In a significant move to enhance its brand identity and market presence, BAIC Blue Valley recently announced its plan to change its Chinese name from "BAIC Blue Valley New Energy Technology Co., Ltd." to "BAIC Jihe New Energy Automobile Co., Ltd." This change emerges from the company's current predicament in an increasingly competitive market.

Seven years ago, when the company underwent a reverse merger to go public, "Blue Valley" was a source of pride for the BAIC Group, capitalizing on its research and development advantages to become the "first stock in the new energy vehicle sector," standing shoulder-to-shoulder with TeslaHowever, the automotive landscape has dramatically shifted since then, leaving BAIC Blue Valley facing significant challenges and in urgent need of a benchmark product to regain momentum.

In those early days, BAIC Blue Valley was buoyed by a rapidly evolving new energy vehicle (NEV) market, cementing its status as a front-runner as consumers began to shift from traditional internal combustion engines to electric-powered alternativesYet, this dominance has waned over just a few short years, assigning the responsibility of reviving the brand primarily to its self-owned Jihe brand, whose future performance will ultimately determine whether the company can reclaim its former glory.

Emphasis on Extended Range

Before the name change, BAIC Blue Valley was already strategically redirecting available funds toward Jihe and another brand, XiangjieJihe, in particular, has taken the lead with a focus on enhancing its extended-range electric vehicle (EREV) offerings, while Xiangjie is developing product upgrades.

The funds in question stem from a private placement financing in 2023, where BAIC Blue Valley raised approximately 6.03 billion yuan (net of taxes and issuance costs). Originally, these proceeds were earmarked for six projects; however, the company decided to adjust the allocation of some of this funding, taking into account market conditions, economic feasibility, and progression of each initiative.

Specifically, certain projects, such as upgrades to the ARCFOX Alpha T model, vehicle product upgrades, and core capability development, reached their intended status and thus are being concluded

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At the same time, other components of these projects will see a slowdown or halting of investment.

For example, in the ARCFOX Alpha T model upgrade project, three variants were initially planned for upgrades; however, it has been decided that two will go forward while the development of the last variant will ceaseLikewise, the project concerning the three ARCFOX N61 electric vehicles will also see one variant dropped entirely.

According to the revised strategy, the corresponding funds will be reallocated to two stated projects: one targeting scenario-based product development with a skateboard platform, and the other focusing on the ARCFOX Alpha T5 model upgradeNew projects also include the EREV upgrade for the T5, S5 model upgrade, the Xiangjie vehicle project, and a new MPV initiative.

The extended-range ARCFOX Alpha T5 upgrade project has a total investment of about 348 million yuan, with 200 million yuan drawn from raised fundsSimilarly, the ARCFOX S5 upgrade will cost approximately 624 million yuan with an intended funding of 350 million yuanThe Xiangjie project alone is expected to reach a total investment of 5.532 billion yuan, utilizing 700 million yuan from the raised funds.

BAIC Blue Valley has made it clear in recent communications with investors that the development of the Xiangjie EREV model is proceeding smoothlyThey aim to achieve a dual product lineup of pure electric and extended-range flavors by 2025, asserting that they possess the capability and technology reserves to launch extended-range products within the Jihe brand soon.

This commitment to extending their range of electric vehicles indicates a clear strategic pivot within the company, demonstrating that both Jihe and Xiangjie intend to enter the EREV market derivative.

Main Brand Setbacks

Unlike traditional gasoline vehicles that transition gradually through hybrid models to pure-electric solutions, BAIC Blue Valley has had a strong electric vehicle foundation, launching its subsidiary, BAIC New Energy, in 2009 as one of China’s earliest players in the NEV sector.

Public records show that BAIC New Energy rolled out its first pure electric vehicle, the E150EV, in 2011, followed by the EC series and EX series, among others, catering to various market segments

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The company furiously pursued profitability via taxi services and platforms like Didi, which led to rapid growth.

