Why some Chinese language purchase native electrical automotive manufacturers Nio, Xpeng and never Tesla
An electric vehicle charging station can be seen on January 31, 2021 at Nio’s headquarters in Hefei, Anhui Province, China.
Ruan Xuefeng | Visual China Group | Getty Images
BEIJING – Chinese consumers, considering whether to buy Tesla’s electric cars or local alternatives, have two things on their mind: price and range.
This emerges from anecdotes gathered by CNBC – conversations from across the country that do not constitute qualitative research. However, the comments shed light on what is important to some consumers in China, the world’s largest auto market.
U.S.-listed Chinese auto start companies Nio, Xpeng and Li Auto saw their deliveries spike last year despite a slump in the entire automotive market and the coronavirus pandemic. Company stocks rose sharply in 2020 but pulled back slightly this year.
Tesla is still the market leader for high-end electric vehicles in China. On a quick check at the start of the evening commute one day, CNBC found 11 Tesla cars driving past, plus two Nio SUVs, one from WM Motor and Xpeng’s newest P7 sedan.
Some Chinese consumers took the following into account when making their decision to buy a local electric car.
First, price was an important consideration.
Chen Yingjie, 42, said he bought Li Auto’s Li One SUV for about 300,000 yuan ($ 46,000) in April 2020 after realizing it would cost him about twice as much, a similar car from Nio can be bought with all the specifications he wants.
Nio’s starting price is low, but there are many features available for an additional fee, Chen said. The Shanghai resident had previously bought the G3 from Xpeng in 2019 and later a BYD electric car for his father in June 2020.
Part of Nio’s strategy is to sell many vehicle features through a subscription model. For example, last year the company introduced a “battery as a service” plan that charges customers a monthly charge for battery power – similar to a regular fuel charge for a traditional gas-powered car.
For Wang Jingyan, 29, he said that Nio’s focus on customer care was something he felt was worth paying extra for because it saved him time from going to a repair shop.
Price was a factor for him too. Wang said he bought his Nio ES6 for about 450,000 yuan – his first electric car – in late 2019 after being recommended at work by a manager and compared to a more expensive Lexus RX.
He said he hadn’t had a chance to try Tesla’s Model 3 before, but he didn’t make such a good impression based on his friends’ experiences and online stories of poor customer service in stores.
Concerns about the driving range
Another important factor for Chinese consumers was how far the car could go on a single battery charge.
Zhang Zhen, 41, lives in a cold part of northern China and was concerned about the ability of an electric car to have enough electricity to take a trip while the vehicle was heated. Last fall, his family bought a Li One that comes with a fuel tank to charge the battery.
This fuel increases the range of Li One on a single charge from 180 kilometers to 800 kilometers.
Zhang said his wife mainly used the car to send and pick up their children from school, a daily distance of about 10 kilometers. The children also prefer his wife’s car to their non-electric car because they can see cartoons on the vehicle’s built-in interior screen, Zhang said.
But he found repairs more problematic than for a non-electric car and said he would not consider buying another such vehicle in the northeastern region of China, as there was no public charging infrastructure there.
To support the local development of electric vehicles, the Chinese government has launched subsidy programs and highlighted the establishment of a national charging system.
However, compared to the US, the majority of cars in China lack fixed parking, making it difficult for many drivers to get regular access to battery charging stations, according to Mingming Huang, founding partner of the Future Capital Discovery Fund, an investor in Li Auto.
For this reason, he expects that range expansion systems like the start-up offerings could be the best option for China in the next five to ten years. The Li One SUV from Li Auto has a fuel tank for charging the battery when on the go.
After all, many Chinese drivers are opting for electric cars because of favorable government policies, such as programs that make it much faster and cheaper to get license plates for electric vehicles. With efforts to reduce traffic jams and pollution in Chinese cities, locals often have to wait years to buy expensive license plates for fuel-powered cars.
After waiting almost a year for a fuel-powered license plate in Hangzhou, a 27-year-old decided to wait no longer after seeing an Xpeng G3 electric car while on a shopping spree. The car matched her budget of around 180,000 yuan after government subsidies, she said.
On the streets of Beijing, where license plates are also hard to come by, high-end electric car maker Tesla is still a popular choice.