Why Did 70,000 People Buy NIO & Xpeng EVs Instead Of Teslas In China Last Year?
I saw a headline about this topic earlier today: “Why some Chinese are buying local electric car brands like Nio — instead of Tesla.” I thought it might offer some interesting insights, but it turns out CNBC just talked to a few people and got a few quotes on the topic. Perhaps they capture the essence of the answer to the question in my headline, or perhaps not. CNBC was quick to note that these were just some anecdotes and the media outlet didn’t collect legit data on this. Nonetheless, the story piqued my interest. Why, indeed, do tens of thousands of Chinese buyers prefer buying from one of these EV startup brands rather than from Tesla, king of the mountain? (Note: I own stock in all of these companies — TSLA, XPEV, and NIO.)
First of all, let’s be sure everyone is up to date with the statistical context here. The Tesla Model 3 was the top selling electric vehicle in China last year, reaching nearly 140,000 sales. NIO had 43,728 sales across its lineup, and Xpeng had 27,041 across its lineup. So, together, NIO and Xpeng sold not quite half as many vehicles as Tesla (aside from the Model 3, Tesla sold a few thousand Model S and Model X vehicles). Still, looking at these three “smart electric vehicle” startups, 1 out of every 3 sales was a NIO or Xpeng EV. So, let’s think about why so many people are buying from these other brands.
I’ll start with Xpeng since I think it’s easier. I’ve spoken with Xpeng’s international PR person at length, and aside from Xpeng’s focus on smart tech, one of the big takeaways seemed to be that Xpeng vehicles are cheaper. This was something the CNBC article highlighted briefly as well. The price of an Xpeng G3 electric crossover? Just 180,000 yuan ($27,800) before subsidies (or 149,800 yuan/$23,150 after subsidies). You can’t get a new Tesla for below $30,000 anywhere in the world. Actually, you can’t get a new Tesla for below $35,000 anywhere in the world. In China, a Tesla Model 3 costs at least 265,740 yuan ($41,000) before subsidies or 249,900 yuan ($38,600) after subsidies. Tesla’s crossover, the Model Y, starts at 339,900 yuan ($52,500) and is not eligible for subsidies due to the base price being above 300,000 yuan.
So, yes, a $15,000 to $30,000 lower price is probably a big deal, especially considering the Xpeng G3 still offers a lot of range (520 km or 323 miles NEDC at the low end) and good tech all around. Frankly, I expect Xpeng sales to go up a lot by then end of 2021. The value for the money just seems too appealing, and that post-subsidy price point of $23,000 is accessible to a much larger portion of the population than $34,000+. That’s the sweet spot for market-leading sales in the USA.
The Xpeng P7 costs 229,900 yuan ($35,500) after subsidies, so has to appeal more on its merits against a Tesla Model 3, but it does have an NEDC-rated range of 706 km (439 miles), which is quite astounding. The Model 3’s base range rating in China is 468 km (290 miles). In range-for-yuan terms, the P7 offers a wicked deal that I think is unmatched in any market.
What about NIO?
NIO doesn’t undercut Tesla on pricing like Xpeng does. In fact, the NIO EC6 and NIO ES6 starts at about $55,000. The larger ES8 starts at about $65,000. So, how is it selling so many vehicles?
One thing that buyers have noted is NIO’s unique battery-swapping option — a quick and easy way to get a full battery. The system seems to be quite popular, defying the expectation many had that battery swapping is a dead-end solution. This unique feature may also be a hot selling point in China due to lack of easy home charging for many buyers.
Overall, NIO has put a huge emphasis on its “lifestyle,” stores, and customer service, and it seems that has also pulled in a decent portion of buyers — like a similar focus has done for Tesla. NIO tries hard to develop a community around its brand, and that seems to be working out fairly well for the automaker.
At the end of the day, too, auto preferences are about culture and design. Many buyers may simply prefer the look and feel of a NIO vehicle. Others may recognize that NIO is a 100% Chinese company whereas Tesla comes from the USA, and that may be a critical factor for them.
NIO has also quite aggressively rolled out new models, which drums up excitement, interest, and consumer choice. It already has the EC6, ES6, ES8, and ET7 on the market. That gives a variety of options with a clear family language and class. Hook a buyer on one and you’ve probably got them on more? (Note that NIO had 3 models in the top 20 in 2020 — the only brand other than BYD to achieve that.)
Notably, Xpeng is a bit younger than NIO, and much younger than Tesla, but already has two low-cost, high-tech options on the market. I’m curious to see how interest in that brand and its overall vehicle production and demand scales up as more models are introduced.
What did I miss? What else is there to say about these electric vehicles and why they saw 70,000+ sales in 2020?
Of course, I could also write a bit about Tesla’s own advantages — why it had double the sales of Xpeng and NIO combined in 2020 in China. However, that’s been covered at length — here on CleanTechnica and elsewhere — and the question of the day that I really wanted to consider was how it is that Tesla doesn’t suffocate these other EV startups attempts in China.
I should also say that the CNBC article that stimulated this piece also discussed Li Auto and its appeal. As you can see in the first chart above, the Li Xiang One was the 8th best selling plugin vehicle in the country in 2020, and as you can see in the second chart, it rose a step to #7 in January. However, as you can also see, it’s not a 100% electric vehicle — it’s an extended-range electric vehicle. I don’t feel inclined to wade into that discussion again, but the range extender is cited as the top reason Li Auto is also finding buyers (naturally). I personally am just very turned off by the design of the Li Xiang One, so I find it hard to even put this much text down about the company or its vehicles. But it does sit fairly high on the rankings (for now).
Related story: China — 9.4% Plugin Vehicle Share In Another Record Month