EV market in China is booming

By Jeff Lee 2022-01-24

While alternative fuel vehicles sale is up to 3.52 million cars in China last year, we expected the number would rise up to 5 million this year, and BEVs will be the majority. Although Chinese government would cancel all subsidies (the difference is ten thousand RMB above.), the EV trend is on the way, automakers will fight for market share and profitability this year. On the other hand, startups will continuously face huge capital consumption, and survivors also need to compete with traditional automakers’ EV model challenge. Who could survive from the two-stage challenge ? In my opinion, EV brands from China should go to Europe and North America, trying to find a new market and build their global reputation, instead of only competing in domestic market, just like other ICE automakers. NIO, XPeng Motors, BYD, Xiaomi, and JiDU, who will be the leader of Chinese domestic brands to fight for the global market in the future?

Chinese government promoted alternative fuel vehicle industry in recent years. Especially for BEV, they’ve already become the leader of global BEV market in terms of trend setting and market size. Some domestic brands are front-runner, such as outstanding players BYD, NIO and XPeng Motors.

Although Taiwan has no car import/ export trading business with China at this moment, in my opinion, we have to admit those Chinese domestic BEV brands have already well-prepared for the key technology and are able to compete with global automakers. They will play an important role in global EV market after 5 years.

The so-called “Startup Power”, dozens of new car brands rising up from 2014 in China, have three companies with high publicity: NIO, XPeng Motors, and Li Auto. Plus long-established BYD, they all specialize in alternative fuel vehicle technology.

Li Auto did not focus on BEV by now, so I focus the discussion on the other three companies:

NIO was found in 2014, with Anhui Jianghuai Automobile Group as their OEM assembly plant. In the first a few years, they started to setup many subsidiaries in Europe and North America, participated in Formula E racing sport, then IPO at New York Stock Exchange in 2018.

Their business model is quite unique… customers buy car and “rent” battery separately by battery-swapping service. In With this purchase option, car price will be reduced by 70,000 RMB.  Every car only needs 3 minutes to swap the battery at the second generation station.

There are two meanings behind battery-swapping service… firstly battery and fast-charging technology wouldn’t be able to charge battery to 80% capacity in 10 minutes by the next 10 years, and secondly driver can enjoy the newest battery tech by swapping service without changing cars.

Two months ago, NIO contracted with Shell group of Netherland to widely build up public charging stations in China and Europe, and team up for home charging and battery assets management. In Norway, NIO started selling EVs in the 4th quarter last year, and almost 90% customers selected car and battery separated purchase program.

 

XPeng Motors：This company was founded in 2014 in Guangzhou, they received financial support from Xiaomi. HonHai (Foxconn) and Alibaba, and then IPO at New York Stock Exchange in 2020. Compared with NIO, XPeng is more conservative for overseas sales strategy. Until now, they exported vehicles to Europe on and off. On the other hand, however, their advanced fast-charging technology is up to the level of 800V high voltage and 480KW high power.

Although they are proud of their technical capability, high R&D expenses would be a big challenge to achieve financing balance by early mass production for more sales and income.

 

BYD: Company was founded in Shenzhen in 1995, their battery business sector has higher reputation than auto business sector, BYD hold the highest car brand value among Chinese domestic car brands for consecutive years.

Their BEV sales number volume was just fewer than the previous two companies last year, but BYD has their own battery and chip supply chain with over 30,000 employees as R&D team. In my opinion, they may be running a little behind on car sales number, but for the whole picture, BYD will stand on the top as the key role of global new technology supply chain.

 

In my viewpoints, besides these three automakers, there are another three powerful competitors who might change the global market, i.e. Baidu. Xiaomi and Huawei.

Xiaomi already set up their auto business sector last March, and invest into dozens of supply chain companies like battery, Chip, and self-driving technology. They announced the SOP date will be in the first half of 2024. As the cellphone “pricing disruptor”, any possibility for Xiaomi to duplicate their strategy in auto industry?

As another tech giant, Baidu joint venture with Geely Automobile, the biggest domestic brand. They build up a new brand named “JiDU”, and self-driving tech from Baidu will be implemented into JiDU EV.

As for Huawei, they choose to work with multiple traditional automakers, to help them develop another new brand. as we know, Beijing Automotive Group, Chang'an Automobile, and GAC Group agreed to participate this program.