Behind the Ideal Automobile's Maximum Price Reduction of 30,000 RMB, What Exactly is Li Xiang Thinking?

Ideal Motors, a car manufacturer that is actively seeking change, has just undergone its largest-scale price adjustment since its inception.

This morning, Ideal Motors announced a new pricing system for its L series models, including the L7, L8, L9, and MEGA.

The 2024 models of the Ideal L7 are now available in Pro, Max, and Ultra versions, priced at 301,800 yuan, 329,800 yuan, and 359,800 yuan, respectively.

The 2024 models of the Ideal L8 are available in Pro, Max, and Ultra versions, priced at 321,800 yuan, 349,800 yuan, and 379,800 yuan, respectively.

The 2024 models of the Ideal L9 are available in Pro and Ultra versions, priced at 409,800 yuan and 439,800 yuan, respectively.

The latest price for the Ideal MEGA is 529,800 yuan.

The company stated that with the new pricing system, both new and existing customers who have placed orders but have not yet received their vehicles can enjoy the new prices. Additionally, Ideal Motors will provide cash rebates to owners who have already received their 2024 models of the Ideal L7, L8, L9, and MEGA.

Following this price adjustment, the price range for the Ideal L series, excluding the L6, now ranges from 301,800 yuan to 439,800 yuan. Additionally, the price of the Ideal MEGA has been reduced by 30,000 yuan, now priced at 529,800 yuan.

For Ideal Motors, this round of price adjustments holds profound significance. It is not only a passive response to the increasingly fierce external market competition but also an active reform measure reflecting the company's self-reflection and proactive adjustments from various perspectives.

In simple terms, through price reductions, Ideal Motors is striving to "slowly climb out of the pit."

01 L7/8/9 Prices Overall Reduced, L6 Begins from 0 to 1

For Ideal Motors, the broadest impact of this price system adjustment is on the three L series models released before the Ideal L6 series, namely the 2024 models of the Ideal L9, L8, and L7.

From the logic of the price adjustment:

These three models no longer include the Air version. In terms of product configuration, this means that the L9, L8, and L7 are all equipped with air suspension as standard.

The Pro versions of these three models have been reduced by 18,000 yuan, meaning that the starting price of the L7 Pro has been adjusted to 301,800 yuan, which is also the lowest price standard for the three models.

The Ultra versions of the Ideal L9, L8, and L7 have been reduced by 20,000 yuan, meaning that the highest price of the L9 series has been reduced to 439,800 yuan, and the Max versions of the L8 and L7 have also been reduced by 20,000 yuan.

This also means that in the price range of 300,000 to 450,000 yuan, the above three models of the Ideal L series now seamlessly cover the price range from 301,800 yuan to 439,800 yuan.

It is important to emphasize that when the three models of the Ideal L series were released on March 1st, the strategy adopted was to maintain the same prices as the previous models. However, in mid-March of this year, Ideal Motors made adjustments to the product configurations of these three models, introducing a new Air version without air suspension and lowering the prices (although deliveries had not yet begun).

The recent adjustments essentially involve lowering the entire price range of the three models in the L series, after removing the Air version. Through these price adjustments, Ideal Motors has offered consumer-friendly pricing while maintaining the overall positioning of the L series.

Although the product adjustments may seem somewhat chaotic, the resulting price system adjustments are a positive development for potential customers.

According to information from internal sources, the adjustments were the result of comprehensive considerations by Ideal Motors, taking into account market competition and product positioning.

From a macroeconomic perspective, the market's consumer demand has become more conservative due to the impact of the macro economy. Additionally, competition in the Ideal L market has become increasingly fierce, especially after BBA faced challenges and widespread price reductions. Against this backdrop, the strategy of the three models in the Ideal L series to proactively respond with an overall price reduction was adopted.

From a product positioning perspective, the Ideal L7, L8, and L9 are positioned in the price range of 300,000 to 500,000 RMB. Therefore, despite the overall price reduction, by removing the Air version, they have maintained a price floor of 300,000 RMB.

