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People ignore because they only like ‘made in China’ products, at most they only pay attention to Elon Musk’s Tesla

If global automakers expect to expand their dominance in the electric vehicle era in China, they’re probably wrong.

In fact, the kings of the times, such as General Motors or Volkswagen, are lagging their local rivals in a booming EV market in China, which has already ramped up its inflows. capital for electric and self-driving car ambitions.

CHINESE PEOPLE FEAR FOR FOREIGN GOODS

For Tianna Cheng, an office worker in Beijing city, what made her wonder before buying the 180,000 yuan Xpeng crossover electric car (more than 600 million VND) was Xpeng, BYD or Nio better. Foreign car companies are absolutely not in this woman’s plans.

“If I buy a petrol car, I might consider foreign brands,” says Cheng. “But when I want to buy an EV, there are very few foreign brands besides Tesla that properly apply advanced smart technology.”

Foreign electric car brands are disillusioned with hegemony in China: People ignore them because they only like made-in-China goods, at most they only pay attention to Elon Musk's Tesla - Photo 1.

China steps up funding for electric and self-driving car ambitions

Driven by demand from consumers like Cheng, electric car sales are growing in China’s $500 billion auto market, the world’s largest.

According to data from the China Association of Automobile Manufacturers, in the first four months of 2022, the number of new energy vehicles, including pure EVs and hybrids, more than doubled year-on-year. to 1.49 million vehicles. In addition, cars using green technology also accounted for 23% of the Chinese car market, while overall sales fell 12%. This partly reflects a decline in demand for traditional petrol cars.

According to data from the China Tourist Vehicle Association, no foreign brands made the list of the top 10 car manufacturers in the new energy vehicle (NEV) segment this year, except for the first electric car maker Tesla. American style. All are “made in China”, from BYD, Wuling to Chery and Xpeng.

According to a representative from BYD, the company has sold about 390,000 EVs this year, three times more than Tesla sold in China. Meanwhile, the joint venture between Volkswagen (the leading car manufacturer in Germany) and FAW Group is also ranked 15th in terms of electric vehicle sales. The reason is that the Buick Velite 7 or the Volkswagen ID are not enough to satisfy consumers like Ms. Cheng – who are looking for a “green” product, as advanced and comfortable as possible.

Foreign electric car brands are disillusioned with hegemony in China: People ignore them because they only love made-in-China goods, at most they only pay attention to Elon Musk's Tesla - Photo 2.

No foreign brands made the list of top 10 car manufacturers in this year’s new energy vehicle (NEV) segment in China

“Foreign brands are far from my life and lifestyle,” Cheng said, adding that he is using a digital device that helps him connect to apps like Alipay or Taobao.

In fact, global car brands have dominated the Chinese market since the 1990s, with 60-70% market share. In the first four months of 2022, that number dropped to 52%, and then by May, to 43%.

Forecasting the challenges that traditional automakers are facing, Nissan CEO Makoto Uchida said some brands “will probably disappear in the next three to five years” in Japan. Chinese mainland.

Meanwhile, local brands are growing. According to Mr. Uchida, former head of Nissan China branch, the quality of ‘made in China’ electric vehicles is improving rapidly. A lot of progress has been made in a short span of just a few months.

“There will be a lot of change in China and we need to monitor the situation carefully. Automakers must be agile in the design, development, and early launch of new models. If we slow down, we will fall behind,” Uchida said.

Efforts to turn the situation around

Foreign electric car brands are disillusioned with hegemony in China: People ignore them because they only like made-in-China goods, at most they only pay attention to Elon Musk's Tesla - Photo 3.

Foreign brands try to turn the situation around

According to Bill Russo, a former Chrysler CEO who now heads Shanghai-based consulting firm Automobility, global brands need to turn the tide quickly. They currently control less than 20% of the market share in mainland China.

“Chinese brands are starting to race towards electric vehicles. Consumers want to buy smart four-wheelers and traditional automakers are having a hard time getting up to speed,” Russo said. “I think this is a necessary shift to high-tech. Traditional car companies seem to be out of the game.”

Along with the vehicles of the General Motors brand, such as Buick, Chevrolet and Cadillac, the Volkswagen Group, which includes Volkswagen, Audi, Bentley, Lamborghini, Porsche and Skoda, has been a market leader for two decades. The two global groups accounted for 13% and 12% market share respectively in mainland China last year, according to LMC Automotive.

In particular, the giant General Motors (GM) in Detroit (USA) also has a 44% stake in the automotive joint venture SAIC-GM-Wuling Auto (SGMW) in China. According to insiders, the company is currently focusing on attracting young customers in big cities who were not previously interested in its models.

Foreign electric car brands are disillusioned with hegemony in China: People ignore them because they only like made-in-China goods, at most they only pay attention to Elon Musk's Tesla - Photo 4.

It is difficult for foreign car brands to overcome the shadow of Tesla in the Chinese market

According to Reuters, GM has just announced spending more than $35 billion on global projects with more than 30 new electric vehicle models, of which more than 20 will be launched in the Chinese market. Starting this year, the company will also launch an all-electric Cadillac Lyriq SUV.

Following the launch of the Lyriq, an electric Buick SUV and compact EV crossover are also scheduled to hit the market early this year. Buicks sales have fallen 32 percent over the past five years to just 828,600 vehicles in 2021, while Chevrolet more than halved to 269,000 vehicles, according to LMC Automotive.

According to Reuters, in 2025, GM aims to increase the annual production of EVs in China to 1 million units. Demand for electric family vehicles, such as Buick’s Velite and Chevrolet’s Menlo, both increased significantly in 2021 and the first three months of this year. Smart technologies, including highway self-driving assist, cybersecurity, and over-the-air software updates are gradually being integrated.

The giant Volkswagen of course does not let itself be out of the game when it spends about $55 billion on developing electric vehicles globally, from now until 2026. Early last year, this company also officially launched the ID electric car model. new generation in China, but the number of cars sold did not meet expectations. Volkswagen aims to sell 160,000-200,000 units this year, although so far, it has only delivered 33,300 ID cars.

Foreign electric car brands are disillusioned with hegemony in China: People ignore them because they only like made-in-China goods, at most they only pay attention to Elon Musk's Tesla - Photo 5.

An electric vehicle factory in China

However, according to Reuters, the main markets of foreign car brands are the US and Europe, so manufacturers often promote the performance and durability of vehicles. This doesn’t really seem to suit China’s traffic conditions, as it’s mostly congested and people can’t even drive above 60km/h most days of the week.

As mainland consumers prefer smart cars, Volkswagen said it is investing heavily in R&D (research and development), especially in vehicle application software.

“Our strategy is to achieve our ambitious targets in China and become the leader in the electric vehicle market by 2030. Volkswagen hopes to take the No. 1 position in China in the coming year. future”, said a representative of the German car company.

Such ambition, but brands like Volkswagen are facing great challenges in the market of billions of people, because “conquering” rich consumers like Ms. Cheng is not something that is too easy. Moreover, Tesla’s shadow is also too large for them to keep an eye on any other foreign EV brand in the near future.

Follow: Reuters

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