The net loss of zero-run cars narrowed to 4.2 billion yuan last year： gross profit turned positive for the first time, and it will focus on overseas markets.

Zero run C10

Thanks to the improvement of product structure, cost reduction and efficiency increase, the zero-run car realized a positive gross profit in 2023.

On March 25, Zhejiang Zero Run Technology Co., Ltd. (Zero Run Car, 09863.HK) announced on the Hong Kong Stock Exchange that in 2023, the zero run car realized a revenue of 16.747 billion yuan, an increase of 35.2% over 2022; The annual net loss was 4.216 billion yuan, and the net loss in 2022 was 5.109 billion yuan, narrowing year-on-year.

According to the announcement, Zero Run achieved a positive annual operating cash flow of 1.082 billion yuan, an increase of 3.481 billion yuan compared with 2022. As of December 31, 2023, its working capital was 19.388 billion yuan, an increase of 98.2% compared with the same period in 2022.

It is worth noting that in 2023, the zero-running car realized the gross profit turning positive for the first time, with the gross profit rate of 0.5% for the whole year, while it was -15.4% in 2022.

According to the zero running, this is mainly due to the improvement of product structure, continuous cost reduction and efficiency improvement, and unique technical cost reduction ability. It is predicted that the gross profit will be further improved with the improvement of cost control and operational efficiency in the future.

Zero-run said that its cost advantage benefited from the technical advantage of "global self-research". Zero-run global self-research means that the three electric systems (including batteries, electric drives, electronic controls, intelligent cockpit, intelligent driving, etc.), which account for about 60% of the BOM cost of the whole vehicle, have realized independent research and development and independent manufacturing.

In terms of research and development, the announcement shows that the research and development expenditure of Zero Run in 2023 was 1.92 billion yuan, an increase of 36.1% year-on-year.

In the earnings conference call, the executives of retail sales stressed that in the China market, retail sales will continue to focus on the mainstream market of 100,000 yuan to 300,000 yuan, and stick to the cost-effective route through the cost advantage of global self-research.

In the aspect of zero running, the cooperation with Stellantis Group was further explained.

On October 26, 2023, Zero Run Automobile announced that Stellantis Group plans to invest about 1.5 billion euros to acquire about 20% equity of Zero Run Automobile; On November 20, 2023, the subscription was completed, Stellantis became its major shareholder and won two seats on the board of directors of Zero Run Automobile.

Stellantis Group is the fourth largest automobile group in the world. In 2021, PSA Group and Fiat Chrysler Group (FCA) merged with a share ratio of 50:50, which is an automobile manufacturer and travel plan provider.

After becoming the major shareholder of zero-run cars, Stellantis Group will also help zero run out of the sea. According to the financial report, in cooperation with Stellantis Group, Zero Run brand new energy vehicles will be launched overseas in 2024.

"The competition in China’s auto market is too fierce, and going overseas is the most important thing." In the earnings conference call, the senior manager of Zero Run said that China and overseas markets have completely different needs, but auto companies are a global industry, and they must be global to survive. Zero Run will focus on China and overseas markets at the same time.

According to reports, Zero Run Auto plans to form a joint venture named "Zero Run International" with Stellantis Group. Zero-run cars will use Stellantis Group’s global manufacturing capacity and huge dealer network to expand their global business.

Retail executives said that the company is accelerating its globalization strategy and its overseas team has basically been formed. In terms of overseas sales channels, retail will adopt the dealer model.

In addition, the financial report also revealed that Zero Run Automobile is negotiating with other OEMs for the external supply of core components of Sandian and entering the supply chain system of other OEMs. This will become the third important strategy after the whole stack self-research to control costs and the light asset model to cooperate with the sea.

In terms of delivery volume, in 2023, a total of 144,200 new cars were delivered by zero-running cars, an increase of 29.7% year-on-year. In January and February of this year, 18,800 vehicles were delivered by zero-run.

As of the close of March 25, the zero-running car fell 2.65% to close at HK$ 23.85.