Tesla is slated to introduce the Model Y, its fifth car, in March 2019. It is expected to be a crossover SUV that is smaller than the Model X and shares the underlying technology of the Model 3. With SUV sales through of the roof in the United States, it is likely to be a success. And with a tag price likely to resemble the Model 3, the Model Y will launch in the United States with very little direct competition when you consider the premium associated with electric SUVs from Jaguar, Audi, Mercedes-Benz and Porsche.
That’s not the case in China, however, a point underlined this week by two new vehicle announcements.
On Saturday, Chinese EV startup NIO launched the ES6, the company’s second all-electric SUV. It’s a smaller, five-seat successor to NIO’s first car, the larger ES8. Broadly speaking, the ES6 is simply a more accessible and accessible version of the ES8. It will start at 358,000 RMB, or around $ 51,000, and that’s before the government subsidies.
NIO’s second fully electric SUV, the ES6.
The base model features a 70kWh battery pack that offers 410 km (or approximately 254 miles) of range, or 430 km (267 miles) in performance cut. NIO will also sell a version of the ES6 equipped with an 84kWh battery pack that will collect approximately 480 km (298 miles), with the performance version reaching 510 km (or approximately 317 miles) of range on a full charge. (Although to be clear, NIO is basing these estimates on the now outdated European standard known as NEDC, which was superseded by a more rigorous one this year – in other words, expect the maximum range of each to be up to a few dozen miles more. down)
All different versions of the ES6 will be equipped with dual electric motors, and will also be loaded with Tesla-style technology. An 11.3-inch touchscreen hangs between the dash and center console, while another screen sits behind the wheel instead of a physical instrument cluster. The SUV also offers a display screen that places critical information (such as speed) in the driver’s field of vision while looking down the road. And of course, the ES6 is equipped with a suite of sensors that enable driver assistance functions (under the “NIO Pilot” umbrella) such as adaptive cruise control and lane keeping.
Then there are NIO’s more unique features, like the “in-car artificial intelligence system” called NOMI, a Nexus Q robot that sits atop the center of the dash. NIO also incorporated the ES6, perhaps my favorite feature to be announced this year: a “smart fragrance system” that offers a “more pleasant experience for occupants.”
The Xpeng G3.
NIO wasn’t the only Chinese automaker to cause trouble this week. Xiaopeng, another of hundreds of EV startups that have sprung up in China in recent years, officially launched its first all-electric SUV, the G3. Backed by Foxconn and Alibaba, and valued at around $ 3 billion, Xiaopeng, or Xpeng, has gained some notoriety in the run-up to the launch of its first car because its concept designs were inspired by Tesla’s Model X. They said they took advantage of the fact that Elon Musk’s Tesla patents were open source.)
But what Xpeng released this week wasn’t such an obvious clone. It’s also a lot cheaper than a Model X, or even what the Model Y will end up costing. The G3 starts at RMB 227,800, or just stays close to $ 33,000, again, before any government subsidies. It will offer NIO-like driver assistance features, has a huge Tesla-style touchscreen on the dash, and has a battery pack that should last around 230 miles (though full details are still scarce).
Both startups are laser-focused in design and technology.
Xpeng has been taking orders for the G3 and claims to be ready to begin deliveries. This week, NIO opened pre-orders for the ES6, and deliveries will begin in June 2019. Depending on where buyers live, both cars could cost up to $ 10,000 less thanks to fairly generous government subsidies resulting from Beijing’s push to wean the country off of internal combustion engines.
Tesla’s timeline for launching the Model Y in China is not entirely clear. It’s also unclear where the company will build the SUV. Elon Musk has said 2020 is a likely target for production, but hasn’t announced whether that will happen at the Gigafactory in Nevada, or at the Gigafactory, which Tesla is making its way outside of Shanghai to build the Model 3.
NIO and Xpeng have a lot of ground ahead when it comes to producing cars in high volumes like Tesla, let alone on the scale of other major automakers. NIO only started production of the ES8 in June of this year, and it has only built around 10,000 cars. Xpeng is even further behind.
But both companies have a decent number of leads to build a customer base while Tesla puts its cheapest electric SUV into production. And while Tesla has exported the Model X (and Model S) to China for a few years, the company’s cars are tens of thousands of dollars more expensive than most Chinese cars, and prices have fluctuated wildly as the government introduced new tariffs. year as part of the ongoing trade war.
NIO and Xpeng aren’t “Tesla killers” on their own, but they are the tip of the iceberg. They are two of the most notable start-ups in a vast expanse of Chinese automakers, many of whom have spent the past few years preparing electric vehicle programs to meet the government’s green energy mandates.
NIO and Xpeng are not “Tesla killers”, but they are representative of a much larger trend
In fact, perhaps even more challenging for companies like Tesla, which are still largely outside of the world’s largest car market, is that the Chinese government is beginning to push the consolidation of the domestic auto industry. The China National Development and Reform Commission will begin to give more weight to the best-performing car companies, including those that are ready to increase their capacity and are willing to invest heavily in R&D.
The NDRC has also said that it is committed to supporting companies that want to export their cars, a goal set for NIO, which plans to bring its cars to the US Xpeng has not announced plans to expand beyond China yet, but Several other Chinese automakers, such as SF Motors, a subsidiary of auto giant Sokon, or Qiantu, another company that announced it is targeting the United States this week, have expressed similar ambitions. NIO, Xpeng and SF Motors have already established R&D centers in the US.
Automakers around the world have spent decades entering China in anticipation of an auto boom, though those efforts were largely handcuffed by rules that forced outside companies to establish 50-50 alliances with Chinese counterparts. That effort, coupled with the government’s recent push to foster the development of dedicated hybrid and electric car companies, helped build enough knowledge and momentum to create companies like NIO and Xpeng.
China announced a plan to relax the association’s rules this year, rapidly resulting in moves such as Tesla’s announcement of a Gigafactory in China, or the purchase of a large majority of its Chinese partner by BMW. It seemed to be something like an opening of the floodgates. But the heavy hand of the Chinese government is still firmly behind the wheel of the electric car movement. That means Tesla will face formidable competition as it ramps up production of the Model Y, Model 3, or whatever else it chooses to build in China. It also means that, with the Chinese government at the wheel, Chinese automakers are closer than ever to trying to compete on American soil, too.