Zhang Hua, a researcher at Shanghai Jiaotong University, spent three months looking at a variety of electric car models before deciding to spend 250,000 yuan ($36,340) on a P7 sedan made by electric car maker Xpeng in early March.
What impressed Mr. Zhang about the car was its driver assistance system and voice command features.
“I prioritize the smartness of the car, because now is the digital age. Both drivers and passengers want more entertainment and digital connectivity in the car,” said Mr. Zhang.
“China-made smart electric vehicles are now a good choice for middle-class consumers, because their technology and services meet our needs,” he added.
The 40-year-old man is not the only one with this thought.
Tens of thousands of Chinese car buyers have flocked to showrooms of BYD, Nio, Xpeng, Li Auto and several other China-based electric vehicle makers, pushing Tesla from the most popular electric vehicle brand in China to 10th place, according to a survey conducted by JD Power and Tongji University, Shanghai in December 2022.
Xpeng's P7 sedan. Photo: arenaev.com
Designed specifically for China
Tesla's main competitors in China such as Nio, Xpeng and Li Auto have developed battery-electric vehicles with longer driving ranges than the Tesla Model 3 and Model Y.
While the base versions of Tesla's Shanghai-made Model 3 and Model Y can travel 556 and 545 kilometers on a single charge, the entry-level versions of Nio's ET7, Xpeng's P7 and Li Auto's L8 have ranges of 530, 480 and 1,315 kilometers, respectively.
In addition, Chinese electric cars are also equipped with virtual reality and augmented reality (VR and AR) systems to give passengers an immersive experience, something Tesla cars do not have.
Tesla's self-driving software and navigation system, touted by CEO Musk as a competitive advantage, have also been criticized by customers for being slow to update road conditions in China.
BYD-made taxis charge at a charging station in Shenzhen, China. By 2022, BYD will officially “surpass” Tesla to become the world’s best-selling electric carmaker. Photo: Bloomberg
Chang Yan, a Chinese blogger, said his Model 3, purchased in 2018, still instructs him to make a U-turn on Chang'an Avenue near Tiananmen Square, even though the move is banned.
“This is a stark contrast to the models from Nio, Xpeng or Li Auto. The navigation guidance of these models is almost perfect,” said Mr. Chang. In addition to the Model 3, Mr. Chang also owns a Nio sedan.
Chinese customers are also impressed with the voice recognition capabilities of domestic car models.
According to Jeff Cai, a senior consultant at JD Power China, the 10 most popular car models in China can understand at least 87% of Chinese consumers' voice commands.
Tesla also offers voice recognition technology for Chinese users, but the system does not perform well in noisy environments, according to a survey by JD Power and Tongji University. Moreover, Tesla's Model 3 did not make the top 10.
“Tesla is facing a serious problem because its product portfolio is very limited. The slow response to Chinese consumers’ preferences puts Tesla in a passive position. Price is not the only factor attracting Chinese customers,” said Cui Dongshu, secretary general of the China Passenger Car Association (CPCA).
Even Tesla CEO Elon Musk himself has admitted that China is where his company could face the toughest competition.
Unshakable position
Despite its low ranking, Tesla continues to lead the premium electric vehicle segment in mainland China. After a resounding success over the past three years, Tesla is still growing well in the mainland, and the company may be able to successfully revive declining consumer demand.
Tesla's largest factory in the world in Shanghai is still running at full capacity, while the Model 3 and Model Y produced there remain the best-selling premium electric cars after recent sharp price cuts.
Tesla electric cars are considered smart electric cars by Chinese drivers. The Shanghai-made Model 3s, which were launched on the mainland in January 2020, have received rave reviews from Chinese drivers, even as Covid-19 has devastated the economy and dented Chinese purchasing power.
The Model 3 was the best-selling electric car in the mainland until it was overtaken by a mini-electric car assembled by SAIC-GM-Wuling in September 2020.
Despite this, Tesla cars remain popular in this market. In 2022, the company delivered more than 710,000 Model 3 and Model Y vehicles to customers in the mainland, up 50% from the same period in 2021.
Meanwhile, Beijing-based Li Auto delivered just 133,246 units to customers in 2022, despite growing 47% year-on-year.
CEO Elon Musk at the groundbreaking ceremony of Tesla's Shanghai factory in 2019. Photo: Fortune
“Our global consumer survey shows that Chinese car buyers appreciate and are willing to pay for advanced new technologies such as autonomous driving and smart cockpits,” said Stephen Dyer, head of Asia automotive research at global consultancy AlixPartners.
“Foreign automakers had a head start with these technologies. However, their Chinese competitors quickly caught up, and even surpassed them.”
Tesla cars are called foreign cars in China, because they are not designed specifically for mainland drivers and passengers.
“Foreign models are not designed for Chinese drivers and passengers, nor are they modern enough for the Chinese ‘rich’ to choose,” said Eric Han, a senior manager at Suolei, a Shanghai-based consultancy.
“However, cars are still considered high-quality and value-for-money products in China, because Tesla's brand is already so well-known,” Mr. Han added .
Nguyen Tuyet (According to SCMP, Reuters)
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