Visitors look at Volkswagen AG vehicles at the carmaker’s booth at the Auto Shanghai 2021 show two … [+]
China, home of the world’s largest auto market — including for red-hot electric vehicles, will on Tuesday open the most important industry show since the country ended its “zero-Covid” policies at the end of last year. Auto Shanghai, to be held at the city’s National Exhibition and Convention Center, will run through April 27. The stakes are high for domestic brands such as BYD and NIO and the foreign automakers that rely on the China market for much of their global sales. EVs accounted for about one in four of autos sold in China last year.
What are some of the possible trends, and who will be some of the possible winners and losers to look for? To learn more, I talked on Sunday to Tu Le, founder of Sino Auto Insights, a consultancy that follows China’s auto industry. Le is a long-time China veteran who relocated to the Detroit area during the pandemic and now is back in Shanghai for the show. Edited excerpts follow.
Flannery: What are some of the big things you’re looking for at the show?
Le: Who is attending? Industry leaders? Foreign journalists? I want to see the level of interest, foot traffic, excitement, the energy and the electricity of the show. The Beijing and Shanghai auto shows are basically the only relevant auto shows left in the world. In China, you see exciting new products, new features and new brands. That’s why I want to be here.
Flannery: Are you expecting a big foreign crowd?
Le: There will be more management team members from overseas since they’ve likely not visited in the past three years. They’ll hit the streets and see all the EVs and their jaws will drop. They are going to be amazed by the number, the diversity, the quality and the design of them all. They should be clearly concerned — that’s going to be a theme.
Flannery: What else are you looking for?
Le: The first set of EV front consoles were just like an iPad bolted onto the center stack or center console. I’m looking for mature designs and features among all of the brands, with AI features and smart connectivity for personal assistance and with more integration with your mobile phone.
Another trend will be the expansion of intelligent driving systems. Vehicles will have more and more sensors. Chinese consumers place a lot of importance on safety, and advanced driving assist systems (ADAS) imply safety by helping monitor, control and steer a vehicle – also ADAS systems not just in premium vehicles but also in more affordable vehicles。
Flannery: What about older foreign brands, such as Ford or GM?
Tu Le, founder of Sino Auto Insights
Le: Is it going to be “The Empire Strikes Back?” Generally, the legacies have been kind of sitting on their hands the last couple of years — none of the EV products they’ve launched have truly resonated with the Chinese consumer or really gotten any sustainable demand. The Chinese EV companies have really stolen the show.
Will any one of them step up and launch a vehicle or product or features that will grab the attention of the media? I’m looking for that. I’m hoping that they’re motivated to show the Chinese consumers that they are very important to them, are bringing their best products, and are worthy and able to compete with the best of the Chinese.
Flannery: How about Tesla?
Le: Tesla actually will not be at the show and I don’t know how much of the needle is going to move for Tesla this year in China without another price cut. There is a rumored refresh of the Model 3 on its way later this year for the China market and that might move the needle pretty significantly in Europe and the United states if it launches in those markets since there’s not as much competition with mid-size sedans. Their Model 3 is a mass- market sedan in China now. It’s not a premium sedan anymore, not at the price point that it sells in China.
Let’s be clear on that. The market segment for 300,000 yuan and below crossovers/SUVs and sedans is the most brutal in China. There are a ton of brands that play in that space and a ton of choice.
Flannery: So how about the local makers such as BYD?
Le: They will have their Yangwang premium brand. My question is whether they can step it up. They’ll show us what a premium vehicle priced at one million rmb looks like. Is the feel and the experience going to be premium? They can sell at three hundred thousand rmb and below. Can they show Chinese consumers they can play at that one million rmb space?
Flannery: How about NIO?
Le: Their vehicle lineup seems pretty strong. They need to be able to produce them. Another question is how the refresh for models like the ES6 and ET7 will be.
Flannery: XPeng?
Le: They need a good show. They’ve had a few product launches that have been a bit lackluster. They’re hoping for a huge turnaround, I’m curious to learn more details about their overall strategy. XPeng is a competitor to BYD. They play in the same space — the mass market but they position themselves a bit more premium and technologically advanced. They have failed to really grab the sales volume necessary for them to definitively say they’ve been successful. They hired Great Wall’s former president Feng Wangying to help create efficiencies and build a sales team.
Flannery: Where’s Xiaomi in all of this?
Le: They’re not ready to show any product. They’re still due to launch their products in 2024.
Flannery: What about Li Shufu’s brands – he has so many now, including Volvo, Zeekr, Polestar and others? He was China’s richest auto billionaire on the Forbes Billionaires List this month. (See related post here.)
Le: One of the brands that Geely has invested in that isn’t at the show is Jidu Auto, their joint venture with Baidu. I had a chance to visit them two days ago and see a beta version of the interior. Their first product is supposed to be delivered to customers later this year. It will be quite impressive if they can execute what I saw properly.
Volvo is doing well and has never sold more vehicles in China. Li Shufu gave them enough capital to invest in building great products and did the right thing by leaving them alone. They were a niche brand before but have gone more mainstream. Before Geely acquired them, the global market was challenging for Volvo, but they’ve launched some good products with some exciting new EVs on the way.
Flannery: What about Zeekr?
Le: Zeekr is interesting. They plan to IPO in the U.S. this year and recently unveiled a sub-¥200K small SUV the Zeekr X. They are among the companies that have called out Tesla as a target.
Some of the larger Chinese domestic players need to reconcile their brand strategy. Geely, for instance. Zeekr originally was only supposed to sell at 300,000 yuan and above but has lower prices, too. They could be competing against one another and cannibalizing sales of their brother and sister Geely brands.
Flannery: How about other Chinese brands? And where is Alibaba in the mix this year, besides investing in XPeng?
Le: People mostly talk about the U.S. publicly traded companies — Li Auto, XPeng and NIO. But GAIC Ion is doing well. Alibaba helps a few EV companies on the technology side and has a joint venture with SAIC called IM Motion. Alibaba is a formidable player in the EV space here.
See related posts:
China EV Stocks Gain As Key Auto Show Opens; XPeng Leaps 13% On New Platform
The 10 Richest Chinese Billionaires 2023
BYD’s Wang Chuanfu Explains How China’s No. 1 EV Maker Caught Up With Tesla
Micron Probe May Hurt China’s Efforts To Attract Foreign Investment
American Views Of China Worsen, Distrust Of Its Social Media Is Widespread — Pew
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