Zhenghao Innovation’s “Life-and-Death Breakthrough” | Wang Lei | Energy Storage | Wang Tao | Liu Wei | Huabao | Photovoltaic Modules
In 2024, Zhenghao reported nearly 8 billion RMB in revenue, reflecting a remarkable growth of nearly 80% year-on-year, successfully reversing its fortunes.
The past two years have been a rollercoaster for Zhenghao Innovation. The year 2023 was particularly challenging, marked by a significant downturn. As the Russia-Ukraine conflict wound down, sudden shifts in domestic policies led to a decline in the company’s revenue growth and a delay in its IPO. The highly anticipated second growth curve, which revolved around the lawnmower project, turned out to be a costly venture with mediocre responses, ultimately leading to its abandonment. With mounting pressure on performance, internal conflicts emerged, resulting in some early investors exiting and key personnel leaving the company. Zhenghao felt like a ship adrift in a vast ocean, at risk of being engulfed by waves of adversity.
In this crisis, founder Wang Lei decisively shifted the strategy, vigorously promoting organizational changes and introducing the Huawei IPD management system. This move effectively pulled Zhenghao out of the mire, enabling a remarkable turnaround.
However, the upcoming year, 2025, appears to be anything but calm. In the rapidly growing home energy storage sector, Zhenghao faces titans like Tesla and Huawei, while innovative companies such as Anker are also vying for market differentiation. Can Zhenghao maintain its success amidst this fierce competition?
This article explores Zhenghao’s tumultuous journey, discussing how technological companies can navigate the harsh realities of a global market and evolve through organizational advancements to emerge stronger.
01 Team’s “Dimension Reduction Attack”: Zhenghao’s Ascent
In 2023, Zhenghao overtook Huabao New Energy to claim the top market share. This shift was both surprising and expected, given the high industry anticipation for Zhenghao. The company achieved this milestone earlier than anyone anticipated, largely due to its technological innovation and redefinition of the industry.
Founded in 2017, Zhenghao was not an industry pioneer. At that time, Huabao New Energy had already established itself five years prior and was two years into outdoor power supply development. The core team of Zhenghao, which originated from DJI, played a crucial role in its rapid rise. Wang Lei, who holds a PhD in mechanical engineering from the University of Hong Kong, previously led the battery research department at DJI, where his team increased the flight time of DJI drones from 20 to over 30 minutes.
Wang’s high vision and strong personal charisma were evident as he often shared meals brought from home with colleagues, engaging in relaxed discussions about business. In 2016, he recognized the vast potential of the energy storage market, believing that electricity freedom represented an enormous blue ocean opportunity. He proposed to DJI’s founder, Wang Tao, the idea of enabling outdoor electricity use through product innovation, but this did not resonate with Wang Tao.
The following year, Wang Lei left DJI to establish Zhenghao, recruiting former colleague Chen Xi as CTO. Chen, who had worked in the flight control department, initially planned to join Makeblock, founded by Wang Jianjun, but ultimately chose Zhenghao due to fortuitous circumstances. He is not only technically adept but also has strong product insights and a creative mindset.
Chen, a multi-talented engineer, is skilled in coding, circuit design, and product structure. His philosophical approach and problem-solving skills have contributed significantly to product development. He established a “cultivation group” within the company that includes many core members. During meetings, Chen often likens processes to functions, illustrating how they interconnect through recursive calls.
With a strong technical background and innovative culture, Zhenghao has cultivated a pure corporate ethos. In contrast, Huabao New Energy, known as the “first stock in energy storage,” comes from a sales background, with founder Sun Zhongwei initially starting in Shenzhen by selling soy sauce, resulting in a weaker technical foundation. Furthermore, their R&D investment starkly diverges: Huabao’s research investment has historically been only 2-3%, while Zhenghao invests around 40%.
