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

BEIJING – Chinese consumers wondering whether to buy Tesla electric cars or local alternatives have two things on their minds: price and autonomy.

This is according to the anecdotes gathered by CNBC – conversations from all over the country that do not represent qualitative research. But the comments take a look at what some consumers care about in China, the world’s largest car market.

Nio, Xpeng and Li Auto, the US-listed Chinese companies, saw an increase in deliveries last year, despite a decline in the global car market and the coronavirus pandemic. The company’s shares rose in 2020, but retreated slightly this year.

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

Here is what some Chinese consumers who have considered their decision to buy a local electric car say.

First of all, the price was a major issue.

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

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

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

For Wang Jingyan, 29, he said Nio’s focus on customer service was something he thought was worth paying extra for saving him time to go to a workshop. of repairs.

Price was also a factor for him. Wang said he bought his Nio ES6 for about 450,000 yuan at the end of 2019 – his first electric car – after recommending 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 before, but he didn’t get such a good impression based on his friends’ experience and online stories about poor customer service in stores.

How far the car could drive with a single battery charge was another important factor for Chinese consumers.

Zhang Zhen, 41, lives in a cold part of northern China and was concerned about the ability of an electric car to have enough power to complete a car trip while warming up the vehicle. So last fall, his family bought a Li One, which comes with a fuel tank to charge the battery.

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

Zhang said his wife primarily uses the car to send her children to school, a daily distance of about 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 screen, Zhang said.

But he found repairs more complicated than for a non-electric car and said he would not consider buying such a vehicle in the northeastern region of China because of the lack of public charging infrastructure there.

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

But compared to the US, most 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 Mingming Huang, founding partner of Future Capital Discovery Fund, an investor. in Li Auto.

Therefore, he expects range expansion systems, such as start-up offers, to be the best option for China in the next five to 10 years. Li Auto’s Li One SUV comes with a fuel tank to charge the battery 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 buy expensive license plates for fuel cars.

After waiting for almost a year in Hangzhou for a fuel license plate, a 27-year-old man who applied for anonymity decided not to wait after seeing an Xpeng G3 electric car during a trip to the city center. commercial. The car matched its budget of about 180,000 yuan, after government subsidies, she said.

On the streets of Beijing, where license plates are also difficult to obtain, the state-of-the-art electric car manufacturer Tesla is still a popular choice.