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China’s top EV makers, Li Auto, Xpeng, and Nio, achieve strong sales despite discounts.

ByYasmeeta Oon

Jul 2, 2024

China’s top EV makers, Li Auto, Xpeng, and Nio, achieve strong sales despite discounts.

China’s top three premium electric vehicle (EV) manufacturers, Li Auto, Xpeng, and Nio, have demonstrated strategic business acumen. Despite the necessity for discounts and incentives, these companies have achieved significant sales growth in June, showcasing their sound decision-making and market understanding.

Based in Beijing, Li Auto leads the race with a 36.4% month-on-month increase in deliveries, reaching 47,774 units. This figure is just shy of their all-time high of 50,353 units set in December. Guangzhou-based Xpeng has also seen a steady rise in its sales for the fifth consecutive month, with a 5.1% increase to 10,688 vehicles. Meanwhile, Shanghai-based Nio set a new record for the second month, with deliveries rising 3.2% from May to 21,209 units, surpassing their previous record set in [month and year].

CompanyJune DeliveriesMonth-on-Month IncreaseAll-Time High Deliveries
Li Auto47,77436.4%50,353

The robust sales figures underscore the continued expansion of China’s EV market, even amidst concerns about slowing momentum. Eric Han, a senior manager at the advisory firm Suolei in Shanghai, noted that while the market is growing, leading companies face the formidable challenge of maintaining profitability due to the necessity of offering discounts and incentives. These discounts and incentives, while driving sales, also put pressure on the companies’ profit margins, making it difficult for them to achieve sustainable profitability in the short term.

At the start of 2024, the top three premium EV makers saw deliveries drop as new competitors, such as smartphone giant Xiaomi, entered the market with their own models aimed at affluent consumers. These established players had to reduce prices or introduce incentives, like waiving battery rental fees, to stay competitive. The entry of new players like Xiaomi has intensified the competition in the market, forcing the established players to rethink their strategies and innovate to maintain their market share.

Nio’s introduction of incentives for its battery swap technology in May significantly attracted new buyers. This technology lets car owners quickly exchange a used battery for a fully charged one. Under the promotion, Nio vehicle buyers who rent a swappable battery are exempt from paying the rental fees for 12 months, a savings of 8,736 yuan (US$1,202).

Xiaomi reported that its SU7 intelligent EV surpassed the 10,000 delivery mark in June. The Beijing-based company started delivering the vehicle in late March. It aims to compete with Tesla’s Model 3 and targets at least 100,000 SU7 deliveries in 2024.

The market expansion of Zeekr, a premium EV unit of Geely, and BYD, the world’s largest EV manufacturer, is a promising sign for the future of the EV market. Both companies reported record sales in June, indicating a growing consumer interest in electric vehicles and a bright future for the industry.

Shenzhen-based BYD, supported by Warren Buffett’s Berkshire Hathaway, reduced the prices of almost all its models by 5% to 20% in mid-February. According to Goldman Sachs, this price adjustment has led to an average 10% price drop across 50 models.

Only a few EV makers, such as BYD and Li Auto, have yet to achieve profitability. With trade tariffs limiting their access to European and American markets, Chinese EV manufacturers focus on Southeast Asia. The market value for cleaner cars in this region is approaching US$100 billion, and companies like BYD, Xpeng, and Geely are investing billions of dollars in countries like Indonesia, Thailand, and Malaysia to capture a larger share of these rapidly growing markets for sustainable vehicles.

  • Li Auto: Leads with a 36.4% month-on-month increase in deliveries, reaching 47,774 units.
  • Xpeng: Achieves a 5.1% sales increase for the fifth consecutive month, delivering 10,688 vehicles.
  • Nio: Sets a new record with a 3.2% increase in deliveries, reaching 21,209 units.
  • Nio’s Battery Swap Incentive: Attracts new buyers with a 12-month rental fee exemption.
  • Xiaomi’s SU7 EV: Surpasses 10,000 deliveries in June, targets 100,000 deliveries in 2024.

The competitive landscape in China’s EV market is rapidly evolving, with new entrants like Xiaomi challenging established players. The aggressive strategies employed by these companies reflect their adaptability and resilience in a highly dynamic market. The necessity to offer incentives and discounts is a double-edged sword, driving sales but also squeezing profit margins.

The introduction of new technologies and customer-centric incentives, such as Nio’s battery swap technology, demonstrates the innovative approaches these companies are taking to attract and retain customers. This focus on technological advancements and customer satisfaction is crucial for maintaining a competitive edge in the crowded EV market.

The growing interest in electric vehicles in China is mirrored by similar trends in other regions. Companies like BYD and Geely are capitalizing on this interest by expanding their operations and market reach in Southeast Asia, a region with significant growth potential for clean energy vehicles. This strategic expansion is not only aimed at increasing market share but also at diversifying revenue streams in response to trade barriers in Western markets.

Looking ahead, the future of China’s EV market appears promising, with continuous growth and innovation driving the industry forward. However, the challenge of achieving sustainable profitability remains a significant hurdle. The balance between offering competitive prices and maintaining healthy profit margins will be crucial for the long-term success of these companies.

The entry of new competitors and the necessity to innovate constantly will keep the market dynamic and challenging. Established players will need to continue investing in new technologies, customer incentives, and market expansion strategies to stay ahead. The ongoing support from the government in terms of subsidies and favorable policies will also play a critical role in sustaining the growth of the EV market in China.

In summary, the impressive sales growth of China’s top three premium EV manufacturers in June reflects their strategic agility and market acumen. As they navigate the competitive landscape and work towards profitability, their ability to innovate and adapt will be key to their sustained success in the rapidly evolving electric vehicle market.

Featured Image courtesy of The Star

Yasmeeta Oon

Just a girl trying to break into the world of journalism, constantly on the hunt for the next big story to share.

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