Recently, Tesla's stock price surged, pushing its market value past Toyota's to become the world's most valuable automaker. It took Toyota 75 years to achieve this title, while Tesla, founded in 2003. did it in just 17 years.
Seeing such remarkable performance, how do those car companies that consider Tesla as their benchmark feel? Among these, domestic new energy vehicle startups frequently mention Tesla because they all share a common aspiration: to become the "Tesla of China."
However, so far, none of them have truly reached this height. Given that Tesla also started as an underdog before becoming a giant, it’s premature to dismiss all of them now. Among these startups, there are still some worth looking forward to.
Currently, the most closely watched new energy vehicle startups in China are undoubtedly NIO, Xpeng, and Li Auto. Interestingly, the CEOs of these three companies recently appeared together in a photo (from left to right: He Xiaopeng, Li Bin, and Li Xiang), accompanied by a thought-provoking caption: "Three struggling souls reminiscing about tough times and planning for the future..."
Some speculate that they are banding together for warmth. However, this seems unrealistic, given the difficulty of integrating resources and their different development and operating models, which may not result in a 1+1+1>3 effect. At most, they might strengthen cooperation and exchange, but ultimately they must grow independently.
Given the reduction in new energy subsidies, the impact of the pandemic, and Tesla's factory in Shanghai, do they still have a chance to become the "Tesla of China"? Let's explore this.
1. NIO: A Tough 2019. a Hopeful 2020
NIO has two models, the ES8 and the ES6. with the former priced between 448.000 and 624.000 RMB, and the latter between 358.000 and 526.000 RMB. NIO’s development strategy is similar to Tesla’s: establishing a high-end brand image with luxury cars and then penetrating the market with relatively mass-market models.
The biggest challenge of this strategy is bearing greater operational pressure in the early stages. Last year, NIO suffered from this: sales fell short of expectations, accumulated losses exceeded 20 billion RMB, and frequent incidents of spontaneous combustion ensued, leading to a series of crises. Founder Li Bin was even dubbed "the unluckiest person of 2019."
Fortunately, NIO managed to pull through by means such as layoffs, selling off its Formula E team, and seeking financing. Entering 2020. the balance of hope tipped towards NIO, especially with the 7 billion RMB financing from the Hefei government being a crucial lifeline.
On the product front, NIO plans to launch the electric coupe EC6 and introduce a new model positioned below the ES6 to capture volume sales over the next two years.
Additionally, the new energy vehicle subsidy policy stipulates that 300.000 RMB is the threshold for subsidies, but NIO’s products with battery-swapping capabilities are exempt from this limit, which is good news.
Commentary:
Compared to Xpeng and Li Auto, NIO is larger and, thanks to its strong marketing system, has maintained a good presence in the automotive circle. Currently, its prospects are undoubtedly the broadest. To become the Tesla of China, the most important thing is to ensure quality control and quickly launch a volume product like the Model 3.
2. Xpeng Motors: Steady Progress, Xpeng P7 as a Key Component
Unlike NIO, Xpeng has been more steady, initially launching the G3. a relatively mass-market product. Despite some friction with consumers last year due to product upgrades, the issue was eventually resolved. This single model made Xpeng one of the few new energy vehicle startups with deliveries exceeding 10.000 units.
Xpeng’s highlight this year is the Xpeng P7. a new model launched this year that competes directly with Tesla's Model 3 in both product and price positioning. If it performs well, it will undoubtedly boost morale.
Xpeng’s biggest leverage currently lies in "software intelligence." Both the G3 and P7 emphasize software evolution, similar to Tesla’s approach.
It’s worth mentioning that Xpeng Motors now owns its vehicle production plant and obtained production qualifications by acquiring Foday Automobile, commonly known as "dual qualifications." This means Xpeng has transitioned from outsourcing production to independent manufacturing.
Commentary:
The emergence of the Xpeng P7 has marked the beginning of a direct confrontation with Tesla, more so than NIO and Li Auto. The outcome of this battle is crucial for Xpeng’s future development.
3. Li Auto: A Unique Technological Approach, More Proof Needed
As of May 27. the 10.000th Li ONE rolled off the production line at Li Auto's Changzhou manufacturing base. Although NIO and Xpeng have both delivered over 10.000 units, Li Auto is still relatively weak. However, its extended-range hybrid powertrain and the slogan "no range anxiety" have generated significant buzz and attention.
In terms of product service, Li Auto stands out by collecting feedback and suggestions before the delivery of Li ONE, making corresponding improvements to the vehicle. Even after delivery, it continues to upgrade the product, making it easier for users to use and understand.
Another noteworthy point is that the Li ONE (priced at 328.000 RMB) falls just below the 300.000 RMB subsidy threshold, but Li Auto covers the subsidy reduction cost out of its own pocket. These factors contribute to its later rise.
However, Li Auto faces challenges, such as quality issues with the first batch of Li ONE vehicles, including "failure to accelerate after disabling adaptive cruise control" and "emission system faults." This indicates a need for improvement in quality control.
Moreover, with only one model, its product line is too narrow to showcase more potential to consumers. Finally, the high development cost and difficulty of the extended-range technology make its future sustainability uncertain.
Commentary:
Although Li Auto still lags behind NIO and Xpeng in terms of development, its momentum is relatively good. Due to its unique technological approach, it might lead a new trend. However, to earn the title of "China's Tesla," it needs to produce more stable and efficient products.
Conclusion
In an increasingly competitive market, it is challenging to stand out without unique advantages. The three new energy vehicle startups mentioned above each have their "unique skills," making them the leading forces and the primary contenders for the "Tesla of China" title.
The opportunity exists, but as seen from the descriptions, even though NIO, Xpeng, and Li Auto are leading the domestic new energy vehicle industry, they each have pressing issues to resolve. To become the "Tesla of China," they must not only compete with Tesla but also face traditional players like BYD, BAIC New Energy, and even luxury brands like BMW, Benz, and Audi. Which of these three has the ambition and capability to achieve this?