Zhenghao has consistently maintained high standards for product quality and innovation. Since its inception, the company has never sought shortcuts through imitation but has instead focused on new technologies and product forms. In 2019, the company launched the groundbreaking DELTA 1300, addressing critical pain points in traditional products, such as slow charging and the inability to power high-wattage devices, which led to its immediate success.
In addition to attracting talent from DJI, Zhenghao also recruited numerous individuals from OPPO, a company known for its consumer insights. An office at OPPO features a large wall-sized user journey map that meticulously tracks consumer interactions from the moment they enter a store to purchase, capturing every potential issue and emotional response. The inclusion of OPPO alumni brought valuable consumer insights methodologies to Zhenghao, significantly enhancing its development in the consumer market.
Armed with advanced technology, innovation, and consumer insights, Zhenghao’s team implemented a “dimension reduction attack” against most of its competitors, swiftly achieving the first phase of its business closure.
02 Windfall from “Outdoor Power Supply”: Leadership Change
Following its initial success driven by product strength, Zhenghao encountered a massive market windfall due to the Russia-Ukraine conflict. The company’s early investments in Europe positioned it to quickly dominate the market. From the onset, it was clear that surpassing Huabao was inevitable. The two companies differ significantly in product focus, user positioning, market choices, and sales strategies. While both target outdoor scenarios, Huabao primarily appeals to outdoor enthusiasts, whereas Zhenghao accommodates family usage.
The design aesthetics of their products reflect these distinctions: Huabao’s vibrant orange and black color schemes serve as warnings outdoors, while Zhenghao adopts a minimalist Scandinavian style, integrating seamlessly into home environments. Additionally, Huabao’s market focus on the U.S. and Japan limits its reach, while Zhenghao targets a global market, placing significant emphasis on Europe, which values outdoor and environmentally friendly products.
Unlike Huabao’s online strategy, Zhenghao emphasizes branding and media exposure, adopting an omnichannel approach. Its products are available not just online but are also stocked in major retailers such as Walmart, Costco, and Decathlon. These cumulative differences led the two companies down drastically divergent paths starting in 2022.
That year, the Russia-Ukraine conflict erupted, plunging Europe into an energy crisis. Electricity prices soared to several euros per kilowatt-hour, severely impacting local lifestyles and businesses. For instance, a Chinese owner of a small hotel in Germany saw his monthly electricity bill skyrocket from a few thousand euros to 30,000-40,000 euros, erasing all profits and barely covering basic expenses. With electricity costs soaring, European consumers rushed to purchase energy storage products for emergencies. Riding this wave, Zhenghao’s sales surged, while Huabao failed to capitalize on the European market, missing this significant opportunity.
By the first half of 2023, Zhenghao had captured 35% of the global market share, marking a dramatic shift in the industry landscape. Meanwhile, Huabao, seeing Zhenghao’s rapid rise in Europe, hastily attempted to follow suit by flooding the market with products. However, as the energy crisis subsided the following year, the market returned to rationality, leaving Huabao with massive inventory buildup. This setback hit Huabao hard, forcing it to cut costs, streamline operations, and delay new business ventures. By 2024, Huabao’s market share had plummeted to third place, trailing behind Delanminghai, while Zhenghao, despite its prior success, soon faced another crisis.
03 Stagnant Core Business, Delayed IPO, and Struggles with Second Growth Curve
Before Zhenghao could fully enjoy its top position, it found itself in a challenging situation. The outdoor power supply market attracted a flood of competitors in 2022, resulting in severe oversupply and a decline in demand as the European energy crisis eased and the camping trend waned. The market for outdoor power products experienced a sudden drop in demand, leading to an imbalance in supply and demand, and many companies faced significant losses or closure. Zhenghao also dealt with inventory buildup due to the tough market environment.
As a response to the “overheating” in the energy storage sector, the China Securities Regulatory Commission implemented six regulatory measures regarding IPOs and refinancing in 2023, signaling a tightening of re-financing policies. Under this regulatory pressure, Huabao’s market value halved, while Zhenghao’s IPO plans were also stalled. The shrinking market and delayed IPO triggered a chain reaction, leading to a significant drop in Zhenghao’s valuation. Industry insiders estimated that Zhenghao’s revenue in 2023 was around 5 billion RMB, remaining flat compared to the previous year.
