Chinese electric car start-ups Nio and Xpeng are shifting towards the lower-priced segment of the market, with plans to release newly branded cars this year. Nio’s first mass market car will be an SUV that is cheaper than Tesla’s Model Y, starting at 249,900 yuan in China. Previously, Nio targeted the premium market with vehicles costing around $50,000 or more. The move to launch mass market brands puts Nio and Xpeng in direct competition with local rival BYD and German carmaker Volkswagen, amid an intense price war in China’s electric car market.
Nio is planning to launch its new brand, Onvo, in mid-May, targeting families as the key consumer segment. Xpeng, on the other hand, plans to launch its new sub-brand Mona in the next two or three months, with a price range below 150,000 yuan. This is part of Xpeng’s strategy to tackle the mass market segment by utilizing scale, technology, and cost control. Xpeng’s driver-assist software has been a key selling point in China, distinguishing the company from competitors like Tesla, whose full self-drive software is not yet available in the country.
Despite undercutting the Model Y, Nio’s new mass market brand will target a price of around $30,000 (213,000 yuan), which is slightly higher than BYD’s offerings. BYD has found success in the lower end of the mass market, with products ranging from below 100,000 yuan to over 1 million yuan. In response to the shifting market dynamics, BYD is launching a new hybrid-powered car in the second quarter with a price range of 120,000 to 150,000 yuan. The intense competition and price volatility in China’s new energy car market have led to a surge in sales of electric vehicles, with such cars accounting for over 40% of new passenger cars sold in the country.
The decision by Nio and Xpeng to enter the mass market segment comes at a time when only a few brands dominate that space in China, compared to the premium segment where there are numerous competitors. Xpeng is aiming to bring differentiated technology to the mass market, leveraging its scale, technology, and cost control to offer cutting-edge features previously only available in premium cars. The emphasis on technology and affordability reflects a broader trend in the electric car market, as companies seek to expand their customer base and grow market share amidst intense competition.
Looking ahead, both Nio and Xpeng are gearing up to launch their new mass market brands in the coming months, signaling a strategic shift towards capturing a larger share of the growing electric vehicle market in China. With new offerings priced competitively against Tesla’s Model Y and other established brands, Nio and Xpeng are positioning themselves to attract a wider range of consumers, particularly those looking for more affordable electric car options. As the market for electric vehicles continues to evolve, these Chinese start-ups are poised to play a key role in shaping the future of mobility in the world’s largest automotive market.
