China’s hot electric vehicle market is no longer focused on lower prices.Stocks to watch | Wilnesh News
Winning the Chinese electric vehicle market is no longer just about the cheapest price. Many industry insiders say that despite the new U.S. tariffs, China’s electric vehicle industry has entered a new stage of competition that is no longer centered solely on price tags. That’s good news for profit margins. But it also puts pressure on companies to make sure they spend money developing features that consumers want. Sometimes this can be as simple as installing a skylight, benefiting the glassmaker. A JPMorgan Chase survey last month showed that more than 80% of Chinese consumers said they would prefer electric vehicles with panoramic sunroofs, and most were willing to pay more than 600 yuan ($84.50) to buy one. Untapped Market The market is largely untapped for those broad panels. JPMorgan analysts said in a report last week, citing data from Fuyao Glass at the end of 2023, that only about 12% of cars globally (including traditional fuel vehicles) are equipped with panoramic sunroofs. Hong Kong-listed Fuyao Glass is a major supplier of automotive glass and one of JPMorgan’s top picks to capitalize on China’s growing electric vehicle market. According to the report, panoramic sunroofs will account for approximately 7% of Fuyao’s total revenue in 2023. JPMorgan Chase said: “We believe that the competition for electric vehicles in China has shifted from being mainly focused on ‘price’ to now increasingly focusing on ‘content’, and surprisingly, our survey results show that customers are willing to pay for content.” This is consistent with the consultant This is consistent with findings from company AlixPartners, which found that U.S. and European consumers are more price-sensitive than Chinese consumers when buying electric vehicles. “We don’t think this means Chinese consumers are price insensitive,” said Stephen Dyer, co-head of Greater China and Asia head of the automotive and industrial practice at consulting firm AlixPartners. “We interpret this to mean that Chinese consumers have literally hundreds of affordable options. They’re priced well,” he said in late April, noting that Chinese consumers value tech features almost as much as U.S. consumers. Twice as many respondents. This interest was on full display at the Beijing Auto Show late last month, with nearly all electric vehicle manufacturers emphasizing driver assistance features and in-car entertainment features. But the underlying core technology of electric vehicles is still the battery. About 70% of J.P. Morgan survey respondents said they would be willing to pay a premium for the battery brands they want, especially those that offer boost capabilities. “This is a positive for CATL, which is 1-1.5 years ahead of peers in launching ultra-fast charging batteries,” analysts said. Chinese battery giant CATL New Energy Technology Co., which is listed in Shenzhen, is owned by J.P. Morgan One of the top electric vehicle supply chain companies in China. Hybrids are in vogue To be sure, not every Chinese car buyer is ready to buy a fully electric vehicle. A new JPMorgan Chase survey found a significant increase in respondents who preferred hybrids to pure battery-powered vehicles this year. Some 44% of respondents said they would rather buy a plug-in hybrid or a car with a gas tank to extend the battery’s range. That’s up from 27% in 2023 and 24% in 2022, JPMorgan said. According to the report, in terms of automobile brands, BYD has ranked first among consumers’ favorite brands for three consecutive years. The battery maker and electric vehicle giant makes hybrid and battery-only vehicles and is one of JPMorgan’s top companies in the field. Compared with last year’s performance, BYD’s brand recognition has declined, with new entrant Xiaomi following closely behind. The J.P. Morgan report said that brands such as Geely Auto, Huawei’s Alto brand and Li Auto have seen significant improvements in customer recognition. Tesla’s brand power has declined slightly. However, the survey found that Tesla Model 3 is the most popular pure electric vehicle in the price range of 200,000 to 300,000 yuan. A JPMorgan Chase survey shows that most respondents have a car purchase budget of at least 300,000 yuan, with a car purchase budget of 300,000 to 400,000 yuan being the most popular. Last week, Chinese electric vehicle company Nio unveiled a new car priced at just over 200,000 yuan. While its new Onvo L60 SUV is about $4,000 cheaper than the Tesla Model Y, the vehicle is slightly more expensive than Xiaomi’s new SU7 electric sedan. NIO Chief Executive William Li told reporters on Thursday that he expected China’s electric vehicle price war to be essentially over and that most of the cuts had been completed. —CNBC’s Michael Bloom contributed to this report.
