Major international automakers such as General Motors (GM) and Volkswagen (VW) may think their electric vehicles (EVs) will keep selling well in China, but they could face a surprise. Chinese domestic carmakers have already taken a big share of the world’s largest car market, where it is estimated that car sales amount to $500 billion each year.
Buyers looking for smart technology
When Beijing office worker Tianna Cheng planned to buy a new car, she chose between three Chinese brands, Xpeng, BYD, and Nio. She did not consider buying foreign cars.
Cheng said that foreign car brands did not have what she was looking for, she wanted an EV able to give her the “comfort” of having a smartphone-like experience in her vehicle. She uses a mobile device to connect to shopping websites and control the windows and music while she is in her car. The 29-year-old said:
“If I was buying a gasoline car, I may have considered foreign brands, but I wanted an EV, and other than Tesla, I saw few foreign brands applying advanced smart technology properly. Foreign brands are so far from my life and lifestyle”
Cheng is one of many Chinese who are buying electric vehicles. The China Association of Automobile Manufacturers reported that sales increased in the first four months of year 2022. During that time, the number of electric or plug-in hybrid passenger cars got more than doubled from a year earlier to 1.49 million units. Vehicles with these kinds of technologies represent 23% of China’s passenger car market. However, vehicle sales fell by 12% because of a drop in demand for gasoline cars as well as supply chain issues.
There are almost no foreign brands among China’s top 10 makers of new energy vehicles (NEVs) this year. The only exception is Tesla, which is in third place. All the rest are Chinese brands, including BYD, Wuling, Chery, Xpeng and Nio.
China’s leader is BYD, the company has sold about 390,000 EVs in the country this year. That is more than 3 times as many as worldwide leader Tesla sold in China. The top-ranked traditional carmaker is Volkswagen, which is at 15th place for EV sales. Since the 1990s, foreign carmakers sold up to 70% of the passenger cars in China. However, during the first 4 months of 2022, their sales went down to a deplorable 52%, and in April it was at just 43%.
Nissan chief Makoto Uchida told Reuters that some well-known brands “could disappear in three to five years” in China. He said:
“Local (Chinese) brands are becoming stronger. The quality of EVs from Chinese makers had improved quickly, with progress being made in the space of months, not years. Foreign carmakers had to move quickly in the design, development and launch of new models. Otherwise, if we were slow, we would be left behind.”
Bill Russo is a former Chrysler executive who now heads the Shanghai-based advisory business Automobility. He said foreign brands need to change the situation quickly because they control less than 20% of China’s only growth auto market. He considered this a problem because, “traditional companies are not hi-tech natives.” Russo said:
“Chinese brands are winning the race to EVs. Consumers’ desire for cars that are more like smartphones on four wheels is not likely to change.”
Volkswagen said EV demand in China was strongly linked to the “smart car” idea, so the company is investing more in local research and software. General Motors also announced plans to spend more than $35 billion worldwide by 2025 to make electric cars. That includes more than 30 new EVs, over 20 of them to be sold in China.
International carmakers need to attract people in big cities with money to spend. Li Huayuan, a civil engineer from Shanghai, said. Li briefly considered Japanese and German brands before he bought his BYD electric car last year for $43,000. According to Li:
“Seems to me only Tesla stands out when it comes to American brands, the other brands don’t even look competitive to me.”
A 3d animation professional with over 20 years of industry experience having served in leading organizations & production facilities of Pakistan, an avid car enthusiast and petrolhead with an affection to deliver writings to help shape opinions. Formerly written for PakWheels as well as major publications including Dawn. Founder of CarSpiritPK.com