Lantu Executive: Intense Competition in the New Energy Vehicle Industry, Profit Margin Only About 5%

On August 25th, it was reported that during an interview with the media, LanTu Auto's COO Jiang Tao discussed the topic of "involution-style" competition in the new energy vehicle industry.

Jiang Tao stated: "The intense competition in the new energy vehicle industry is not entirely due to low-price competition; it is more reflected in the very low profit margins across the entire industry, around 5%. Our company's situation is somewhat better, but it is still difficult. Once a new energy vehicle company's operational decisions are slightly off, it can bring huge risks to the enterprise."

In response to this situation, relevant national departments have already begun to take corrective action.

In July this year, during the State Council executive meeting, it was proposed to focus on promoting the high-quality development of the new energy vehicle industry. In response to various irrational competition phenomena in this industry sector, there is a need to adhere to a combination of short-term and long-term measures and adopt a comprehensive approach to effectively regulate the competitive order of the new energy vehicle industry.

Strengthen cost investigation and price monitoring, enhance supervision and inspection of product production consistency, and urge key automobile companies to fulfill their payment term commitments.

Jiang Tao stated that the national governance of the new energy vehicle industry is beginning to show results. For example, there is a commitment to pay suppliers within 60 days, and Lantu has always operated in this manner.

He believes that it is impossible for automakers to develop all industry-related technologies, as many technologies rely on supply chain companies. If the payment period is extended, causing supply chain companies to operate at a loss, they will not have the funds to invest in the research and development of new products and technologies, which will hinder the high-quality development of the entire industry.

Therefore, it is necessary to ensure that supply chain enterprises maintain a reasonable profit margin and relatively stable cash flow, so that they have sufficient funds to invest in product research, development, and iteration.

Jiang Tao stated that we hope to become partners with our suppliers; their R&D is part of our R&D, and their manufacturing is part of our manufacturing. We collaborate and grow together with suppliers on an equal footing. This approach not only reduces corporate costs but also meets the demand for rapid iteration of industry-related products.