Chery is revving up its new energy vehicle game with successive brand launches. According to 36Kr, the automaker will unveil a brand-new NEV marque called “Yueji” in the third quarter this year, with its first model expected to debut by year-end.
Public records indicate that, in January, Chery filed to trademark Yueji under the international classification of Class 12 transportation vehicles. Insiders told 36Kr that the brand has been a year in the making, with its first offering, codenamed T1GC, set to be a hybrid compact SUV packing iFlytek’s Starfire large model and Chery’s latest chassis. Suppliers for components bumper injection molds are already being sourced.
The upstart will be overseen by Chery’s Omoda and Jaecoo (O&J) unit. An insider told 36Kr that the new brand is actively fundraising, with plans to establish stores in urban areas combining full-service outlets and experience hubs.
This marks Chery’s second NEV rodeo after iCar. Last October, during an event, chairman Yin Tongyue vowed Chery would seize a leading position among the NEV ranks by 2024.
Can Chery crack the competition and rise to the top?
Transitioning to high-end vehicles, launching multiple initiatives
Early this year, Yin addressed staff, stating that “brand elevation is the fundamental pursuit of adhering to long-termism and is also Chery’s strategic requirement and survival path.” To accelerate the upscale push, premium sub-brand Exeed launched its Sterra series. At Exeed’s 2024 Global Dealer Theme Conference, Yin said that Exeed, as Chery’s flagship, would “mobilize group resources” to invest in Sterra’s tech and products.
However, despite significant investment, Sterra has yet to yield results for Chery. Its first model, the Sterra ES SUV released in December 2023 at a unit price of RMB 229,800–339,800 (USD 31,750–46,950), unable to crack 1,000 monthly sales thus far.
To rejig its fortunes, Exeed is adjusting its communication strategy. Initially billed as an electrified BMW focused on comfort, insiders told 36Kr that Sterra will now flaunt a “technology” label under new leadership.
Exeed’s rebranding underscores but a microcosm of Chery’s wider transformation. The firm restructured last year, splitting user co-creation, product management, styling, procurement, quality assurance into individual business units.
Previously, though some brand units had dedicated R&D and design teams, they were lean. The split allowed supplementing personnel to individual business units as needed, accelerating model development cycles to some extent. For instance, the styling design center was earlier dispersed across departments of around 100 staffers, with each juggling 1–2 brands. Now, discrete units each focus exclusively on a single brand’s design.
Another move by Chery is headhunting a lead for its Yaoguang Laboratory project spearheading frontier tech research. As of February, it had inducted 20 personnel, with plans for 12 primary and 30 secondary labs. On March 27, it welcomed outside experts to the project too.
First mooted in Chery’s “Yaoguang 2025” strategy, the interdisciplinary Yaoguang Lab initiative was envisioned to birth 300 global labs over five years. While progress has not met expectations, the recent recruitment drive indicates that Chery remains committed to prioritizing cutting-edge R&D.
Filling the NEV gap
2023 was a standout year for Chery: 1.88 million vehicles were sold in total, up over 52% year-on-year , with exports accounting for 937,000 vehicles.
Conventional vehicles shouldered most sales. The main Chery brand alone sold 1.34 million internal combustion engine (ICE) and hybrid models at prices ranging RMB 100,000–200,000 (USD 13,810–27,620), accounting for 71.3% of its total sales volume. This also underscores Chery’s muted NEV play so far.
Currently, Chery’s six passenger car units, including Chery, Exeed, Jetour, iCar, EH, and O&J , primarily peddle ICE and hybrid rides in that RMB 100,000–200,000 sweet spot. While lucrative, the likes of BYD, Chang’an Automobile, and Great Wall Motor loom with highly competitive NEV offerings of their own.
Chery foresaw the predicament. As Yin once said, Chery’s NEVs were “early to rise, but late to gather momentum” since the company did not want to rely on “losses and vicious competition” for market share. He affirmed 2024 would shed Chery’s “can’t sell NEVs” stigma, leaning on plug-in hybrid and all-electric vehicles to bolster domestic sales.
On February 28, Chery’s maiden NEV brand iCar launched its iCar 03 model, which is priced between RMB 109,800–169,800 (USD 15,170–23,460). Within a month of its launch, pre-orders for iCar 03 have exceeded 16,000 units.
But one brand like iCar is insufficient for Chery to command a serious presence in the NEV space. For 2024, Chery targets outpacing the industry’s growth by 10–20%. According to data from the China Association of Automobile Manufacturers (CAAM), China’s automobile sales grew by 12% year-on-year in 2023, meaning Chery’s target sales growth rate for 2024 would likely be over 22%, requiring the sale of at least 2.256 million vehicles.
To get there, Chery is expediting NEV rollouts, having revealed plans for at least 22 NEV models and 18 ICE models this year.
With ample resources, Chery is employing a “sea of cars” strategy to penetrate the NEV market. But with EVs growing homogenous, it needs stronger differentiation to stand out.
Investing in new technology like intelligent driving, too, is crucial for the premium positioning Chery craves. Earlier this year, Gu Junli, CEO of Dazhuo Intelligence, said during an event that Chery “never engaged in money-burning deals”, suggesting that Chery rolling out intelligent driving features will require fiscal discipline.
Plugging into an open supply chain is also inevitable for the transition of legacy automakers. A source close to Chery told 36Kr that most of the automaker’s suppliers are self-sourced, with external suppliers mostly from Europe, responsible for supplying interiors, seating, and other components.
Chery is aware of the issues at hand. Internally, Yin has mentioned promoting systematic, innovative R&D and embracing digital marketing more readily. The company will also benchmark itself against Huawei’s organizational practices and culture.
“Can we break into the global top 10 in 2024?” ponders Yin. As the NEV battlefield intensifies, Chery’s biggest foe is itself. Whether it can innovate from within will decide its fortunes.
KrASIA Connection features translated and adapted content that was originally published by 36Kr. This article was written by Tian Zhe for 36Kr.