Chapter 831 - 338: Xiangnu’s Invitation (3)

Chapter 831: Chapter 338: Xiangnu’s Invitation (3)

To put it bluntly, they just want Extreme Shadow Group not to interfere with them selling products to outsiders, and not to interfere with their pricing power.

Extreme Shadow Group doesn’t interfere with these things to begin with, but... after all, they were nurtured by Extreme Shadow Group, they’ve made quite a lot of money over the years, and their tech has improved a lot.

"Sure. Even if they sell to outsiders at a low price, it won’t affect our cooperation. But the price on the industrial chain side has to drop by thirty percent."

Li Yang agreed.

Those companies definitely have their own considerations. Even with a thirty percent cost cut, they can still make money.

Besides, the suppliers that are still around now are all pretty capable; their tech really is strong.

Feng Xinli continued, "Boss, once we open this door, related supply-chain products will flood the market. For the sake of profit, they might quote even lower prices to others..."

"An even lower price means there won’t be enough safeguards. Our safeguards on this side cannot be reduced. Right, make sure we have backups for every part of the supply chain..."

Backup means we go support a similar company. Even if their tech is a bit weaker, as long as capital goes in, they can catch up.

Extreme Shadow Group has no intention of letting anyone get a chokehold on them.

They can prop up other companies at any time.

If any supplier insists on diving into the low-end market and waging price wars, sooner or later they’ll burn out their own R&D capability, and their tech iteration will slow down.

After all, once you start a price war, you have to rely on huge output to make profit. Scaling up production also has a cost and eats into R&D funds, which drags down R&D efficiency.

This is also why, more than a decade ago, Western countries moved some high-end industrial contract manufacturing to China—they thought China would get stuck in the low-end industrial trap.

Instead, people here were busy figuring out how to do high-end, breaking through one thing after another.

The final result speaks for itself: the share of high-end industry kept growing, which created today’s strongest industrial system in the world.

There are too many sectors that need support domestically, so it’s hard to throw several billion at any single firm; most only get a few tens or hundreds of millions.

For tech iteration, that amount of money is nowhere near enough.

Extreme Shadow Group’s targeted support is highly efficient.

Foreign countries also want to support their industries, but the problem is they no longer have a complete industrial system. Propping up a few individual firms doesn’t accomplish much.

"If the original suppliers find out about the backup companies, won’t that..."

"What’s there to be afraid of? Just tell them openly! If they’re willing to maintain their competitiveness and keep iterating their tech, no one else can possibly catch up—they’ll hold the first-mover advantage. If they choose to slack off, they can’t expect to drag Extreme Shadow Group down with them. They’re not qualified. As for the backup companies, I’ve already thought it through... I’ll send the documents; everyone take a look."

The tech level of the domestic backup companies now isn’t bad either; at most they’re one generation, or even just half a generation, behind the top-tier firms.

On a global scale, they’re still top-notch.

With leading companies showing the way, the folks behind them have a clear direction for their breakthroughs and can advance quickly.

Feng Xinli picked up the file and glanced at it; it was mainly strategies for supporting the backup companies.

The strategy was simple: refurbishment.

Extreme Shadow Cars has sold more than a million units so far. Among them, the first and second models are still fine in the EV market, but within Extreme Shadow Cars’ own lineup, they’re already a bit outdated.

On the hardware side, quite a few components are no longer really usable.

For example, the first-generation assisted driving just isn’t good enough, and it lacks a bunch of functions.

The second generation can be upgraded to the latest ADAS, but hardware limitations keep it from being that nimble.

Especially since the tech in this area was updated again last year, though it hasn’t fully iterated across the board yet, the gap is widening.

Li Yang’s plan is to upgrade the old models in both hardware and software, comprehensively, at a very low price: fifty thousand yuan for a full upgrade on the first gen, thirty thousand for a full upgrade on the second gen, bringing them up to the 2020 model’s level in both software and hardware.

Under normal circumstances, the company would definitely lose money doing this, but all the related parts will be sourced from the backup companies, so the costs are much lower.

This not only supports the backup companies, it also brings tangible benefits to Extreme Shadow Cars’ owners.

After three years of driving, spending just fifty thousand is basically like getting a new car.

To actually roll this out, it’ll be at least 2021. By then the backup companies should be able to provide products comparable to this year’s. If there’s still a bit of gap, they just push harder...

In Feng Xinli’s view, what Extreme Shadow Group is doing here is basically charity; there’s absolutely no profit in the middle.

They’ll even have to hire a large number of auto repair engineers.

New energy EVs are not easy to repair...

Once this batch is done, the next batch will arrive.

In 2019 alone, more than four hundred thousand cars were sold...

They’ll have to feed several thousand people again... that’s not a small expense; Extreme Shadow Group basically has to subsidize the wages out of pocket.

But there’s nothing to nitpick about the strategy. It’s equivalent to Extreme Shadow Group running two full systems. If any link in one system fails, they can immediately turn to the backup and promote the backup company.

For Li Yang, this enterprise-backup plan is also essentially another path.

If Extreme Shadow Cars can sell three million units a year in the future, the number of cars needing upgrades annually will be huge...

Which will drive owner spending.

It’s like driving for two or three years and spending a few tens of thousands to own a new car again—most owners won’t say no.

This is the sustainable development path for new energy vehicles. Even if the global car market saturates someday, continuous upgrading will still keep them highly competitive.

Other companies just can’t pull this off. They can’t even support one full supply chain, let alone two.

They’ll never be able to push costs down that far, and they’ll never do something with zero profit.

The meeting lasted six hours.

After it ended, he originally planned to eat at the company cafeteria, but remembering that Xiangnu had invited him, Li Yang decided to drop by.

He was definitely going to give a fair and objective review of Xiangnu’s cooking, so she’d understand just how bad she was at it.

He is, after all, a sharp tongue.