(Beijing) The Auto China car show kicked off Thursday in Beijing with all the automobile giants engaged in a fierce global price war in the strategic electric vehicle sector.
The crowd flocks Thursday to the exhibition center which hosts until May 4 the event, usually organized every two years alternating with that of Shanghai, but which has not taken place since 2019 due to the pandemic.
Several big Chinese names in the sector spoke at the show, such as He Xiaopeng, general manager of XPeng, and Lei Jun, boss of Xiaomi, while visitors wandered between the stands and took photos of the vehicles on display.
The Chinese electric market has exploded in recent years – representing 69% of global sales in December 2023, according to the Rystad Energy firm – and Chinese manufacturers are now attacking the international market. They are today the “most competitive in the world” according to Tesla boss Elon Musk.
There are as many as 129 electric vehicle brands in China, but only 20 of them have managed to achieve a domestic market share of 1% or more, according to Bloomberg data.
Chinese consumers, especially in the premium vehicle market, are looking for smart features in their electric vehicles, something the country’s companies are far more capable of providing compared to their foreign competitors, experts say.
“Optimize the experience”
Chinese electric vehicle manufacturers “view the car much more like Apple views the phone, the iPad or the laptop. They seek to optimize the experience,” said Daniel Kollar, in charge of mobility and automobile issues at the consulting firm Intralink, specifying that “this is what the Chinese consumer expects.”
This poses a challenge for foreign companies trying to position themselves as rivals in the Chinese market.
“Companies like Volkswagen and Stellantis (…) are trying to take an approach like ‘If you can’t beat them, join them,’” Mr. Kollar told AFP. “This is why we are seeing partnerships appear, like with XPeng. They think that they are behind and that the best way to get ahead is to ally themselves with them.
Among the most prominent brands at the show is BYD (Build Your Dreams), an automobile and battery giant based in Shenzhen. BYD beat Tesla in 4e quarter 2023 to become the world’s leading seller of electric vehicles.
Tesla claims to have regained that title in the first quarter of this year, but BYD remains firmly in the lead in its home market, with a third of sales, compared to 8% for Tesla.
The company is expected to unveil its first electric pickup, the BYD Shark, at the show.
The traditional automobile giants, which have struggled to cope with the surging wave of Chinese competitors in recent years, will also be present at this show.
Westerners worried about their manufacturers
The price war is intensifying among electric vehicle makers, especially as consumer spending slows in China.
On Monday, Beijing-based Li Auto slashed the price of its models by up to 30,000 yuan (nearly $5,650). The move follows Tesla’s decision to lower its prices in China by 14,000 yuan ($2,635).
Battered, the American manufacturer announced on Tuesday a 55% drop in its profits in the first quarter, and announced that it would accelerate the launch of a low-cost car, the Model 2, which would be sold for around $25,000 (compared to more than $40 000 dollars on average for its current models).
The rapid expansion of Chinese production of electric vehicles worries Western countries, who fear for the future of their own manufacturers.
Beijing deemed foreign concerns about overcapacity in China “unfounded,” arguing that the success of its power sector was due to innovation and efficient supply chains, not subsidies.
However, the Chinese government has long helped its manufacturers, financing purchase discounts to stimulate the market and accelerate the transition to clean energy cars. Subsidies gradually phased out at the end of 2022.
The European Union last year launched an investigation into the subsidies, which it said gave Chinese companies an “unfair” head start in their domestic market.
A decision which did not prevent BYD from launching its future electric vehicle factory in Hungary, thus becoming the first Chinese company to manufacture passenger cars in Europe.
Last week, Chinese state-owned Chery signed a deal to produce electric vehicles in Spain.
reference: www.lapresse.ca