From 2013 to 2017, BAIC New Energy saw its total sales exceed 180,000 units, positioning itself at the forefront of the pure electric vehicle marketBy November 2017, its sales figures put it second worldwide behind Tesla's 89,013 units, showcasing a promising trajectory.

This rapid expansion gave the BAIC Group the confidence to publicly declare a strategic pivot: at an event in 2018, then-chairman Xu Heyi stated that BAIC would focus solely on innovation in the new energy sector, abandoning traditional fuel carsBy 2020, they planned to stop selling self-branded traditional gasoline-powered passenger vehicles in Beijing, aiming for a total stop by 2025.

Consequently, BAIC Blue Valley remained committed to the electric vehicle path, launching the Jihe brand and enhancing offerings through collaboration with technology giant Huawei.

The launch of Jihe's first mass-production model, the Alpha T, occurred in 2020, followed by the Alpha S the next year, and the Hi version in 2022. Unfortunately, these new models did not gain significant market tractionIssues with technological alignment and marketing efforts resulted in Jihe's dismal sales: only 6,000 units in 2021 and 13,000 in 2022.

Simultaneously, the ride-hailing market faced saturation, creating a multi-faceted pressure that caused BAIC Blue Valley to fall behind competitors

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Between 2020 and 2023, annual sales for BAIC New Energy were only 25,900, 26,100, 50,200, and 92,200 units—far from the 150,600 units sold in 2019.

Attempting to Break the Stalemate

Soft sales have led to drastic changes in performance metricsAnalyzing trends, 2018 and 2019 stand out as BAIC Blue Valley’s most profitable years, generating revenues of 18.091 billion yuan and 23.589 billion yuan respectively, while net profits were marginally positive at 73 million yuan and 92 million yuan.

However, following these highs, the company's financial position took a nosedive, with revenues plummeting to 5.272 billion yuan in 2020 and net losses skyrocketing to 6.482 billion yuan.

This downward trend has persisted to the present dayFor 2024, BAIC Blue Valley expects losses to range between 6.5 billion to 6.95 billion yuanCumulatively, the company’s losses from 2020 to 2024 are projected to exceed 29 billion yuan, averaging an annual loss of more than 5.8 billion yuan.

These figures underline a troubling reality: selling cars is not a lucrative endeavor for BAIC Blue ValleyA report from Cinda Securities highlights that the company sold 28,000 units in the first half of the year, but a staggering loss of 86,900 yuan per vehicle was reported, though this marked a slight improvement of 13,500 yuan from the previous quarter.

Cash flow positions are even more alarming

In recent years, BAIC Blue Valley's available cash has consistently failed to cover its short-term liabilities (including short-term loans and non-current liabilities due within a year). By the end of September 2024, the company held merely 3.716 billion yuan in cash against short-term obligations that reached 7.743 billion yuan.

In a bid to reinstate liquidity, BAIC Blue Valley initiated three rounds of financing post its IPO, raising 1.034 billion yuan, 5.45 billion yuan, and 6.03 billion yuanCumulatively, the funds received since the reverse merger have exceeded 41 billion yuanMoreover, from 2018 to 2023, the firm also received approximately 10.493 billion yuan in government subsidies.

This financial state is evidently unsustainableTo reverse their fortunes, BAIC Blue Valley has deepened its collaboration with Huawei, launching the Xiangjie S9 in August 2024—a new luxury sedan aimed at competing with brands like BMW and Audi.

However, data from Hongmeng Zhixing shows that in 2024, a total of 444,956 vehicles were delivered across all models, with only 7,494 S9s deliveredThe average monthly sales from August to December were only 1,594.8 units, highlighting a lackluster performance.

As of January 2025, only 643 units of the S9 were delivered, substantially trailing behind the 2,169 units delivered in September 2024.

Current observations suggest that both Xiangjie and Jihe are struggling to alter the ongoing trend, and the increased focus on EREVs appears to be a necessary step for BAIC Blue Valley in its quest to regain market relevance.

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