Furthermore, the price system adjustments can also be seen as Ideal Motors' subtraction within the L series.

Interestingly, this price adjustment does not involve the recently released Ideal L6.

According to internal sources, in the early 2023 pricing process, Ideal Motors had considered positioning the L6 at 269,800 RMB. However, with the arrival of 2024 and the challenges faced by Ideal MEGA, Ideal Motors made the decision to lower the price of the L6.

Therefore, the current price of the Ideal L6 has been based on the latest pricing system of Ideal Motors and fully considers the results of market competition.

Additionally, a source close to Ideal Motors informed us that internally, the positioning of the Ideal L6 and its target customer base are not consistent with the Ideal L9, L8, and L7. After all, in the price range of 200,000 to 300,000 RMB, the market competition is extremely fierce, and the Ideal L6 also faces competitors such as the Wanjie M7, with the corresponding consumer base being relatively price-sensitive, thus requiring a different sales strategy.

The source stated: "Internally at Ideal Motors, the approach now is to treat the L6 as starting from 0 to 1, rather than from 1 to 10."

Why did the Ideal MEGA reduce its price by 30,000 RMB?

In this major adjustment of the price system, an interesting development is the direct reduction of the Ideal MEGA's price by 30,000 RMB, from 559,800 RMB to 529,800 RMB. At the same time, in order to appease MEGA owners who have already taken delivery, Ideal Motors has implemented a strategy to provide a 30,000 RMB cash rebate.

This is considered a positive development for both new and existing users.

According to reliable information, initially, the internal consideration was to only focus on the L series. However, following the suggestion of Ideal Motors' President Ma Donghui, Ideal Motors ultimately decided to also reduce the price of the MEGA by 30,000 RMB, which can be seen as a gesture to MEGA owners.

In fact, it is not surprising that the Ideal MEGA's price reduction coincided with the L series price reduction.

After all, as the first high-end pure electric vehicle under the Ideal brand, the Ideal MEGA may not necessarily have a large sales target, but internally, it also has a certain sales goal. It is understood that the initial monthly sales target for the Ideal MEGA within the company was 6,000 to 7,000 units. However, the actual sales performance of the Ideal MEGA falls short of this target.

Therefore, implementing a price reduction strategy to attract the potential target group for the MEGA is a viable approach.

An informed source told us that in response to the disappointing market performance of the MEGA, Ideal Motors has also conducted a series of reviews internally and drawn several lessons.

Firstly, there is the issue of charging. The MEGA is targeted at the high-end pure electric market with a customer base of over 500,000. In this market, their time is more valuable, and therefore they are more concerned about the charging issue of pure electric vehicles. Therefore, direct charging is a supporting service that car companies must address. Although Ideal Motors had established 5C charging stations before the MEGA, they were limited to highways rather than urban settings, which is the biggest problem.

Secondly, there is the issue of public opinion. The source indicated that according to the internal review at Ideal Motors, the public opinion issues faced by the MEGA after its release were much more severe than anticipated. As public opinion escalated, it also to some extent affected the sales of the MEGA.

Of course, the release of the Ideal MEGA also had a certain impact on the rhythm of frontline sales. In fact, from the perspective of sales efficiency, the sales strategy adopted by the MEGA in the initial release period also consumed the energy of Ideal Motors' frontline sales and squeezed the market acceptance of the Ideal L series. As Li Xiang himself said, "The main model, Ideal L8, even lost its place in the showroom."

From the results, it can be seen that not only did it fail to achieve the planned MEGA sales target, but it also affected the sales efficiency of the L series.

In addition, during the internal review, it was realized that it was inappropriate to release the 2024 models L9, L8, and L7 alongside MEGA at the same event in terms of timing. Essentially, this was also a negative result caused by Ideal's "desire for sales volume."

However, the issues faced after the release of MEGA also have their positive significance.

An internal source close to Li Xiang himself told us that in fact, after Ideal Cars stumbled with MEGA, it also led to a lot of internal reflection, learning, and lessons, and also helped Ideal Cars to clarify its strategy in the pure electric market. As a result, when Ideal Cars subsequently launches more emphasis on high-volume pure electric SUVs, it can avoid stumbling.

