Here's How Tesla Is Influencing China's Electric Car Startups
Tesla’s holistic, integrated approach has redefined the concept of an automaker.
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Posted on EVANNEX on October 27, 2020 by Charles Morris
As Elon Musk put it on the company’s latest investor call, “Tesla is absurdly vertically integrated compared to other auto companies, or basically almost any company.” The innovator doesn’t just assemble cars: it produces many of the key components that give its vehicles an edge over other EVs; sells them directly to customers; operates a Supercharger network to charge them; and even provides solar panels and battery storage to power them.
Now Tesla is becoming a major player in China, and as such it’s becoming a role model for the new wave of Chinese EV startups. It’s a crowded field. As AJ Cortese reports in a recent article in KrASIA, there were over 480 EV-makers registered in China as of March 2019. Most of these are more or less unknown stateside, but a few are becoming regular topics in US media, including BYD, which builds electric buses in California, and three that recently began trading on US stock exchanges: Nio (NYSE: NIO), Li Auto (NASDAQ: LI), and Xpeng Motors (NYSE: XPEV).
To what extent will these up-and-coming firms choose to (or be able to) emulate Tesla’s unprecedented level of virtual integration? Cortese writes that China’s EV-makers are already enthusiastically following Tesla’s lead in some areas, but are less likely to do so in others.
Tesla’s direct relationship with its customers, and its control of its sales channels, is the envy of automakers around the world. US automakers are prevented by law (and by long-established structural factors) from selling vehicles directly to customers, but that hasn’t prevented them from exploring new ways to expand online sales. European automakers face fewer constraints, and they’ve been more aggressively flirting with Tesla-style direct sales.
Compared to the North American and European OEMs, Tesla’s Chinese rivals have much more freedom to emulate its direct sales model. They are moving quickly to build their own retail networks, and some of the pupils have already overtaken the master, at least in terms of the number of retail sites.
At last count, Tesla had 24 stores in 12 Chinese cities. According to KrASIA, Xpeng had 147 stores and service centers in 52 Chinese cities as of June. Nio has established two different types of retail facilities in 89 cities across China. The 22 Nio Houses are designed as luxurious locations—each features not only a showroom and a service center, but a members’ area with a café, meeting rooms and a playground for kids. The 119 Nio Spaces are smaller facilities, mostly located in smaller cities, that focus on customer engagement with cars. Li Auto has also chosen to skip the traditional independent dealership model, and sells directly to customers both offline and online.
Above: Unique activities offered at ‘Nio House’ locations in China offer a private place for their car owners to meet up (YouTube: NIO)
When it comes to charging infrastructure, however, it’s a different story. Some domestic EV-makers are investing substantial sums in infrastructure, and others are not.
Xpeng seems to be intent on following Tesla’s lead. As KrASIA reports, the company stated in its IPO prospectus, “We believe an extensive Xpeng branded supercharging network will enhance our brand recognition and provide differentiated user experience to our customers.”
Nio is taking a different tack. The company has been diligently working on a battery swapping network, (a concept that Tesla explored and abandoned a few years ago) and plans to launch a battery-as-a-service model later this year. So far, it has said nothing about building a proprietary charging network.
China already has more charging stations than any other country—over 1.2 million as of 2019—and in March, the central government announced a plan to add around 600,000 more. Local governments, utilities and battery maker CATL are also investing in public charging networks.
They’ll have to move quickly to catch those crazy Californians. Tesla already has over 2,500 Supercharger stalls in over 150 Chinese cities, and recently announced plans to install 4,000 more this year.
Written by: Charles Morris; Source: KrASIA
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