Why some Chinese are buying local electric car brands Nio, Xpeng and not Tesla

BEIJING – Chinese consumers wondering whether to buy Tesla’s electric cars or local alternatives have two things in mind: price and range.

That’s according to anecdotes collected by CNBC – conversations from across the country that don’t represent qualitative research. But the comments highlight what interests some consumers in China, the world’s largest auto market.

Chinese start-ups Nio, Xpeng and Li Auto, listed in the United States, saw their shipments increase last year despite a collapse in the global auto market and the coronavirus pandemic. Company shares have soared in 2020, but have retreated slightly this year.

To be clear, Tesla is still the market leader for premium electric vehicles in China. During a quick check at the start of the one-day evening commute, CNBC found 11 passing Tesla cars, along with two Nio SUVs, one from WM Motor and Xpeng’s latest P7 sedan..

Here’s what some Chinese consumers are saying that factored into their decision to buy a local electric car.

First, the price was a major consideration.

Chen Yingjie, 42, said he bought Li Auto’s Li One SUV in April 2020 for around 300,000 yuan ($ 46,000) after realizing that it would cost him about twice as much to buy a car similar to Nio with all the specifications he wanted.

Nio’s starting price is low, but there are a lot of features that come at an additional cost, Chen said. The Shanghai resident previously bought Xpeng’s G3 in 2019 and then a BYD electric car for his father in June 2020.

Part of Nio’s strategy is to sell a lot of car features through a subscription model. For example, the company last year launched a “battery-as-a-service” plan that charges customers a monthly charge for battery power – similar to a regular fuel charge for a traditional gasoline-powered car.

For Wang Jingyan, 29, he said that Nio’s focus on customer support services was worth paying extra, as it saved him time before going to a workshop. repair.

Price was also a factor for him. Wang said he bought his Nio ES6 for around 450,000 yuan at the end of 2019 – his first electric car – after a recommendation from a manager at work and comparing it to a more expensive Lexus RX.

He said he hadn’t had a chance to try Tesla’s Model 3 beforehand, but didn’t have such a good impression based on his friends’ experience and the stories. online about poor customer service in stores.

Another big factor for Chinese consumers was the distance the car traveled on a single battery charge.

Zhang Zhen, 41, lives in a cold region in northern China and worried about an electric car’s ability to have enough power for a road trip while heating the vehicle. So last fall, his family bought a Li One, which comes with a fuel tank to charge the battery.

This fuel increases the Li One’s range from 180 kilometers (111 miles) to 800 kilometers (497 miles) on a single charge.

Zhang said his wife mainly uses the car to send and pick up their children from school, at a daily distance of around 10 kilometers (6.2 miles). Children also prefer his wife’s car to his non-electric car because they can watch cartoons on the vehicle’s built-in interior display, Zhang said.

But he found the repairs to be more complicated than for a non-electric car and said he would not consider purchasing another such vehicle in the northeast region of China due to the lack of public charging infrastructure.

In an effort to support the local development of electric vehicles, the Chinese government has launched subsidy programs and focused on building a national charging network.

But compared to the United States, the majority of cars in China do not have fixed parking spaces, making it difficult for many drivers to have regular access to battery charging stations, according to partner Mingming Huang. founder of Future Capital Discovery Fund, an investor in Li Auto.

That’s why he expects line extension systems like starter offerings to be the best option for China in the next five to ten years. Li Auto’s Li One SUV comes with a fuel tank to charge the battery while on the go.

Finally, many Chinese drivers choose electric cars because of favorable government policy, such as programs that make license plates for electric vehicles much faster and cheaper. Due to efforts to reduce congestion and pollution in the Chinese citys, locals often have to wait years to purchase expensive license plates for gasoline-powered cars.

After waiting nearly a year in Hangzhou City for a gasoline-powered car license plate, a 27-year-old man, who requested anonymity, decided not to wait any longer after seeing an Xpeng electric car G3 while traveling to a shopping center. The car met 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, premium electric car maker Tesla remains a popular choice.