The mode of building factories after foundry is dead and its influence is doomed to be far-reaching

In early March, Weilai Automobile released its first annual report since going public, not only showing a huge loss of nearly Rmb10bn last year, but also confirming that it would cancel plans to build a factory in Jiading, Shanghai. A year ago, in February 2018, Weilai announced plans to build its own manufacturing base. At that time, the local media in Jiading District of Shanghai, where automobile manufacturing is the pillar, reported that the entire vehicle base of Weilai Automobile would be moved to Jiading. "At present, the site has been selected in Waigang Town, with a planned land area of about 800 mu." The news was also confirmed by Weilai Motors, which planned to start construction in mid-2018 and will produce its third and fourth models when it goes into production. "We signed a framework agreement with the Jiading District Government of Shanghai in 2017 to establish an advanced base for Weilai new energy electric vehicles in Jiading, Shanghai. Recently, we have reached an agreement with relevant parties to halt the construction of the production base in Jiading, Shanghai," Li Bin admitted at the time of the release of the annual report. There was speculation that the cancellation was linked to Tesla's Shanghai plant. Li Bin denied that. He said there were two reasons for removing contract manufacturing from the Jiading plant. First, the Ministry of Industry and Information Technology issued Order No. 50 last year to give directional recognition to the cooperation mode between Jianghuai and Weilai. Second, Weilai's Jianghuai factory has also upgraded its production capacity, which can further increase its production capacity to 150,000 vehicles per year, basically meeting the production needs of the first three models. From here we can know two information points: 1. Ministry of Industry and Information Technology Order No. 50 on the recognition of the cooperation model. 2. Jianghuai Weilai Factory capacity upgrade, basically meet the production needs of the first three models. What are the facts? On 7 February 2018, the Jiading Daily, a local media in Jiading District of Shanghai, reported for the first time that Weilai Vehicle Base would be located in Waigang Town, Jiading, with a planned land area of 800 mu. A Weilai spokesman responded: "Waigang will be Weilai's second plant after the Hefei base. More information is not available for disclosure at this time." "This is the first time that the Weilai Shanghai plant project has been publicly announced in the newspapers. On December 10, 2018, the "regulation" of "no two factories allowed in one city" was issued, which is also known as Order No. 50 of the Ministry of Industry and Information Technology issued by Li Bin. There are two noteworthy items: the province where the newly-built independent pure electric vehicle enterprise is located should meet the following conditions: the utilization rate of automobile production capacity in the last two years is higher than the average level of the same product category industry; The existing newly-built pure electric vehicle enterprise investment projects of the same product category have been completed and the annual output has reached the construction scale. This means that Shanghai has given early approval to Tesla to start construction, and the authorities will be wary of approving new capacity until its planned 250,000-year capacity is achieved, which may be the "truth" of Weilai's exit from Shanghai. And likewise, Weilai has signed an OEM agreement with Jianghuai, and the two have been tightly tied together. Choosing the contract manufacturing model, and the car factory and the local government firmly tied together, there is no possibility of separation. Prior to this, the state strictly controlled new vehicle production capacity, the purpose is to revitalize the existing excess vehicle production capacity. New sources of energy have been shut down in the country Production qualification door of the present, OEM, acquisition has become almost all the new forces to solve the qualifications of the only means. The National Development and Reform Commission formally promulgated the "Regulations on Investment Management in the Automobile Industry" also shows that the integration and merger and reorganization of the industry have also been encouraged. This also means that mergers and acquisitions will be the use of existing idle capacity, eliminate one of the ways of backward capacity. In the future, the traditional car companies that provide contract manufacturing mode for many new car-making forces will adopt joint ventures or sales to solve the problem of idle capacity. This is not only a problem of Weilai, but also a common problem faced by all the new forces of automobile manufacturing which adopt the contract manufacturing mode. From a certain point of view, Weilai, Xiaopeng, Zero Run and other OEM mode of production of automobile enterprises, has been facing a new pattern, and this change is destined to have a profound impact on the future of the Chinese automobile market.