Beyond Tesla And Nio — Companies Exploit China's Mass EV Potential

Segment leaders such as Tesla Inc TSLA, Nio Inc NIO, and Xpeng Inc XPEV may have made their mark on the Chinese consumer, but low-priced EVs are enjoying the mass appeal in the East Asian country.

Huge Customer Base: EVs, such as a $10,000 crossover vehicle made by Hozon Auto, are attracting customers due to lower maintenance costs and a smaller price tag, reported Bloomberg.

“These ultracheap EVs are reaching a new customer in China, as they likely will in other markets as prices come down,” said Siyi Mi, a BloombergNEF analyst. 

Widening Choice: Availability of a wider range has the Chinese consumer spoilt for choice. There is the Hozon Auto Neta N01. Also available is the e1 minicar from Berkshire Hathaway (NYSE: BRK-A) (NYSE: BRK-B) CEO Warren Buffett-backed BYD Company Ltd BYDDF priced at $8,950 and the Hong Guang Mini, a two-door vehicle available for just $4,230. The Hong Guang Mini, built by Wuling — a joint venture between General Motors Company GM and the state-owned SAIC Motor — reported sales in excess of those by Tesla’s Model 3 by two-to-one late last month.

Need For Low-Cost EVs Felt Elsewhere: Car prices have outrun wage growth in the United States, which means the lowest-earning fifth of the population needs to spend 30% of their income on transportation costs, according to Bloomberg.

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“Taking into account people’s access to transportation, it’s very important to see a greater diversity of models like EVs being offered on the lower end of the price range,” said Selika Talbott, a professorial lecturer and a founding partner of an automotive consultant company, Bloomberg reported. Priced at just under $30,000, the cheapest EV available in the U.S. after subsidies from a major vehicle maker is General Motors Company’s GM Mini Cooper SE. Some vehicle manufacturers such as ElectraMeccanica Vehicles Corp SOLO want to change that by introducing single-person vehicles priced under $20,000.

The Frontrunner On A Backfoot: In February, Tom Zhu, the president of Tesla China, dismissed news that it is working on a $25,000 mass-market vehicle. Previously some media outlets had reported that such a vehicle would have been sold globally. 

Xpeng Chairman Brian Gu said last September that the company’s mid-range EVs are already priced around the $25,000 mark.

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