China’s EV trio: A threat to Tesla’s dominant market share?
The trio — Li Auto, NIO, Xpeng
A greener and more sustainable environment is one of the main focus for the years to come. The automobile industry is making the shift to using clean energy and it had gain much attention in recent years. Electric Vehicle (EV) is expected to replace the Internal Combustion Engine (ICE) cars in the upcoming years. Most, if not all, should have heard of Tesla. Tesla is the leading and by far, the biggest EV making company at present. However, they are now faced with strong competition from their Chinese counterparts. They are no other than, and not limited to (in alphabetical order):
The trio is currently listed on the US stock markets with valuations upwards US$20B each with NIO being the biggest EV maker amongst them. More information on investing in any of the trios will be discussed in a separate article. Meanwhile, for those who are interested to find out more about them, their respective symbol/ticker are:
Despite them being young and have relatively small valuations, they present a strong challenge to its America’s counterpart — Tesla. For reference, Tesla was founded in 2003, some 17 years ago at the time of this article and has a market capitalisation upwards of US$600B.
Tesla
Tesla is the most popular EV maker in the world. There needs no introduction to their cars and prototype vehicles as presented at events. Its focus remained to be an advent of clean transport and clean energy production. The cars have been at the forefront of leading technologies in autonomous driving and batteries breakthrough and able to boast as some of the quickest cars in the world. The Roadster 2.0 prototype claimed to be able to break the record of having the fastest acceleration from 0–60 km/h showcase at an event in 2019. While the spotlight have been on them for years, the competition in the EV industry is heating up and the 3 big Chinese EV makers are here to put Tesla to the test.
Introduction of the trio
Today, most EVs are equipped with smart and autonomous driving. While they have their similarities, each of these 3 makers also has its own uniqueness in certain ways exclusive to their respective brands.
Li Auto
The uniqueness of this EV maker is the extended-range which is a limitation in any current EV. The car has a petrol-powered generator that can charge the batteries on the fly. This is especially useful in the outskirts like Tibet, where charging stations are non-existent.
NIO
NIO’s main focus is its battery technology. They have provided Battery-as-a-Service (BaaS) with vehicle-battery separation that allowed for hot-swapping and easy upgrading. The ease of battery hot-swapping is one of the many solutions to resolve the existing problem of long charging times. This will bridge the gap between refuelling petrol cars that are known to be much quicker.
Xpeng
The Xpeng P7 is the flagship model for the company, to date. It has a superior autonomy driving that has the capability of an L3-level (Conditional Driving Automation) with L1 the lowest and L6 the highest in Vehicle Autonomy driving.
To further improve the accuracy for the autonomous driving capability, Xpeng had announced the use of LiDAR (Laser for imagining, detection and ranging) technology in their 2021 models. This technology uses a piece of equipment that is a combination of high-definition (HD) cameras, millimetre-wave radars, ultrasonic sensors, high-precision positioning and mapping systems. It will also cover more usage scenarios, effectively enabling the cars to perform low-speed navigation functions for city driving.
Apart from technology, Xpeng brought fresh and unique designs to the table. Wing doors have always been part of the sports car exterior look. With the unveiling of the P7 Wing Limited Edition, the company have brought the wing doors to their mid-range sedan.
Backings
Despite these EV makers are new and young in the industry, they are backed by some of the tech giants in China. With these high profile backings, they were able to put themselves in some spotlight and draw some attention away from Tesla.
The following are the companies and respective tech giants backing:
- Li Auto — Backed by ByteDance and Meituan
- NIO — Backed by Tencent
- Xpeng — Backed by Alibaba and Xiaomi
China’s 13th & 14th Five-year plan (2021–2025)
China’s Five-Year-Plans (FYP) has been the most important guiding document for the country’s future economic and social development.
More on the FYP (Wikipedia):
Environment and climate change
The 13th Five-year plan (FYP) was started in 2016 and is set to conclude by 2020. The commencement of its 14th FYP will start from 2021 through 2025. The 2021–2025 plan is anticipated to achieve China’s announced goals of carbon neutrality by no later than 2060.
Self-reliance
With the announcement of Made in China 2025, China will continue to transition from producing cheap-low-tech goods to high-end-tech goods. This policy is to increase research and development (R&D) mostly in technology to compete with Silicon Valley in the United States. Artificial Intelligence (AI), Internet of Things (IoT), Machine Learning (ML), EVs are some examples which are part of a comprehensive list of key industries in focus. Amid the intensifying US-Sino trade war, this R&D will only be ramped up and remain the key focus.
Subsidy
China had provided subsidies to electric cars costing less than RMB300,000 in an attempt to encourage and giving more incentives to purchase cleaner cars. This will exclude most of the luxury electric cars such as those built by Germany’s automaker from the subsidies. The plan to provide the subsidies was announced in 2015 and said to end in 2020. Due to the coronavirus pandemic situation, it was extended to 2022. While the subsidies are a great way to encourage the purchases of electric cars, these subsidies will be reduced in 2021 and further reduced in 2022.
Expansion
Apart from the deliveries done in China alone, these EV makers are looking to expand internationally. On 21st Dec 2020, Xpeng announced that the G3 SUV was delivered in Norway.
While there is no official news on Li Auto and NIO expanding outside of China at the time of this writing, there has been talks with interests of bringing their EVs to Europe.
In Dec 2020, there have been talks of the possibility of Apple partnering with the trio, inter alia, on the technology used in these EVs. This was purely based on rumours and predictions from the analysts. Currently, there seemed to be a lack of information to back this up.
Roadblocks
Despite their success, there are roadblocks ahead which they have to clear to push further. Recently, the US administration had announced that they have to pass audit checks in order to remain listed in the US stock markets. Therefore, not being allowed to stay on the stock markets may cause multiple issues. One of the many issues is to raise fundings needed for R&D. In Dec 2020, the EV makers, including Tesla, had raised capital from investors by issuing more shares.
Chip shortages is another cause of an arduous journey ahead for any EV makers. As cars move towards a smarter future with autonomous driving, the rise in demands for the chips have increased tremendously. Any shortage of the chips will put the manufacturing of the vehicle on hold, affecting deliveries.
The future of EV
Tesla is the leader in making EV and has access to first-mover advantage. In addition to that, it is also a luxury EV maker that set them apart from the Chinese trio. The Chinese trio are said to make their cars affordable and capture the mass majority of the market.
Through 2020, there were reports of more petrol cars manufacturers announcing plans to transition to making electric cars. Japanese car makers have also started on going green with their electric-petrol hybrid models and will move towards the full electric models in years to come. Also, ultra luxury car maker like Bentley have also joined the trend of going green.
Environment and climate change could have been one of the many reasons to spark the paradigm change in the automobile industry and the trend will not stop. For now, any form of technology to help save the environment can only mean better.
