Tag: Rule

ZHAOQING, China – Xpeng Motors, a Chinese start-up for electric cars, recently opened a large assembly plant in southeast China and is building a suitable factory nearby. It has announced plans for a third.

Another Chinese electric car company, Nio, has opened a large factory in central China and is preparing to build a second a few kilometers away.

Zhejiang Geely, owner of Volvo, showed off a huge new electric car factory in east China last month that could rival some of the largest assembly plants in the world. Evergrande, a troubled Chinese real estate giant, has just built electric car factories in the cities of Shanghai and Guangzhou and hopes to produce nearly as many all-electric cars as all of North America by 2025.

China is building electric car factories almost as quickly as the rest of the world put together. Chinese manufacturers are using the billions they have raised from international investors and personable local executives to bring established automakers to market.

Success is far from assured. Players include startups, electronics manufacturers, and other newbies to the auto industry. They bet that drivers in China and beyond will be willing to spend $ 40,000 or more on brands they have never heard of.

Chinese automakers acknowledge that the experience brings some advantages to the mainstream auto companies. But they insist that their plans work.

“We have the will and we have the patience,” said He Xiaopeng, chairman and general manager of Xpeng, in an interview. “I think we will find it very challenging, but we also have to move forward.”

The Chinese industry is on the move. China will produce over eight million electric cars a year by 2028, estimates LMC Automotive, a global data company, compared to a million last year. Europe is well on the way to producing 5.7 million fully electric cars by then.

General Motors and other North American automakers have plans to catch up. In April, President Biden urged the United States to step up its electric vehicle efforts. During a virtual visit to an electric bus factory in South Carolina, he warned: “At the moment we are running far after China.”

North American automakers are well on their way to building just 1.4 million electric cars a year by 2028, compared to 410,000 last year, according to LMC.

Global auto companies are helping China’s leadership. Volkswagen started recently Third Chinese electric car factory built.

Thanks to the nationwide rollout of over 800,000 public charging stations supported by the government, China already has the infrastructure for electric cars. That’s almost twice as much as the rest of the world, although US drivers who tend to live in single-family homes find it easier to hook up their cars at home.

With a slower deployment of charging stations outside of China, automakers elsewhere plan to continue building some plug-in hybrids with small gasoline engines for a few more years. However, the market for fully electric cars is already larger than for plug-in hybrids, and the lead of electric cars is growing rapidly. Automakers like GM plan to completely eliminate gasoline and diesel engines over the next 15 years.

Name recognition will be a major challenge for the new Chinese cars. The brands are mostly unknown even to Chinese drivers. On streets full of Buicks, Volkswagens and Mercedes-Benzes, it was difficult for them to stand out.

E-commerce company Alibaba and two state-backed companies have set up a joint venture for electric cars called IM Motors, which is scheduled to begin delivering cars early next year.

Evergrande called his brand Hengchi, pronounced “Hung-cheh”. An electric car craze has brought Hong Kong-traded shares in the company’s Evergrande New Energy Vehicle electric car unit to nearly the same market cap as GM

Evergrande plans to manufacture and sell one million all-electric cars annually by 2025. So far none have been sold.

Geely, an industry veteran with recognized brands in China, has named his electrical brand Zeekr, which rhymes with “seeker”. The delivery of the cars is planned for October.

The Zeekr will be manufactured in a new electric car factory near Ningbo on China’s east coast. The factory is a cavernous space with miles of white conveyor belts and rows of cream-colored 15-foot robots made by ABB of Sweden. It has an initial capacity of 300,000 cars per year, is larger than most Detroit auto plants, and has space for expansion.

“The most important thing is that China has the market,” said Zhao Chunlin, general manager of the factory.

Mr. He named Xpeng, pronounced “X-Pung”, after himself. Xpeng’s niche feature is a cooing Siri-like voice assistant that controls the car’s internet services like directions and music, as well as computer-aided driving on the highway. Xpeng plans to produce 300,000 cars a year by 2024. it sold less than a tenth as many last year.

Mr. He made his first fortune developing a cell phone browser company, UCWeb. He sold it to Alibaba in 2014 and became president of Alibaba’s Mobile Business Services division. That same year, he helped two former Guangzhou Auto State executives set up Xpeng.

Three years later, Mr. He took direct control of Xpeng and left Alibaba, which also acquired a small stake in the automaker. Mr. He said his second child had been born and that he wanted to tell his son that he ran a car company. Mr. He holds 23 percent of Xpeng’s shares, while Alibaba holds 12 percent.

Chinese government officials helped with this. A state-owned company in Zhaoqing, a 1,000-year-old jade carving town near Guangzhou, donated $ 233 million to Xpeng in 2017 to build its first factory with an annual capacity of around 100,000 cars. The city has since subsidized the company’s interest payments according to Xpeng’s regulatory filings.

The City of Wuhan helped Xpeng buy land and borrow money for a new plant at low interest rates. The Guangzhou government also helped Xpeng build its factory in that city, said Brian Gu, vice chairman and president of Xpeng.

Last year, after weathering the pandemic, Xpeng benefited from Wall Street, where Tesla’s rise sparked investor appetites for the industry. The Chinese company raised $ 5 billion through an initial public offering and subsequent share sales. It spends part of the money on new factories and part on research and development, especially on autonomous driving.

Xpeng’s deep pockets are visible in costly automation in the Zhaoqing factory. Robots lift 44-pound car roofs made from dark-tinted glass, apply aerospace adhesive, and press into place. Waist-high robots slide across the gray concrete floor and carry instrument panels as they play an instrumental version of Celine Dion’s “My Heart Will Go On”. (The robots were programmed that way, company officials explained.)

The construction of the factory took only 15 months, which was considerably faster than the assembly plants in the west. Yan Hui, the general manager of the plant’s final assembly area, said decisions were made faster than at the German auto parts maker where he used to work.

“Every design change took a long time – characters, characters, even characters in German,” he said. “But at Xpeng, we can just make the change.”

Although many of the electric car brands are new to China, their owners already have ambitions abroad. Xpeng starts exporting cars to Europe, starting with Norway. Chery, a large state-owned automaker in central China, announced last week that it would start exporting gasoline-powered cars to the US next year, followed by electric cars.

The United States will be a difficult market. The Trump administration imposed 25 percent tax on cars imported from China in 2018, which has slowed exports. Many electric car parts are subject to the same tariffs. This makes it more difficult, but not impossible, for Chinese companies to deliver electric cars in kits for assembly in the United States.

Chinese companies currently see great potential for building their brands.

Michael Dunne, managing director of ZoZo Go, a consulting firm specializing in the electric car industry in Asia, said the industry’s prospects were clear: “China will be the global dominator in electric car manufacturing.”

Liu Yi and Coral Yang contributed to the research.