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EVs set to take off in China as rural consumers embrace USD 4,400 model

Written by Nikkei Asia Published on     3 mins read

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Shanghai auto show opens, targeting middle class in cities next.

China’s biggest auto show features electric vehicles priced within reach of the rural and middle-class buyers essential for propelling the country’s green car market into high gear.

At Auto Shanghai 2021, which opened Monday, attendants at SAIC-GM-Wuling Automobile’s booth touted the success of the company’s super-affordable model, the Hong Guang Mini EV.

“It sold 270,000 units in just 270 days, and it ranked at the top of China’s EV sales for seven consecutive months,” one pitch person said.

The joint venture, which includes General Motors and is majority owned by Shanghai-based SAIC Motor, has been strong in compact commercial vehicles. But the company released the Hong Guang Mini in July 2020 starting at RMB 28,800 (USD 4,420 at current rates). The vehicle became a hit in rural areas, where most live in single-family homes.

Though the EV measures just 2.9 meters long and 1.5 meters wide, it can seat four people. The car can plug into a household outlet, negating the need for separate charging equipment. The Hong Guang Mini also benefits from local government subsidies offered to stimulate China’s post-COVID economy.

For consumers who cannot afford most cars, the Hong Guang Mini provides a new option apart from simple vehicles that resemble electric carts. Unlike the carts, the EV can be covered by auto insurance.

The low price makes the car conspicuously austere in its functionality. The vehicle runs only 120 km on a single charge, and its speed maxes out at 100 kph. Safety features are limited, and air conditioning is optional.

Yet 72,498 Hong Guang Minis were sold in the first quarter of this year, industry figures show. That ranks the EV as China’s top-selling passenger auto among so-called new-energy vehicles (NEVs), surpassing the Tesla 3.

Great Wall Motor is hitting the market with a low-priced electric as well, dubbed the Ora R1. Also called “Black Cat,” the vehicle features a cute exterior designed to draw young women living in rural areas. The Ora R1 ranks fourth in sales among electrics. At Auto Shanghai, a famous actor helped unveil a new sporty version of the EV.

China looks to become the world’s automobile power by taking the lead on electrics. The domestic EV market has grown thanks to purchase subsidies and priority allotment of license plates, but sales are dominated by unadorned models procured for ride-hailing companies. Ordinary consumers have generally shied away from EVs.

But the winds shifted last year when the coronavirus pandemic took hold. The affluent spent their money on high-end EVs after being denied opportunities to travel overseas.

Watch this: VIDEO | Yep, this Chinese EV brand has outsold Tesla

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Demand concentrated on Tesla, which began local production in Shanghai that same year. Nio, a startup automaker based in the same city, later released its own luxury EV to compete against Tesla, officially igniting a boom.

The Hong Guang Mini’s arrival cut prices drastically for rural customers and sparked a new surge in affordable EVs. Models priced at RMB 100,000 or below now account for a quarter of all electric vehicles sold, quickly topping the share for upmarket options.

The next wave of purchases is anticipated to come from the urban middle class, with the Shanghai auto show serving as the coming out party. Global automakers like Toyota Motor and Volkswagen are rolling out electric sport utility vehicles, which are popular in China, at midrange price points hovering around USD 30,000.

China intends for NEVs to make up one-fifth of new autos sold domestically in 2025. Sales of new-energy vehicles are expected to reach roughly 5 million that year. Expanding the reach of mass-market and midmarket EVs could boost Chinese sales of electrics enough to rival Japan’s entire automobile market.

This article first appeared on Nikkei Asia. It’s republished here as part of 36Kr’s ongoing partnership with Nikkei.

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