Chinese Electric Vehicles: A New Era of Consumer Electronics

The electric vehicle (EV) market in China is experiencing a surge in competition, with local automakers ramping up production and incorporating advanced tech features that set them apart from Tesla and other foreign competitors. This new trend in the Chinese EV industry is transforming the sector into a consumer electronics market, with a focus on in-car projectors, refrigerators, and driver-assist technology.

The rapid pace of new model releases in the Chinese EV market is a stark contrast to the earlier focus on driving range. Companies are now investing heavily in advanced tech features to attract consumers, who are increasingly interested in entertainment and gadgets. Li Yi, the chairman and CEO of Appotronics, a Shenzhen-based laser display company, explained, “In China, I think it’s more entertainment, more gadgets. People really want to buy something with the most advanced tech specs.”

Appotronics, which claims to work with major automakers, recently made the 32-inch projection screen that unfurls inside the newly launched M9 SUV from Huawei’s Aito brand. The M9 SUV, which comes with a refrigerator, collapsible front seats, and an AR HUD (Augmented Reality Head-Up Display), has generated significant interest, with orders surpassing 30,000 vehicles as of January 1, 2024. The six-seater car sells for about 470,000 yuan to 570,000 yuan ($66,320 to $80,430), making it a competitive option in the market.

Tesla, on the other hand, does not offer these accessories, and its driver-assist tech is limited in China. Li Auto’s L9 SUV, which starts at 429,900 yuan, also comes with AR HUD, a refrigerator, and driver-assist tech. Xpeng’s G9 SUV, widely considered a leader in China for driver-assist tech on city streets, starts at 289,900 yuan.

The swath of new EV models and advanced tech features in China is vast, with more than 100 new EV models due to launch in 2024. Consumers’ interest in these new models has shifted towards in-vehicle tech features and driver-assist capabilities, which are “far more advanced” than prior electric cars or traditional gasoline-powered vehicles, according to Yiming Wang, an analyst at China Renaissance Securities. Price and maximizing mileage are also top considerations for consumers.

Appotronics’ Li expects that the demand for car tech will help his new business segment generate “a few hundred million” yuan in revenue this year, equivalent to about $40 million to $100 million. The Shanghai-listed company previously made about $300 million in overall revenue a year. When asked about Tesla, Li said, “People at Tesla want something completely different than Chinese carmakers.” He also noted that Chinese customers are willing to pay a premium for car tech, while U.S. automakers are more focused on reducing costs.

The Chinese EV market’s shift towards consumer electronics is a result of the country’s dominance in the supply chain for electric car batteries. Companies like BYD have succeeded due to their early work in batteries, which allows them to reduce costs. Traditional foreign auto giants like Volkswagen are struggling to adjust to the surge of electric cars in China, while domestic companies, including smartphone company Xiaomi and Geely-backed startup Zeekr, are rushing to release electric cars.

Driver-assist has emerged as a competitive feature for electric cars in China. Tesla’s Autopilot, which helps with driving on highways, is available in the country, but its “Full Self Driving” (FSD) feature for city streets is not. Chinese regulators are gradually allowing passenger cars to use more driver-assist features in cities, and there is a nationwide push for developing driver-assist and self-driving technologies via pilot programs. However, it remains unclear to what extent consumers are willing to pay for such features.

Shay Natarajan, a partner at Mobility Impact Partners, a private equity fund that invests in transportation, noted that customers indicate in surveys that they are willing to pay for general safety and navigation features, but their answers change when they are asked about specific ADAS (Advanced Driver-Assistance Systems) features and their buying behavior. “There are over 20 unique ADAS features,” she said, noting blind spot warnings or surround camera view were the most popular items. “Note that FSD is not on top of the list of ADAS features customers are willing to pay for.”

In conclusion, the Chinese EV market is undergoing a significant transformation, with local automakers ramping up production and incorporating advanced tech features to attract consumers. This shift towards consumer electronics is a result of the country’s dominance in the electric car battery supply chain and Chinese consumers’ interest in entertainment and gadgets. The market is expected to see more than 100 new EV models launch in 2024, with a focus on in-vehicle tech features and driver-assist capabilities. The demand for car tech is expected to generate significant revenue for companies like Appotronics, as consumers continue to seek out the most advanced tech specs in their electric vehicles.