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China and the electric car

Xpeng Motors was founded in 2014 and is thus actually considered a start-up company. Nevertheless, the Chinese carmaker has already opened a large assembly plant for electric cars in southern China, is currently building a second and has announced a third. Nio, also founded in 2014, is already preparing to build a second electric car factory.

Chinese manufacturers benefit from investors ' willingness

China is working to make the West look old in the production of all-electric cars, much like China has already done with the production of solar cells. This was shown by a report by Keith Bradsher, China correspondent of the “New York Times”, under the title “China Bets on Electric Car Domination”.

It is not only the young," small " car manufacturers who press the accelerator pedal:

China is building manufacturing capacity for electric cars almost as fast as the rest of the world. Chinese manufacturers are using the billions they receive from international investors and local leaders to challenge established automakers.

The same number of electric cars from China as from the rest of the world

Many players are newcomers to the automotive industry and thus take risks. After all, established car companies have some advantages. For the new Chinese car brands, the lack of awareness will be a big challenge. They are counting on drivers in China and around the world to be willing to spend 40,000 francs and more on brands they have never heard of. The brands themselves are unknown to many Chinese. Against Buick, Volkswagen and Mercedes-Benz, they still have to fight for their place. But Chinese automakers are fighting to make their plans work.

China will produce over eight million electric cars per year by 2028. That’s what LMC Automotive, a global data company, estimates (see chart below). Europe should then produce 5.7 million all-electric cars. Global car companies are also contributing to China’s dominance: Volkswagen recently started building its third Chinese factory for electric cars.

China and the E-Car

More charging stations than anywhere else

In China, the network of charging stations is much more advanced than elsewhere. The government is supporting the installation of 800,000 public charging stations across the country. The scarcity of public charging stations in other countries contributes to the fact that many plug-in hybrids are sold instead of electric cars. But worldwide, the market for all-electric cars is already larger - and the gap continues to widen. Automakers like GM are therefore planning to phase out gasoline and diesel cars in the next 15 years.

Huge investments by start-ups

The well – known Chinese industry veteran Geely has chosen Zeekr (pronunciation “Siikr”) as the name for his electric cars-in reference to English “Seeker”, German “seeker” or “seeker”. The company plans to start delivering cars in October. Zeekr is manufactured at the new electric car factory near Ningbo on China’s east coast. The factory is a huge space with miles of white conveyor belts and rows of five-meter cream-colored robots-manufactured by ABB. The plant has an initial capacity of 300,000 cars per year, larger than most Detroit auto plants, and it also has room for expansion.

Evergrande has named its brand Hengchi (“Hengtschi”). A stock market hysteria for electric cars has driven up the shares of the electric car unit. Evergrande plans to sell one million all-electric cars a year by 2025. The online platform Alibaba has also founded an electric car joint venture with two state-supported companies under the name IM Motors. The delivery of cars is scheduled to begin early next year.

Evergrande and Geely are huge established companies; but how is it possible that a start-up like Xpeng (“Äxpang”) can build huge new factories within a few years? Xpeng also plans to achieve production of 300,000 cars per year by 2024. The story is strongly tied to the person He Xiaopeng, who named Xpeng after himself.

Business promotion in Chinese

He Xiaopeng made his first fortune with a mobile browser company. In 2014, he sold it to Alibaba and became president of a business unit of Alibaba. In the same year, he helped found Xpeng. Three years later, he left Alibaba and took direct control of Xpeng. He now holds 23 percent of the shares, and Alibaba also has a 12 percent stake.

Chinese government officials have helped along the way. In 2017, a state-owned company near Guangzhou lent Xpeng 233 million dollars for the construction of the first factory with an annual capacity of 100,000 cars. Since then, the city has been subsidizing the company’s interest payments, according to Xpeng’s documents.

The city of Wuhan helped Xpeng buy land and borrow money at low interest rates for a new plant there. Also, the Guangzhou government supported Xpeng in building the factory in this city, said Brian Gu, deputy chairman and president of Xpeng. All this is strongly reminiscent of location marketing in Europe and the USA, where industries are lured with free land and tax breaks.

After surviving the pandemic, Xpeng made big business on Wall Street last year, where the rise of Tesla whetted investors ' appetite for the industry. The Chinese company raised CHF 4.5 billion in an IPO and subsequent share sales. Part of the money is spent on new factories, another part on research and development, especially in the field of autonomous driving.

The step abroad is partly already planned

How uncompromisingly Xpeng invests is shown by the costly automation at the factory in Zhaoqing. Robots lift 20 kilos of dark-tinted glass car roofs, apply aviation-hard glue and press them into place. The construction of the factory took only 15 months, much faster than the assembly plants in the West. Yan Hui, the head of the final assembly division, said decisions were being made faster than at the German auto parts manufacturer where he used to work. “Every design change took a long time,” he told The New York Times. “At Xpeng, we can make changes easily.”

Even though many electric car brands are new in China, their owners already have ambitions abroad. Xpeng starts exporting cars to Europe, first to Norway. Chery, a major state-owned automaker in central China, recently announced that it would begin exporting gasoline cars to the U.S. next year, followed by electric cars.

“China will dominate the global market”

The US will be a difficult market. The Trump administration imposed tariffs of 25 percent on cars from China in 2018, which has slowed the volume of exports. Components of cars are also affected by the same tariffs.

At the moment, Chinese companies are busy building and establishing their brands. Michael Dunne, managing director of the consulting firm ZoZo Go, which specializes in the electric car industry in Asia, told the “New York Times”, the future prospects of the industry are becoming clearer: “China is becoming the global dominator when it comes to the production of electric cars.”

Instead of concentrating resources on the rapid development of electric car production on a large scale, most established car manufacturers continue to advertise their latest hybrid models. This strategy seems dangerous. The comparison to another promising industrial sector mentioned at the beginning is obvious: In recent years, China has largely pushed competitors from all over the world out of the market with the mass production of solar modules.