Looking at it the other way around, if the problematic vehicle had been Ideal's pure electric SUV, the problem would have been even more serious.

This time, the internal source also told us that during the internal review at Ideal Cars, Li Xiang himself admitted that MEGA was made for him personally. However, at the same time, Ideal MEGA will still adhere to its positioning as a product for family users, which is also part of the brand's character and cannot be changed.

03 Slowly climbing out of the pit and planning for the future

This price system adjustment clearly indicates that after the unfavorable listing of MEGA, Ideal Cars as a whole has entered a phase of rapid adjustment.

These adjustments can actually be seen from Li Xiang's internal letter in March. Previously, in the internal letter, Li Xiang had expressed that Ideal Cars' excessive focus on the desire for sales volume had significantly reduced its original strengths in user value and operational efficiency. Therefore, Ideal Cars needs to lower its sales expectations and desires and return to healthy growth.

In response to this, an internal source told us that Ideal Cars internally has indeed been repeatedly emphasizing "lowering expectations." On the one hand, it is indeed an adjustment of the internal mentality that was previously overly confident, and on the other hand, it is also a prediction of the external market environment.

After the adjustment in mentality, many of Ideal Cars' actions have become more decisive. For example, with this price adjustment, "internally, all illusions have been completely abandoned," and the aim is to provide the value that should be given to users.

Apart from the mentality issue, Ideal Cars internally also had an important review, which was to solve the problems in the existing decision-making mechanism through organizational adjustments.

A person involved in the internal review at Ideal Cars told us that Ideal Cars has been learning to do process management all along, which has brought many benefits and enhanced its combat capabilities. However, for the sake of the process, it has also trapped some business leaders who can truly fight, leading Ideal Cars to become a traditional car company where "the boss gives orders and the subordinates only execute."

However, from top to bottom, Ideal Cars has already realized this problem and made adjustments.

In fact, according to what we learned from inside Ideal Cars, this major adjustment in the price system was initiated by the newly established product department during the organization adjustment in early April. Specifically, Liu Jie organized a meeting of the new product line team to discuss, and the result of the discussion was to lower the price of the L series, and successfully persuaded Li Xiang.

In simple terms, "the current mechanism of Ideal Cars allows someone internally to negotiate with Li Xiang's personal decisions," which is very important. Therefore, this change in the price system also reflects the agility of Ideal Cars' internal organizational adjustment.

It needs to be made clear that despite the significant price system adjustment and the user-oriented benefits, Ideal Cars as a whole has not lost its footing.

An internal source close to Li Xiang told us that in this price system adjustment, Li Xiang's thinking is also very clear. On the one hand, he agrees to actively respond through price reduction, and on the other hand, he emphasizes the need to stabilize sales while continuing to maintain healthy profitability and stable cash flow for the company.

After all, "Ideal Cars is a company that does the math."

In addition, Li Xiang has repeatedly emphasized in internal meetings that it is necessary to invest in next-generation technologies, especially core technologies such as intelligent driving, such as end-to-end and large models. In the long run, with the development of intelligence in software and hardware, electric vehicles and humanoid robots will become different carriers of the same thing, and this is also where Ideal Cars needs to invest and plan heavily.

From this perspective, although it is striving to extricate itself from the current predicament, in the eyes of Ideal Cars, it is still a long-term-oriented endeavor.

Looking at Ideal Cars' development from its establishment to the present, Ideal ONE helped Ideal Cars complete the process from 0 to 1, the three models of the L series (L9, L8, and L7) helped Ideal Cars build its product system and achieve commercial success, and MEGA allowed Ideal to enter a new development stage of operating dual-line products in extended range and pure electric.

At present, the start of this new development stage has not been smooth and has indeed stumbled.

But fortunately, the mistakes made by Ideal Cars are not fatal. It still has enough opportunities, space, and capabilities to make self-adjustments, and this will be a process that will take a considerable amount of time.