 28.86%, 27.42%, 27.69% and 23.23% respectively.

Although compared with other two-wheeled electric vehicles, the gross profit margin of No.9 electric vehicle is very considerable, but as a brand focusing on the high-end market, its revenue has increased well, but its gross profit margin has been declining, which is not a good sign.

All along, Company No.9 has been in an awkward position of small profits, which has a great relationship with the deep bundling of Xiaomi Company.

In the early days, relying on the big tree of Xiaomi Group, Company No.9 did not worry about order income even though its wings were not full. In 2017, Xiaomi Group contributed more than 1 billion yuan in orders to Company No.9, accounting for 74% of its total revenue; In 2018, Company No.9 received an order of 2.434 billion yuan from Xiaomi Group.

However, although the income is good, it is difficult for suppliers to obtain high profits because Xiaomi products win with cost performance.

According to the prospectus No.9, the products of Company No.9 are in a state of small profits because Xiaomi products are oriented to cost performance and mainly adopt the profit sharing model. From 2017 to 2019, the gross profit margin of Xiaomi’s products sold by No.9 Company was 22.46%, 20.79% and 15.11% respectively, while the gross profit margin of No.9 Company’s own brand was as high as 42.58%, and the gross profit margin of Xiaomi’s products was significantly lower than that of its own brand products.

In order to increase the gross profit margin, Company No.9 chose to gradually untie Xiaomi Company and reduce the proportion of Xiaomi products in the company’s operating income.

I have to say that this move has indeed improved the gross profit margin of Company No.9.. According to the financial report, in 2022, the gross profit margin of Company No.9 rose to 25.97%, up 2.74 percentage points year-on-year. However, the net interest rate of Company No.9 also dropped to 4.43%, down 0.03 percentage point from the same period of last year.

At the same time, after leaving Xiaomi, the performance growth of Company No.9 is basically at a standstill.

Although the revenue and net profit of Company No.9 in 2022 still showed a double increase trend, compared with 2021, the growth rate of revenue and net profit returned to the mother dropped significantly.

In this regard, Company No.9 explained to the media that due to the epidemic situation, the logistics in some areas was interrupted, which led to the shortage of some important raw materials and parts of the company, resulting in delayed delivery.

However, Zheshang Securities analyzed that there will be some pressure on the short-term income of Company No.9, which is actually related to the decline of Xiaomi channel income.

Obviously, although Company No.9 wants to leave Xiaomi to achieve soaring, it seems that the road ahead is not easy.

03 quality problems are frequent, and the prospect of No.9 is not optimistic.

What’s even more embarrassing is that although Company No.9 relies on powerful intelligent technology to achieve cornering overtaking in the two-wheeled electric vehicle market, its product quality problems are frequent, so it has been criticized by many consumers.

According to Shandong Business Daily, in June 2022, Ms. Liao, who lives in Shantou, Guangdong Province, bought a No.9 n70c electric bicycle worth 3,599 yuan in a local No.9 electric bicycle shop.

Unexpectedly, less than half a year after the purchase, there were various failures. Although several dashboards were replaced, they still failed to solve the problem. There are still system failures such as black screen, Bluetooth unable to connect, and APP showing that the vehicle is offline, but the vehicle has been unable to start and use normally, and it has become an electric brick.

On the black cat complaint platform, there are more than 8,100 complaints about No.9, most of which are about quality problems such as "the battery starved to death", "the intelligent system failed during the warranty period" and "the electric vehicle has great safety hazards".

In addition to frequent quality problems, consumers are also very dissatisfied with the after-sales service of No.9 company.

A consumer said on the black cat complaint platform that his No.9 electric car had 40 batteries left, but it broke down and couldn’t be started at all. After contacting the store, the other party asked him to send it to a 12-kilometer store by himself. After contact, no one handled it, and the store said that only one master could not come to the door. He was very disappointed with the after-sales attitude of Company No.9..

In the sampling inspection of relevant departments, the No.9 electric vehicle also failed many times.

In October 2022, Beijing Fengtai District Market Supervision Administration announced the results of product quality supervision and spot check in 2021, which showed that a No.9 electric bicycle produced by No.9 Technology Co., Ltd. was found to be unqualified, and the items involved were "speed warning sound and short circuit protection".

With more and more consumers complaining about the quality of No.9 electric vehicle after use, it will inevitably bring bad reputation to No.9 company.

Recently, in order to find a new growth curve, Company No.9 began to touch the "other economy", hoping to find a new competitive advantage in the unique consumption field of young women.

However, although this group has great consumption potential, it obviously has higher requirements and pays more attention to consumption quality, experience and service.

If Company No.9 can’t actively improve after-sales service and product quality, then the new growth curve may be just a mirage and may not be realized.

Although the dream of Company No.9 is good and it has advantages in the field of intelligence development, it still needs a lot of efforts to make the blue ocean bigger and the red sea blue.