Due to stagnant performance and tightening policies, some investment institutions valued Zhenghao at approximately 10 billion RMB (around 1.5 billion USD) based on a revenue-based multiple of two times, a stark decline from the previous range of 2-3 billion USD. This drop in valuation was worrisome. Moreover, Zhenghao’s previously planned second growth curve did not meet expectations. In 2022, Zhenghao announced ambitious plans to build an outdoor ecosystem, launching products like lawnmowers and outdoor refrigerators to serve as the company’s second growth curve. This strategy drew mixed reactions; some argued that Zhenghao’s core advantage lies in energy storage, while others questioned whether such projects diverted focus and resources.
The lawnmower project, in particular, faced challenges, resulting in losses when it was eventually sold off. The project, codenamed “Little Car,” was highly anticipated internally and led by a capable team. However, after burning through over 100 million RMB, the project failed to resonate in the market, ultimately leading to its sale to Guanghetong at a significant loss. The failure of the lawnmower project was attributed to poor timing, as key technologies in positioning and navigation were not Zhenghao’s strengths, and the market lacked mature technology and supply chain resources at that time.
With the core business stagnating, delayed IPO, and struggles with the second growth curve, internal conflicts began to surface. In 2023, Wang Lei faced lawsuits from several founding members alleging misappropriation of 6 million RMB in founding funds and other accusations. This controversy stirred significant unrest in the industry, although Wang Lei remained largely silent on the matter. Opinions on the lawsuit were divided; some believed that Wang’s actions were justified, while others speculated that he aimed to monopolize the company’s success. As uncertainty loomed, many key employees, seeing dim prospects for an imminent IPO, chose to leave, marking 2023 as the year of highest talent attrition for Zhenghao.
04 Introducing Huawei’s IPD System: Seeking Certainty Amid Uncertainty
Amidst internal and external challenges, discussions emerged about Zhenghao’s potential decline. However, in 2024, Zhenghao reported impressive results, with revenue nearing 8 billion RMB, an increase of nearly 80% from 2023. How did Zhenghao manage to navigate through the industry’s frozen period and achieve growth? The key was decisive organizational transformation.
At the beginning of 2023, Wang Lei made a pivotal decision to implement Huawei’s IPD (Integrated Product Development) system. Initially, Zhenghao inherited DJI’s culture of innovation, lacking stringent processes in product development. Projects often commenced swiftly, guided by informal discussions, which limited oversight to key milestones. While this approach allowed for flexibility, it heavily relied on the manager’s talent and intuition.
As the company expanded beyond single products into comprehensive solutions, the complexity of development increased exponentially. Maintaining the previous model would lead to high communication costs and resource wastage. Therefore, the introduction of a more structured system was necessary to integrate internal resources.
Recognizing the volatility of the energy storage industry, Wang Lei understood that Zhenghao needed to bolster its competitive edge through enhanced team cognition and organizational capabilities. To seek “certainty” in an uncertain market, he pushed forward with the Huawei IPD system, promoting a comprehensive reform.
Initially, many employees accustomed to the culture of innovation found the changes challenging. Reform is not a quick process; Wang adopted a strategy of “first standardizing, then solidifying, and finally optimizing.” He enforced the IPD processes strictly, even when they seemed unsuitable, to help the team gradually adapt. Subsequently, he aimed to establish core processes tailored to the company’s unique business characteristics, ensuring stable operation of the new system.
The evolution process was arduous, with many projects experiencing increased workloads initially due to the unrefined processes. To facilitate employee adaptation, senior management frequently engaged in external learning opportunities. After over a year of reform, Zhenghao’s revenue not only did not decline but surged from 5 billion RMB to 8 billion RMB, while maintaining a workforce of over 2,000 employees. Zhenghao demonstrated that reform could coexist with revenue growth.
