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Grace Mou explains why Chinese consumers flock to domestic EVs
40 Plays30 days ago
In Part 3 of a 4-part series, Grace Mou, Chinese trend forecaster and brand strategist, explains why Chinese consumers are flocking to Chinese automotive brands, especially electric vehicles. Together with Auto Ethnographer host, John Stech, she discusses consumer mindset.
Chinese consumers compare styling, technology, price, and features to arrive at a purchase decision. Grace clarifies what does and does not drive their decision-making process.
She explains her own experience with a family member’s Changan Avatr 11 EV, a car which was purchased to replace previous Fords that the family owned. Her impressions mirror those of many other Chinese consumers.
Grace also addresses vehicle charging, its availability and the advancements of technology towards charging speed. All factors point towards ever greater EV adoption in China where sales already exceed 50% share.
As fast as the Chinese automotive and EV brands are rising, Grace identifies one soft spot. The relentless investment in technology, engineering, and in the current price war in China has diverted budget and attention from brand building. How will this impact these brands in their home market and abroad? Grace addresses this topic.
You can read Grace Mou’s weekly blog with further Chinese culture and branding insights here https://www.grace-creativity.com/blog.
You can also follow Grace Mou on Substack at https://substack.com/@trendculturebrand
To learn more about The Auto Ethnographer, visit the homepage at https://www.auto-ethnographer.com
You can also follow on Instagram or Facebook for a daily “Unusual Cars in Unusual Places” post. For Instagram: https://www.instagram.com/auto.ethnographer/
For Facebook: https://www.facebook.com/profile.php?id=61567929329364
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Transcript
Introduction to Chinese EVs
00:00:00
Speaker
value for money, quality, function, technology that the Chinese EV car owns and has the advantage over competitors like BMW or Mercedes-Benz or Tesla.
00:00:15
Speaker
Hello and welcome to the Auto Ethnographer. I'm John Steck, your host on this journey. We travel the globe to bring you stories about culture and the global automotive industry. Fasten your seatbelt and let's get started.
00:00:28
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Hello and welcome to this week's episode of the Autoethnographer. Today we have the third part of a four part series on marketing and consumer trends in China. Last week, we explored China's cultural soft power and how Chinese brands are being perceived abroad.
00:00:45
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Today, we're going to turn our attention to the rise of Chinese new energy vehicles or electric vehicles as they're known outside of China.
Insights from Grace Mo
00:00:54
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This is after all an automotive related podcast.
00:00:58
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Guiding us through these four episodes is Grace Mo, a trend forecaster and brand strategist whose career has mirrored and shaped China's extraordinary transformation over the past two decades.
00:01:11
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Born and raised in mainland China, Grace began as an English teacher in Chongqing before moving to Shanghai. She's worked with global brands like Coca-Cola, Lego, Ferrari, and LVMH, as well as rising Chinese challengers, helping them navigate China's fast-evolving consumer landscape.
00:01:30
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Grace is known for spotting the signals in the market that matter and turning complexity into clarity. You can read all about that in her weekly blog, the link to which is going to be found in the show notes.
00:01:42
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Grace, hello, and welcome back to the show. Thank you, John, for having me today.
Market Dominance of Chinese EVs
00:01:50
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Of course, today's topic is one that's close to my heart, and I know you put a lot of thought into it as well, which is the automotive industry and specifically the rise of the new energy vehicles in China.
00:02:04
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Yeah. let's Let's dive into that topic a little bit. um Just looking at the background, until just two, three years ago, international brands had the majority of market share in China, and they've lost that now. They're down to about 35 or 40%. even of cars sold in China are new energy vehicles electric vehicles today this This is an incredible shift over the past five years, something that I think has stunned all of the automakers from around the world.
00:02:40
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And let's try to unravel a little bit today. How did that happen?
Rationale Behind Local Preference
00:02:45
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And more specifically, why did that happen? What's going on in the mind of the Chinese consumer? ah Here is ah one thing i need to clarify at the very first beginning.
00:02:57
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ah Chinese people buy Chinese u ah cars not ah out of a patriotism. But ah because the the Chinese EV cars are super good um functional and technology as well as on design. So they buy it for themselves, not for the government ah of the national pride.
