Newcomers shrug off China’s EV headwinds with bets on niche cars
Despite their optimism, it’s unclear how many of the newer entrants will survive the Asian nation’s cutthroat industry
[BEIJING] For all the talk of China’s car industry being crowded with low-volume brands that struggle to turn a profit, the potential to carve out a share of the world’s biggest auto market is still proving irresistible for new entrants.
Whether with in-car kitchens or plans to take on one of the world’s fastest supercars, Chinese companies are still betting they can offer vehicles that are unique and innovative enough to build businesses around. That’s despite a gloomy medium-term outlook as competition intensifies and Beijing reins in the sprawling industry. AlixPartners estimates that by 2030, just 15 of the 129 brands in China that sell new-energy vehicles will be financially viable.
While that points to significant consolidation in the sector as an aggressive price war squeezes automakers, suppliers and dealers, it’s also an opportunity for companies that can fulfil niche demands. Instead of scrutinising fuel economy, Chinese drivers are increasingly eyeing models with novel add-ons or luxury cars that sell for far less than a legacy Western marque.
“The fundamental change in the car’s identity from being a pure means of transport to a ‘mobile living space’ is setting off a complete restructuring of the industry’s value chain,” said Zhang Yichao, a partner at AlixPartners.
Leading the charge of unlikely entrants is Dreame Technology. The Chinese manufacturer of robot vacuum cleaners says it can adapt its expertise in the kinds of high-speed electric motors found in home appliances to build an electric hypercar to rival Bugatti.
The company plans to debut its inaugural model in 2027, according to local media reports.
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While perhaps the most ambitious foray into the auto sector by a vacuum maker, it’s not the first. Dyson famously spent years and hundreds of millions of pounds developing an electric vehicle (EV), only to scrap the project in 2019 as it could not make it commercially viable.
Rox Motor, by contrast, made it to market and is still around. Started in 2021 by Chang Jing, the founder of vacuum cleaner maker Roborock, the company began deliveries in late 2023. Its premium off-road extended-range EV, the Polestones 01, offers a compact built-in kitchen and is notching sales of around 1,000 units a month.
The company secured a US$1 billion investment in 2023 from Shandong Weiqiao Pioneering Group, the parent of major aluminium producer China Hongqiao Group, and which has its own auto aspirations. Weiqiao already counts BYD and Xiaomi as customers for its products. It’s also reviving the 212, China’s iconic military jeep, and bringing a tiny city EV to Europe.
Others are looking to take on some of the industry’s heavyweights, such as BYD, more directly in the mass market on expectations that demand for affordable, tech-focused EVs will endure in the face of future challenges in China.
Tesla alumnus Zhu Renjie, who led Cybertruck manufacturing, is now heading a new venture, a unit of Sensteed Hi-Tech Group, focused on making a US$10,000 extended-range EV for Chinese drivers. That puts it in the same price bracket as BYD’s popular Seagull.
The company, part of the broader group whose businesses include high-end auto parts manufacturing, is targeting mass production of its first model, the V17, next year and will eschew dealerships and go almost entirely online to save on costs. Customers can buy their cars online, including via monthly instalments to be paid via Alipay, with after-sales services also set to be organised through e-commerce networks.
Despite their optimism, it’s unclear how many of the newer entrants will survive China’s cutthroat industry.
Beijing has tightened control over the supply chain this year and an industry shakeout is already underway, with the likes of BYD becoming increasingly dominant in the Chinese market.
“Securing manufacturing licenses, sinking huge amounts of capital, establishing a brand, and achieving economies of scale are all insurmountable challenges for many, let alone surviving the price war,” said AlixPartners’ Zhang. BLOOMBERG
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