Tesla and local EV makers leave the legacy automobile to China’s electric car segment

For some mainstream automakers, China’s electric car segment is becoming something of a white whale amid growing competition from younger, faster and more aggressive rivals. That’s part of the reason why Tesla and local EV makers like BYD are seeing success in China’s electric car segment, even as veteran automakers like BMW and Volkswagen see challenges in their efforts to saturate. the domestic electric vehicle market.

Data compiled by the China Passenger Car Association (PCA) revealed that local automakers accounted for nearly 80 percent of the country’s new energy vehicle (NEV) sales in the first seven months of the year. While BYD, which also sells fossil-fuel hybrids in its lineup, is the uncontrollable leader in terms of gross volume, companies like Tesla and domestic pure electric vehicle makers like NIO and Xpeng Motors are gaining momentum.

As noted in a Bloomberg News report, even companies such as Xpeng Motors and Hozon New Energy Automobile Co. — two automakers generally unknown outside of China — now outsell veteran automaker Volkswagen’s two joint ventures. US automaker General Motors is seeing some success with the $4,700 Hongguang Mini EV microcar, but China considers the vehicle a domestic product since GM’s stake in the brand is less than 50%.

Tesla has become about the only foreign automaker to be fiercely competitive in China, but part of that is likely due to support for the company from authorities. Tesla is the only foreign automaker allowed to operate a factory in China without a local partner, and since then Giga Shanghai has become something of a pride for the country’s auto manufacturing sector. The fact that Giga Shanghai is now Tesla’s most productive facility is just the icing on the cake.

PCA General Secretary Cui Dongshu noted that locally made electric vehicles usually have price as an advantage. That’s certainly true for microcars like the Hongguang Mini EV, but even premium EVs from companies that target the high end of the market, like NIO, simply offer so much more than comparably priced offerings from veteran automakers.

The managing director of Shanghai-based consultancy Autoforesight Co, Yale Zhang, noted that traditional automakers are simply lacking in China. Compared to tech-laden vehicles from companies such as Tesla, Xpeng, or NIO, NEVs from traditional automakers typically lack range, feature outdated designs, lack smart technologies, and are too expensive to start. Somehow, it seems that the pedigree of veteran automakers is starting to not matter much anymore, at least in China.

“Traditional automakers have almost no competitiveness in their electrified products. They lean heavily on the path of gasoline-powered cars. But a new toy like electric cars doesn’t necessarily need a historical story,” Zhang said. “There is not much loyalty in the Chinese consumer group. As long as they find affordable and reliable new energy vehicles, it’s easy for them to switch from Volkswagen, Nissan or Toyota.

The end of the third quarter of 2022 is approaching, and with that, another month of NEV sales will be released in China. With Gigafactory Shanghai focusing its efforts on the domestic market, Tesla has a good chance of posting impressive numbers next September. These potential results would only underline the emerging trend in China’s electric car segment – if a serious effort is made to produce compelling electric vehicles, consumers will know about it and sales will follow.

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Tesla and local EV makers exit veteran automaker from China’s electric car segment

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