Currently, the company has developed both innovative product development habits and structured management processes, a notable rarity in corporate transformations. Analysts suggest that while the IPD system might reduce the quantity of innovations, it significantly enhances the certainty and efficiency of those innovations. Essentially, the IPD serves as a tool to guide employees on how to do things correctly, aligning with the founder’s insights and judgment.
05 Expanding into Home Energy Storage: Opportunities and Challenges
With the introduction of the IPD system, Zhenghao experienced a substantial boost in efficiency and revenue. As the industry evolved, Zhenghao set its sights on the broader blue ocean market of home energy storage. Following the market collapse in 2023, companies like Anker, Huabao New Energy, and Delanminghai flocked to the home energy storage segment, but Zhenghao had already made significant strides in Europe since 2021, planning to aggressively enter the U.S. market in 2024.
On one hand, this move allows Zhenghao to escape the turmoil of the outdoor power supply sector, while on the other, the home energy storage market presents vast potential. Unlike outdoor power supplies, the home energy storage market is immense, with single overseas markets potentially worth trillions of RMB and experiencing rapid growth. A report by GF Securities predicts a compound annual growth rate of over 30% for the global home energy storage market from 2024 to 2025.
The demand for home energy storage is driven by essential needs during power outages and high electricity costs. Many U.S. families leverage energy storage to capitalize on time-of-use pricing, storing energy during off-peak hours to save on costs. With a vast market and growing demand, opportunities abound for Zhenghao.
However, the challenges are formidable. The competitive landscape is fierce, with major players like Tesla, Huawei, BYD, and CATL dominating the field. These companies possess superior technology, ample financial resources, and significant brand influence, making it challenging for Zhenghao to establish its foothold. Unlike the low-entry barriers of outdoor power supplies, home energy storage demands high technical stability and product reliability, putting Zhenghao’s R&D capabilities to the test.
Wang Lei is reportedly confident about this venture, suggesting that Zhenghao’s home energy storage products are on par with Huawei’s offerings. However, product strength is just the first hurdle; the greater challenges lie in channel and service capabilities. Home energy storage products require installation and heavily depend on local service providers, making their selection critical to product market stability.
While Zhenghao’s resources are limited compared to competitors like Huawei and Tesla, it is making notable progress in home energy storage. The company is engaging in differentiated competition through pricing and service while innovating in product development. Reports indicate that Zhenghao’s home energy storage revenue could reach several billion RMB in 2024.
In addition to traditional high-cost, large-volume products requiring installation, Zhenghao is exploring convenient, low-cost balcony energy storage solutions, a product line that Anker has also prioritized. Anker’s balcony storage solutions have gained traction in Germany, with revenue estimates reaching several hundred million RMB annually. Their products are designed to be plug-and-play, significantly lowering market entry barriers and reducing consumer costs.
In Europe, installation costs for home energy storage often exceed the product price itself, with users spending upwards of 10,000 euros for installations. This cost represents a significant burden for many working-class families. In contrast, Anker’s affordable balcony storage solutions present a compelling value proposition, showcasing innovation in the energy storage business model and creating substantial opportunities for the industry.
06 From Ascendancy to Dark Times, and Back Again: Zhenghao’s Journey
In just a few years, Zhenghao Innovation’s rise and fall resembles an encapsulated business history. Following the market windfall, the once “dark horse” of energy storage has relied on organizational transformation and the introduction of the IPD system to enhance efficiency and discover certainty amid market uncertainties. However, the new battlefield of home energy storage is rife with competition. Giants like Tesla, Huawei, and BYD are heavily fortified, while companies like Anker are embarking on differentiated competition.
Moreover, rising tariffs introduced by Trump leave Zhenghao with little time for expansive maneuvers. In this ongoing global competition, how will Zhenghao elevate the industry to new heights? The journey of brand globalization and innovation remains a focal point of interest.
