Challenge of Chinese version of Tesla's EV maker "NIO"-Reason for rapid growth of emerging automakers

　In the first installment of this series, we introduced the origins of the Chinese automobile industry, and in the second installment, we introduced the current state of next-generation mobility in China. This time, the third time, we will take up the challenges of Chinese emerging automakers.

　In recent years, new manufacturers in the field of new energy vehicles have emerged one after another in China. It is said that there are 60 to 100 companies in the finished car maker alone, and if peripheral industries are included, there are 192,000 related companies as of 2019. As I mentioned in my previous article, 47,000 new companies entered the market in 2019.

　There are many emerging manufacturers, but of course only a few are successful. While there are manufacturers that have managed to go public in just a few years since their founding, there are also manufacturers that have production licenses but have never operated their factories due to various reasons. The situation deteriorated and many manufacturers went bankrupt.

　Here, among the manufacturers with large sales volume, NIO (NIO), which competes with luxury cars starting in big cities, and SAIC-GM-Wuling (SGMW), which is increasing sales volume targeting the needs of local city residents Finally, let's take a look at the recent situation of battery fire and explosion accidents, which is the biggest issue for new energy vehicles.

"Chinese version of Tesla", which is making rapid progress through fundraising and corporate partnerships

　Nio Automobile Co., Ltd. (NIO) boasts top-class ability and popularity among emerging Chinese manufacturers. In China, it is also called the “Chinese version of Tesla” because it has advanced self-driving technology and mainly develops luxury models.

Founded in November 2014, just four years later, in September 2018, it was listed on the New York Stock Exchange in the United States. has gone public. Currently, in addition to China, the company has design and development bases in the United States, Germany, and the United Kingdom, and just announced in May this year that it will enter the Norwegian market as a foothold for advancing into Europe.

　Founder Mr. Li Bin (William Lee) was born in 1974 and is 47 years old. He is one generation younger than Mr. Liu Qiang Dong (Richard Liu). After starting an IT company while a student at Peking University, in 2000, Li founded BitAuto, China's first comprehensive car information website. YiMo also listed on the New York Stock Exchange in 2010.

NIO has continued to grow rapidly because it has been constantly raising funds since its inception, and by forming alliances with companies and local governments in a timely manner, it has gained financial strength, technological strength, and a foothold for making a leap forward. It's because it's fixed. In addition, it is also important to revamp the conventional image of an automobile manufacturer and establish a position as a lifestyle brand to differentiate itself.

　First of all, in terms of funding, we have raised over US$2 billion (approximately 220 billion yen) in total from venture capital and other sources since our founding until our listing in 2018. After going public, it was often reported that it had cash flow problems, but recently it has succeeded in raising funds through the sale of its American Depositary Shares (ADS).

　In terms of partnerships, in 2016 we signed strategic partnerships with Jianghuai Automobile, a medium-sized state-owned automaker, and in 2017 with Changan Automobile, which is also state-owned, and we are working together on the development and production of new energy vehicles. there is In particular, Jianghuai Automobile is an important partner that undertakes NIO's vehicle production. Due to the fact that Jianghuai Automobile is based there, NIO has a deep relationship with Hefei City Government, Anhui Province. We have invested 10 billion yuan (about 172 billion yen), including

　Furthermore, based on the agreement, construction of the world's largest EV industry park "NeoPark (Shinbashi Intelligent Electric Vehicle Industrial Park)" has just started near Hefei Shimbashi International Airport in April. In the future, it will become an industrial chain hub where hundreds of companies in the smart EV field will move in, aiming to produce 1 million units a year, surpassing Tesla.

　NIO is no longer just a car manufacturer, but a lifestyle brand that sells the experience of "life with NIO cars". In addition to hardware features such as a sophisticated design and battery exchange system that does not require charging, community formation with a dedicated app, operation of the lounge "NIO House" for owners to interact with each other, and highly designed official It can be seen that the sales of goods have a synergistic effect and increase customer loyalty.

Currently, NIO is advancing into the Norwegian market. In September, the SUV "ES8" will be launched, and in 2022, the company has announced plans to expand into five European countries, including Germany. However, Xpeng Motors and BYD have already made inroads into Norway, and it is unknown how much market share NIO can hold in the future.

On the other hand, in China, at the Shanghai Motor Show held in April, they announced plans to actively open stores in small and medium-sized local cities and increase the current number of 260 dealers nationwide to 366. there is Furthermore, in June, it was reported that a low-priced brand of around 200,000 yuan (approximately 3.4 million yen) would be established under the umbrella of the NIO group. This seems to be a strategy based on the fact that the average sales price in local cities of BMW and Audi, which the company uses as a benchmark along with Tesla, is about 200,000 yuan. 2021 is likely to be the “first year” of NIO’s full-fledged regional expansion.

``SAIC-GM-Wuling Automobile'' that meets the needs of rural communities with its ultra-compact EV

It is no exaggeration to say that the development of China's automobile industry to date is due to the achievements of joint venture manufacturers. Joint venture manufacturers are also making rapid progress in the field of new energy vehicles. Among them, SAIC-GM-Wuling Motor (SGMW), which ranked second in sales of new energy vehicles in 2020, has a share of about 40% in the ultra-compact EV market.

　An ultra-compact EV, also called a microcar, is a two-seater EV that is smaller than a light car. The “C+pod” released by Toyota at the end of 2020 also falls under this category. As it is called ``substitute car'' in Chinese, it is intended to be used in scenes such as shopping in the neighborhood and picking up children from school as a vehicle that rides ``instead of walking''.

SGMW is a joint venture automobile manufacturer established in 2002 by Shanghai Automotive Industry Corporation, General Motors of the United States, and Guangxi Automobile Group. Full-scale production of passenger cars began in 2010, and although it entered the new energy vehicle market late in 2017, it will be the first domestic automaker to exceed 22 million units in 2020. ing. Guangxi Automobile Group, which forms the core of the company, is known as a manufacturer strong in commercial vehicles, producing one-box cars, small trucks, and small buses under the Wuling brand name. The sales network it has built since the 1980s has spread to small and medium-sized local cities and rural areas.

　SGMW also produces sedans and SUVs, but its new energy vehicles are limited to ultra-compact EVs. The “Hongkou MINI” released in July 2020 has an exceptional price of 28,800 yuan (about 490,000 yen) for the entry model, so in 2020, 127,000 units will be sold in just five months from the launch. , and the total sales performance from January to March 2021 is showing steady sales with a total of 72,000 units.

　Purchasers of ultra-compact EVs are mainly young people under the age of 40 who live in rural areas. About half of the buyers are from Shandong, Guangxi, and Henan, and 37% of the buyers live in rural areas called counties or townships (2020). China small EV passenger car travel big data report). Although the purchasing demographic is completely different from Tesla, which costs around 1 million yuan (approximately 17 million yen) per unit, the Hiromitsu MINI was able to surpass Tesla in terms of sales volume. Needless to say, the strength of the sales network that the Wuling brand has cultivated in rural areas has also played a role.

A long time ago, the term "substitute vehicle" meant a lead-acid low-speed electric vehicle used by elderly people in rural areas. It was never something that young people would drive, but over time, it evolved into an ultra-compact EV, and was reborn as a car that young people prefer. A two-seater ultra-compact EV such as the Hiromitsu MINI can be expected to be used as a second vehicle in urban areas and as a delivery vehicle. It will be interesting to see how far sales can be increased in this market where SGMW is almost the strongest.