Look out Tesla, SAIC’s $4,500 electric car takes China by storm

On the showroom floor of a SAIC-GM-Wuling Automobile dealership in Chongqing, a salesman enthusiastically recommended the Wuling Hong Guang Mini EV, an electric car that has quickly won over Chinese drivers since its nationwide launch in July.

The boxy compact lives up to its name, measuring less than 3 metres long and 1.5 metres wide, yet can still accommodate four people. The price starts at Rmb28,800 ($4,460), though the most popular model, with air conditioning, goes for just over $5,000.

“If you make a Rmb13,000 down payment, the rest will be interest-free,” the salesman said.

Though the Hong Guang Mini lags well behind offerings from the likes of Tesla when it comes to range and performance, its convenience and low price have made it one of China’s bestselling “new-energy” vehicles, a category that includes electrics and plug-in hybrids.

The compact has been a big hit for state-owned SAIC Motor, China’s top carmaker. SAIC holds a majority stake in SAIC-GM-Wuling, the joint venture that produces and sells the car and is known locally as Wuling. General Motors is a leading shareholder.

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Marketed as “the people’s commuting tool”, the basic model can travel 120km on a full charge and has a top speed of 100kph — good enough for day-to-day driving for most consumers. It does not use a cutting-edge battery, which helps keep the price down, and it can conveniently be charged from a standard outlet.

The car sold 112,000 units between July and the end of 2020, ranking second for the year behind Tesla’s Model 3, but first on a monthly basis. It is also believed to be the second-best-selling electric model worldwide, again behind only the Model 3.

“Consumers give high marks to its low cost and its design,” said Alan Kang, an analyst at British research firm LMC Automotive.

“It’s sold especially well in Henan and Shandong provinces,” Kang said. Small, cheap electric vehicles that can be operated without a licence — but cannot be driven on highways — have taken off in these areas in particular.

Some drivers of these micro-vehicles are trading up to the Hong Guang Mini. Third-tier cities account for more than 60 per cent of the car’s total sales, according to Chinese media.

The compact could make an appearance outside China as well. Wuling said last August that it plans to export the Hong Guang Mini, and media reports indicate that it has partnered with a Latvian automaker to sell a version of the car in Europe, though the price is reportedly set to be twice as high owing to Europe’s environmental requirements.

Like SAIC, Great Wall Motor has also enjoyed a boost from sales of budget electric cars. Its sales of new-energy cars in China jumped 45 per cent by volume last year, lifting it to sixth in the market. This was thanks in large part to the Ora R1, also known as the “Black Cat”, with its cute design and Rmb70,000 price tag.

“There was a lot of support from consumers whose incomes fell due to coronavirus,” said a staffer at a dealership in Hebei province.

Meanwhile, high-end electric vehicles have also been performing just as well in sales, with Tesla tripling its sales volume in China. The Model 3 sells for about Rmb250,000, even after price cuts following the launch of onshore production of the vehicle.

“Purchases from the middle class have grown due to the pent-up urge to spend from being unable to go on vacation overseas,” said an industry source.

Chinese EV start-ups seeking to become the next Tesla have gained as well. Nio has more than doubled its unit sales, putting the company eighth in new-energy vehicle sales last year, up from 13th place. Li Auto multiplied its unit sales 25 times to reach 10th place.

Altogether, China’s five largest EV start-ups, including WM Motor and Xpeng, expanded unit sales by 150 per cent last year.

To offset the effect of the coronavirus epidemic, local governments enacted programmes to stimulate consumption, and rolled out policies to support the mainstreaming of electric vehicles. These factors have buoyed the domestic market.

Liuzhou, the city that serves as Wuling’s headquarters, extended Rmb1,000 vouchers and offered to partially cover electric bills.

The Chinese government plans to have new-energy vehicles account for half of new auto sales by 2035. The market for new-energy passenger vehicles will expand by 45 per cent this year, according to a projection by LMC.

The main global carmakers are likely to come back strongly in China’s electric vehicle race. Volkswagen, which has led all vehicle sales in China, boosted sales of new energy vehicles by nearly 50 per cent last year.

A version of this article was first published by Nikkei Asia on February 13 2021. ©2021 Nikkei Inc. All rights reserved

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