China’s booming e-vehicle market going digital

By Line Heidenheim Juul

China is the world’s largest New Energy Vehicle (NEV) market, and for the last decade NEV companies have been booming. Last year alone a total of 1,2 million NEV units were sold in China. That was down 50% from earlier years explosive growth and despite government support being phased out and purchase subsidies being pulled back late last year.

Then Corona hit. But NEVs in China have found new ways to connect with customers. One company that have been turning their sales strategy around is the startup WM Motor (WeltMeister). During Covid, they have gone digital on sales, and in one livestream they had 5.6 million viewers, while they sold 3000 cars in a one-day online event. Upscale self-proclaimed Tesla-killer NIO implemented similar activities and over 5000 people signed up to a test drive.

The Chinese government has been pushing the new energy vehicle market hard in the last decade by aiming to have 60% of all cars to be new energy vehicles by 2035 and pouring cash into subsidies. The last decades development of local NEV companies and suppliers should be seen as a disrupting power to the global supply chain and car markets because of the vast scale.

While the government in Beijing is slowly now scaling down the subsidies in the market to consolidate the industry, it is strategically placing new regulation to improve the network of charging stations and other critical infrastructure.

Zero touch strategy

“Xiaowei Xiaowei, what is the weather forecast? Can you play me some romantic music? It is not romantic enough!” I am talking to the AI-assistant in a sleek and sporty NEV. The people at WM Motor are giving me a ride in the WeltMeister EX5, and I am excited to test the speed. The car has been rebranded and launched solely online during Covid.

The EX5 reminds me of the fancy models I have tried at NIO House, it has similar battery range (around 520 km) and level 2 self-driving capabilities, but this car comes with a vastly different price tag starting at less than 22.000 USD. WM has produced a model that is both user-centric and cost efficient. After only one year in production they already had 22.000 units on the streets as of last December.

The small startup with big ambitions is backed by giants Baidu and Tencent and gained EUR 400 million in investments last year. Due to sales declining during Covid, they have changed sales strategy, letting customers try interactive design features, livestreaming with them and even sending out cars to private homes for test driving in a “zero-touch” sales strategy.

During lockdown they held close to 900 interactive livestream product videos, and after the opening eased up they continued, launching an entirely online event “Imagine day” which was a great success according to Rupert Mitchell, Chief strategy officer at WM Motor:

“The results can be measured through traffic, usage and sales. During the lockdown period, our online vehicle walkthroughs attracted a total of 1 million views. Just two months later, Imagine Day attracted a total of 120 million views online. On Weibo, real-time viewership peaked at 5.6 million, with the audience collectively posting over 400.000 comments. The number of deposits for our 2020 model EX5; the EX5-Z, surpassed 3.000 on launch day.“

V shape progress and new IPOs

Both dealerships and car brands have been engaging directly and actively with consumers during Covid, and figures from April show that nearly 61.000 NEV were sold. NIO’s livestream in engagement have been everything from chitchat to makeup tips and car tutorials. Tesla, who is still market leaders in NEV in China is also streaming and trying to reach consumers digitally.

Already now there are signs of recovery with April sales only down 3% year on year. Both BYD and NIO has reported significant turnup in sales in April, and Xpeng is rumored to go for a USD 500 million IPO soon. Another newcomer to the market Li Xiang, has seen similar increase in April sales, quickly surpassing experienced competitors.

It is looking like the slump is finally looking up, and may indicate a V-shape in sales going forward.

China wants to rule the global vehicle market

Not only is the central government committed to decreasing air pollution and dependency on fossil fuels it also wants to build up the muscles to be the heart of the global supply chain for NEVs. Perhaps for this reason, has companies such as WM motor chosen to build their production and entire supply chain in China to tap into the ambitious industry plan “Made in China 2025”.

At WM Motor they believe that this change in incentives will keep fostering strong innovation and drive the market to be more sustainable.

“Government support for EV makers has adapted with the industry as it matures. The early days saw heavy direct investment in EV companies to support their launch, resulting in the emergence of the strong players we see today, many of which have brought innovative products to market which continue to fight for technological superiority, which is helping to boost innovation further,” says Rupert Michell.

The future is digital

Back in the WM Motor showroom, I am touching the screen to design my own car, changing lights and colors on the model. I am ready to order a trial at my home, and WM Motor or many of the other innovative and dynamic NEV companies can deliver it to my door step.

As other brands got into the game, a report from the auto industry said that at its peak a massive 7.000 livestreams related to automotive was held in one day. The car industry is not alone in digital streaming, both consumer goods and B2B products are being broadcasted as well.

At WM Motor, they see the online trend continue: “Since Covid-19 forced most of the big players in China’s auto market to pour their marketing budgets into creating increasingly large scale, far-reaching online campaigns, and since potential rewards to such campaigns have become apparent, it is difficult to see how this trend will not continue” says Rupert Mitchell.

All the major tech giants partner up strategically, and in April Alibaba’s biggest competitor JD.com partnered with the popular livestreaming platform Kuaishou, who is second only to Douyin (Chinese version of TikTok). Alibaba’s Taobao Live were pioneers and just this month Alibaba’s payment platform Alipay launched a mini program inside the payment platform for users to ease into livestreaming directly.

Why is it important to invest time in understanding NEV in China?

For all foreign and domestic car makers, the Chinese market is pivotal to win in order to win globally. The strong government support now focusing on building critical infrastructure and regulation to encourage consumers and carmakers to drive development of an ecosystem in NEV making will influence the rest of the world going forward.

And it is not only cars, the entire focus is on “new energy vehicles” counting other means of transportation. On top of that, the domestic players such as NIO and Xpeng have already expanded globally with many others on the way such as AIWAYS and BYTON that both have plans to start selling in the Nordics this year.