China Is Set to Rule Electric Car Production – About Your Online Magazine


ZHAOQING, China – Xpeng Motors, a Chinese electric car start-up, recently opened a large assembly plant in southeastern China and is building a corresponding factory nearby. He announced plans for a third party.

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

Volvo owner Zhejiang Geely exhibited a huge new electric car factory in eastern China last month, rivaling in size with some of the world’s largest automakers. Evergrande, a troubled Chinese real estate giant, has just built electric car factories in the cities of Shanghai and Guangzhou and expects to manufacture almost as many fully electric cars by 2025 as throughout North America.

China is building factories for eletric cars almost as fast as the rest of the world combined. Chinese automakers are using the billions they have raised from international investors and local solidarity leaders to beat established automakers in the market.

Success is far from guaranteed. Players include start-ups, electronics manufacturers and other newcomers to the auto industry. They bet that drivers in China and elsewhere will be willing to spend $ 40,000 or more for brands they’ve never heard of.

Chinese automakers admit that the experience gives established automakers some advantages. But they insist that their plans will work.

“We have the will and the patience,” said He Xiaopeng, president and chief executive of Xpeng, in an interview. “I think we will find this very challenging, but we must also move forward.”

Chinese industry has gained momentum. China will produce more than eight million electric cars a year by 2028, estimates LMC Automotive, a global data company, compared with a million last year. Europe is on track to make 5.7 million all-electric cars by then.

General Motors and other North American automakers I have plans to catch up. In April, President Biden asked the United States to step up its efforts with electric vehicles. During a virtual tour of an electric bus factory in South Carolina, he warned: “At the moment, we are far behind China”.

US automakers are on track to build just 1.4 million electric cars a year by 2028, according to the LMC, compared with 410,000 last year.

Global automakers are helping to lead China. Volkswagen recently started building its third Chinese plant designed to produce electric cars.

China already has infrastructure for electric cars, thanks to a government-backed national deployment of more than 800,000 public charging stations. This is almost double the rest of the world, although drivers in the United States – who are more likely to live in single-family homes – can connect their cars more easily at home.

With a slower roll-out of charging stations outside China, automakers elsewhere plan to continue building some plug-in hybrid cars with small gasoline engines for a few more years. But the market for all-electric cars is already bigger than plug-in hybrids, and the leadership of electric cars is expanding rapidly. Car manufacturers like G.M. plan for eliminate gasoline and diesel engines entirely over the next 15 years.

For new Chinese cars, name recognition will be a major challenge. The brands are unknown even to Chinese drivers. On roads full of Buicks, Volkswagens and Mercedes-Benzes, they could fight to stand out.

Alibaba, the e-commerce company, and two state-backed companies have created an electric car joint venture under the name of IM Motors, which plans to start delivering cars next year.

Evergrande called his brand Hengchi, pronounced “Hung-cheh”. The stock market craze for electric cars propelled the Hong Kong-traded shares of the company’s electric car unit, Evergrande New Energy Vehicle, to almost the same market capitalization as GM.

Evergrande plans to manufacture and sell one million fully electric cars a year by 2025. So far, it has not sold any.

Geely, an industry veteran with well-known brands in China, named her electric brand Zeekr, which rhymes with “seeker”. She plans to start delivering cars in October.

The Zeekr is being made at 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 15-foot cream-colored robots made by ABB Sweden. It has an initial capacity of 300,000 cars a year, greater than most auto factories in Detroit, and room for expansion.

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

He called Xpeng, pronounced “X-pung”, after himself. Xpeng’s niche feature is a Siri-like voice assistant that guides the car’s Internet services, such as directions and music, and its computer-aided highway driving. Xpeng plans to have the capacity to manufacture 300,000 cars a year by 2024; last year, it sold less than a tenth of that number.

He made his first fortune by developing a mobile browser company, UCWeb. He sold it to Alibaba in 2014 and became president of Alibaba’s mobile business services unit. In the same year, he helped finance two former executives at state-owned Guangzhou Auto to start 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 that his second son was born and that he would like to tell his son that he ran an automobile company. Mr. He owns 23 percent of Xpeng’s shares, while Alibaba holds 12 percent.

Chinese government officials helped along the way. A state-owned company in Zhaoqing, a 1,000-year-old jade-carved city near Guangzhou, lent $ 233 million to Xpeng in 2017 for the construction of its initial factory with an annual capacity of around 100,000 cars. The city has subsidized the company’s interest payments since then, according to Xpeng’s regulatory documents.

The city of Wuhan helped Xpeng buy land and borrow money at low interest rates for a new factory there. The Guangzhou government also helped Xpeng to start building its factory in that city, said Brian Gu, Xpeng’s vice president and president.

Last year, after resisting the pandemic, Xpeng profited from Wall Street, where Tesla’s rise has whetted investors’ appetite for the industry. The Chinese company raised $ 5 billion in an initial public offering and subsequent sale of shares. It is spending part of the money on new factories and part on research and development, mainly in the autonomous direction.

The deep pockets of Xpeng are visible in the expensive automation at its factory in Zhaoqing. Robots lift 44-pound car roofs of darkened glass, apply aerospace-strength glue and press them in place. Waist-deep robots glide across the gray concrete floor, carrying instrument panels while playing an instrumental version of Celine Dion’s “My Heart Will Go On”. (The robots came programmed that way, explained the company’s employees.)

The factory took only 15 months to build, considerably faster than assembly plants in the West. Yan Hui, the general manager of the final assembly area at the factory, said the decisions were made more quickly than at the German auto parts manufacturer where he worked.

“Any design change took too long – sign, sign and even sign 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 is starting to export cars to Europe, starting with Norway. Chery, a major state-owned automaker in central China, announced last week that it would begin exporting gasoline-powered cars to the United States next year and continue with electric cars.

The United States will be a difficult market. The Trump administration imposed 25% taxes in 2018 on cars imported from China, which slowed exports. Many parts of electric cars are covered by the same rates. This makes it more difficult, but not impossible, for Chinese companies to start shipping electric cars in kits to the United States for assembly.

For now, Chinese companies see enormous potential to build their brands.

Michael Dunne, the chief executive of ZoZo Go, a consultancy firm specializing in the electric car industry in Asia, said that the prospects for the sector are becoming clear: “China will be the global dominator when it comes to car manufacturing electrical ”.

Liu Yi and Coral Yang contributed research.

Paula Fonseca