Why some Chinese buy local electric car brands Nio, Xpeng and not Tesla

BEIJING – Chinese consumers who are considering buying Tesla electric cars or local alternatives have two things on their mind: price and range.

This is what anecdotes collected by CNBC say – conversations from across the country that do not represent qualitative research. But the comments shed light on what some consumers care about in China, the world’s largest automotive market.

Chinese startups Nio, Xpeng and Li Auto, listed in the U.S., saw deliveries increase last year, despite the decline in the general automotive market and the coronavirus pandemic. Companies’ stocks soared in 2020, but declined slightly this year.

To be clear, Tesla is still the market leader for state-of-the-art electric vehicles in China. During a quick check at the start of the day’s overnight drive, CNBC found 11 Tesla cars passing by, along with two Nio SUVs, one from WM Motor and the latest Xpeng P7 sedan..

Here’s what some Chinese consumers say was taken into account in their decision to buy a local electric car.

First, price was an important consideration.

Chen Yingjie, 42, said he bought the Li Auto SUV from Li Auto in April 2020 for about 300,000 yuan ($ 46,000), after realizing it would cost twice as much to buy a similar Nio car with all the specifications he wanted .

The starting price for the Nio is low, but there are many features that come at an additional cost, said Chen. The Shanghai resident had previously purchased the Xpeng G3 in 2019 and later a BYD electric car for his father in June 2020.

Part of Nio’s strategy is to sell many features of the car through a subscription model. For example, the company launched a “battery as a service” plan last year that charges customers a monthly fee for battery power – similar to regular fuel charges for a traditional gas-powered car.

For Wang Jingyan, 29, he said that Nio’s emphasis on customer service was something he thought was worth paying the most because it saved time when going to a workshop.

The price was also a factor for him. Wang said he bought his Nio ES6 for about 450,000 yuan in late 2019 – his first electric car – after a recommendation from a manager at work and comparing it to a more expensive Lexus RX.

He said he didn’t get a chance to try Tesla’s Model 3 beforehand, but he didn’t have a good impression based on his friends’ experience and online stories about poor customer service in stores.

The distance the car could travel on a single battery charge was another important factor for Chinese consumers.

Zhang Zhen, 41, lives in a cold part of northern China and was concerned about an electric car’s ability to have enough power to complete a trip while it warms up. Last fall, his family bought a Li One, which comes with a fuel tank to charge the battery.

This fuel increases the Li One’s autonomy from 180 kilometers (111 miles) to 800 kilometers (497 miles) on a single charge.

Zhang said his wife mainly uses the car to send and pick up her children from school, a daily distance of about 10 kilometers (6.2 miles). The children also prefer their wife’s car to their non-electric car, because they can watch cartoons on the vehicle’s internal screen, Zhang said.

But he found repairs more troublesome than for a non-electric car, and said he would not consider buying another such vehicle in northeastern China due to the lack of public charging infrastructure there.

In an effort to support the local development of electric vehicles, the Chinese government launched subsidy programs and emphasized the construction of a national charging network.

But compared to the U.S., most cars in China do not have fixed parking spaces, making it difficult for many drivers to have regular access to battery charging stations, according to Mingming Huang, founding partner of the Future Capital Discovery Fund, an investor in Li Auto.

That’s why he hopes that outreach systems, like the initial offerings, may be the best option for China in the next five to 10 years. The Li One SUV from Li Auto comes with a fuel tank to charge the battery in transit.

Finally, many Chinese drivers are choosing electric cars because of favorable government policies, such as programs that make obtaining license plates for electric vehicles much faster and cheaper. Due to efforts to reduce congestion and pollution in the Chinese citys, residents often have to wait years to buy expensive license plates for fuel-powered cars.

After waiting almost a year in the city of Hangzhou for a fuel-powered license plate, a 27-year-old, who asked to remain anonymous, decided not to wait any longer after seeing an Xpeng G3 electric car while traveling to a shopping mall. The car could fit in its budget at about 180,000 yuan, after government subsidies, she said.

On the streets of Beijing, where license plates are also difficult to obtain, state-of-the-art electric car maker Tesla is still a popular choice.