New energy vehicles (NEVs) are a quickly growing segment of China's auto market. Last month, NEV sales more than doubled from a year earlier, far exceeding the 8-percent rise in overall automobile sales. So what's behind the sales surge?
Hongguang Mini EV by Wuling has been the best-selling electric vehicle in China for the last three months.
With no safety airbags, optional air-conditioning and a driving range of under 200 kilometers, the tiny new model has been snowballing in China's market.
The little car's sales reached more than 33,000 last month, making it the first new energy vehicle to have sold more than 30,000 units on a monthly basis in China this year.
One of the key factors is the price. Hongguang Mini EV priced from just 28,800 yuan ($4,410), the model is the cheapest new energy vehicle on the Chinese market, and it's turned out to be just what a wide selection of consumers are looking for.
The targeted consumers are mostly young people – 40 percent were between 20 and 30 years old.
Shi Shuai, principal of Roland Berger, said the new energy vehicle market is beginning to diversify. While originally focused on high-end and high-fashion automobiles, it's now coming to include more utilitarian and more reasonably priced cars. And that lower end of the market is turning out to be big, very big.
"In the higher end, users of Tesla, Nio and other high-end users, their value preference is pursuing the high-tech. And they are not so restricted in the purchasing budget. They are very willing to accept new things. But most of the demands still scattered among the low tier cities. The most frequent use case of them is daily trips shorter than 30 or 40 km," Shi said.
Tesla curtailed the starting price of its Chinese-made Model 3 sedans in October by about 8 percent to 249,900 yuan ($38,269), after state purchase subsidy is taken into account, Reuters reported.
Chinese EV startups Nio's ES8 is priced at 448,000 yuan ($68,600) in the Chinese market, much higher than Wuling Hongguang's Mini EV.
A global market research firm International Data Corporation report says sales of NEVs in China will reach 1.16 million this year, expanding to around 5.42 million by 2025. Those little cars are helping the market turn in a compound annual growth rate, topping 36 percent.