The battle for consumer attention in China's electric car market is playing out on touches of “tech luxury” that car buyers in other markets have never seen.
China's new electric car brands, and even traditional state-owned automakers, are racing to incorporate technologies and features once considered premium into EVs priced as low as $20,000, or less than half the cost of an average new car in the United States, which today exceeds $48,000.
That poses a growing challenge for foreign brands in China, including Tesla and Volkswagen, both of which have EVs leading sales in the world's largest market, and others, analysts say.
Last year, BYD shocked the auto industry when it launched its Seagull electric vehicle, now priced below $10,000, at the Shanghai auto show. The Seagull is now the fourth best-selling electric car in China.
But other Chinese automakers, including state-owned companies that entered the EV race later, closed the gap on sub-$10,000 EVs at the Beijing auto show that kicked off Thursday.
The market is also crowded with electric and plug-in vehicles whose starting price is around $20,000 and whose interior equipment and technology are still expensive.
Chinese consumers, especially younger ones, view technological luxury as an important consideration, and Chinese automakers are taking the lead on these features, said Raymond Tsang, a Shanghai-based Bain & Company partner.
This situation is quite different from many other Western markets where, traditionally, car buyers continue to place high importance on build quality, reliability, ride and handling, he said. added.
KARAOKE IN YOUR MERCEDES
In a race for differentiation, some Chinese brands offer functions that are meant to be fun, even frivolous.
The Baojun Yep, a mini electric vehicle from the SAIC-GM-Wuling joint venture, with a starting price of around $11,000, is equipped with a screen on the tailgate where the driver can flash messages such as “thank you” or a “heart” emoji to acknowledge the kindness of another road user.
The Zeekr 001 electric sedan, a premium offering in China with a starting price of around $37,000, features a grille that can play music while stationary while providing pedestrians with a series of thumbs up emojis.
Roewe's D5X DMH plug-in hybrid SUV, just launched by SAIC Motor and with a starting price of around $16,500, allows drivers to simultaneously enter up to 10 different commands into a system navigation, for example a series of different destinations.
XPeng and Nio, electric vehicle-focused companies that launched as startups, are launching consumer brands for China where price competition has become fierce. Xpeng expects its upcoming Mona-branded electric vehicle to be the first in China priced below $21,000 and equipped with high-level autonomous driving functions.
Even a year or two ago, I didn't think we could achieve this, Brian Gu, co-chairman of XPeng, told reporters on the sidelines of the Beijing auto show.
In China, the price of specialized components – including sensors needed for autonomous driving functions and in-car entertainment screens – has fallen and competition has intensified in the world's largest auto market, analysts say.
Dongfeng, a state-owned automaker, is introducing the Nammi in Beijing. This electric vehicle with a range of 300 km (186 miles) sells for $9,600. It has flush door handles that open on command, an aerodynamic feature popularized by Tesla. Owners can start the car and open the doors remotely using a smartphone.
CHINESE “WOW” EFFECTS
Historically, American and European brands have been considered more luxurious and higher quality than Chinese brands. According to analysts, this situation is changing rapidly.
The halo of foreign brands has almost disappeared, McKinsey analysts said in a report on China's auto market outlook released in March. Foreign owners of traditional high-end cars are transforming into Chinese owners of high-end new energy brands in an almost one-way flow.
German car manufacturers are not sitting idle.
Volkswagen, China's top foreign brand, plans to give tech-savvy Chinese consumers the surprise they expect, Ralf Brandstaetter, head of China, told reporters on Tuesday. Mercedes-Benz CEO Ola Kaellenius told Reuters his Chinese digital technology team was focused on catering to the tastes of China's younger, more tech-oriented consumers.
In the new E-Class you can sing karaoke. Maybe you don't have this function in Germany. Maybe you should do it. But here, the customers love it.
Both German executives said their cars were capable of adding new features at China's speed through over-the-air software updates.
In the flagship store of Chinese technology giant Huawei in the center of Beijing, Jack Xu was not buying a smartphone but his first electric vehicle. The one that caught his eye was a Huawei-backed SUV under the Aito brand, an electric vehicle made in partnership with Seres.
When it comes to EVs, we're already leading the world, the 36-year-old education worker said, looking at the display screen that spanned the width of the front row. Why would I choose a foreign car? (Reporting by Sarah Wu and Kevin Krolicki in Beijing; Editing by Brian Thevenot and Mark Potter)
