Why Some Chinese Buy Local Electric Car Brands Nio, Xpeng and Not Tesla

BEIJING – Chinese buyers have two things to think about whether to buy Tesla electric cars or local options: price and driving range.

That’s according to news gathered by CNBC – conversations from across the country that do not represent qualitative research. But the comments shed light on what some consumers care about in China, the world’s largest automotive market.

Nio, Xpeng and Li Auto, which started the Chinese car industry in the U.S., began delivering deliveries last year despite a downturn in the auto market and the coronavirus pandemic. Shares of the companies rose sharply in 2020, but withdrew slightly this year.

To be clear, Tesla remains the market leader for high-end electric vehicles in China. During a quick scan at the start of a one-day afternoon ride, CNBC found 11 passing Tesla cars, along with two Nio SUVs, one from WM Motor and Xpeng’s latest P7 sedan.

Here is what some Chinese buyers say came into their decision to buy a local electric car.

First, price was a key consideration.

Chen Yingjie, 42, said he bought Li One’s SUV at Li Auto in April 2020 for about 300,000 Yuan ($ 46,000) after realizing it would cost about twice as much to buy a car like Nio with his -every specification he wanted.

Nio’s starting price is low, but there are many features that come at an additional cost, Chen said. A Shanghai resident had previously bought a Gp Xpeng in 2019, followed by a BYD electric car for his father in June 2020.

Part of Nio’s strategy is selling many car features through a membership model. For example, the company launched a “battery as a service” plan last year that charges consumers a monthly fee for battery power – similar to the regular fuel charge for a traditional gas-powered car.

For Wang Jingyan, 29, he said Nio’s pressure on customer care services was something he thought was worth paying extra because it saved him time from going to a repair shop.

Price was also a cause for it. Wang said he bought his Nio ES6 for around 450,000 Yuan at the end of 2019 – his first electric car – following a recommendation from a manager at work and comparing it to a more expensive Lexus RX.

He said he hadn’t had a chance to try out Tesla’s Model 3 beforehand, but that he didn’t have that good idea based on his friends ’experience and online stories about poor customer service at stores.

How long the car could drive on one battery charge was another important reason for Chinese buyers.

Zhang Zhen, 41, lives in a cold part of northern China and was concerned about the ability of an electric car to have enough power to complete a driving trip while heating the vehicle. So last fall, his family bought Li One, which comes with a fuel tank to charge the battery.

That fuel strengthens Li One’s driving range from 180 kilometers (111 miles) to 800 kilometers (497 miles) on a single charge.

Zhang said his wife specifically uses the car to pick up and drop off their children from school, a daily distance of about 10 kilometers (6.2 miles). The children also prefer his wife’s car to his non-electric car because they can watch cartoons on a screen inside the vehicle, Zhang said.

But he has found more repairs than for a non-electric car, and said he would not consider buying another such vehicle in the northeastern region of China because of the lack of public cost infrastructure there.

In an effort to support the local development of electric vehicles, the Chinese government has launched subsidy programs and put pressure on building a national toll network.

But compared to the U.S., most cars in China do not have fixed parking spaces, making it difficult for many drivers to access battery charging stations on a regular basis, according to Mingming Huang, founding partner at Future Capital Discovery Fund, an investor in Li Auto.

That is why it is expected that range expansion systems such as the start-up offerings may be the best choice for China in the next five or 10 years. Li Auto’s Li One SUV comes with a fuel tank for charging the running battery.

Finally, many Chinese drivers choose electric cars because of favorable government policy, such as programs that make it much faster and cheaper to get license plates for the electric vehicles. As a result of efforts to reduce congestion and pollution in Chinese cities, locals often have to wait years to buy expensive permit plates for fuel – powered cars.

After waiting nearly a year in Hangzhou city for a fuel-powered car license plate, a 27-year-old man, who asked anonymously, decided not to wait any longer after his Xpeng electric car G3 view during shopping center tour. The car fits its budget at around 180,000 Yuan, after government subsidies, she said.

On the streets of Beijing, where license plates are also difficult to obtain, the high-end electric car maker Tesla remains a popular choice.