00:03:24
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That is so one thing I have to clarify very clearly here So it's really a ah rational decision that they take, not not a nationalistic or patriotic decision.
00:03:38
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No, nothing is not a patriotic decision. It's a really personal decision based on value for money, quality, function, technology that the Chinese EV car owns and have the advantage over competitors like BMW or Mercedes-Benz or Tesla.
00:04:01
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Let's look at those items a little bit one at a time. So you mentioned, for example, um the price competitiveness, the value. um how How does that situation look? Can you explain a little bit about what's going through the mind of a consumer when they look at the pricing?
00:04:20
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and and And how much is the pricing an advantage for the local Chinese brands? ah Let me just ah use my personal example to tell the story of China EV cars and the Chinese consumer, how Chinese come consumer shift their preference for the local players.
00:04:39
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ah my My sister and the her husband just recently purchased a local EV car called Avita.
Technology and Competitive Pricing
00:04:51
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And the they used to be the loyal customers. users of Ford, American brand and auto brand Ford, they are loyal Ford users and that they purchased two Ford cars before, but they just ah converted to the local brand called Avita.
00:05:09
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Avita, I have been i have been in their car and just ah they just ah drive me around in this new car and experienced it. It is a fantastic sea driving experience and very comfortable. so The seats are very comfortable and there with very advanced technology. When you sit in the cars, you only just ah talk to your car like a person and that they can just ah finish it all the
00:05:41
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task you assigned to the car. So it is like a person, not that like a machine. So that is a very amazing experience when I just the sitting in the car and the bike seat and while they are driving me or around in the city.
00:05:57
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So if you just ah look at the ah history and the the background of Aveda and then you understand the why the Chinese people converted to the local players,
00:06:08
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First, they have the very good design and you can see the very ah international standard design and they have the R&D centers in Shanghai as well as in Germany.
00:06:23
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And Aveda also was supported by Ketel, that's an advanced battery ah brand in China. Ketel, and Ketel is a second largest shareholder of Aveda as well.
00:06:41
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And that also Huawei, ah provides the erdo advanced the technology support to this car. And when it comes to the price, the car range for Aveda between price is quite aggressive.
00:06:58
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fifteen nine are usd and this price is quite aggressive and the compared ah to the international competitors, so which he cannot ah provide the same level of advanced technology.
00:07:16
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Even Tesla cannot. So Chinese local players can, yeah are very competitive on price is regard on regard of the technology function they offer.
00:07:32
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So why not to choose the local player? So if I'm an consumer, I will definitely convert to Chinese eBay rather than those international names.
00:07:49
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it It is a very compelling argument ah to to buy this particular car when you think that CATL or CATL, as some people may know it, um is is a worldwide and world renowned brand ah manufacturing batteries for many different purposes, especially automotive.
00:08:09
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And then Huawei is essentially like an an Apple of China.
Enhanced Driving Experience
00:08:15
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Yes. um Correct? yeah So you yeah put those two together and you have state-of-the-art technology that's that's driving this this car.
00:08:27
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Yeah, so Chinese EV car is more, as I just mentioned, they more act like a person, very intelligent person.
00:08:39
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When you just drive the car, you are work ah interact with an intelligent person instead of machine. That's an experience which cannot ah be replicated by the global players right now.
00:08:54
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So I think considering this and the the price range, it is a very reasonable oh choice, right?
00:09:07
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and And what kind of functions does the car have? but When you talk to it, what what kind of functions and features? I understand that some brands have the ability that you can organize your calendar, you can go shopping, you can interact with with things in your home.
00:09:25
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Is that something that's ah among the features that attracted your your sister and and brother? And there are two functions I noticed that when I was sitting in their car when they were driving.
00:09:38
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And the one thing is that to the the car can just the auto driving without in your control. And especially my my sister is not a very good driver.
00:09:50
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He cannot stop the car correctly into the pit. So ah she needs the car to do it by itself.
00:10:01
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So that is autopilot can just ah stop them into the right place, park them into the right place. So that's a one function my sister love to use. And the other one is that they can design the routes. you you just talk to them and I want to ah go to that place. They will just to give you design the routes in the best way and they can Even though they're very intelligent and i don't i don't understand what is behind this technology, a very intelligent.
00:10:40
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It means a person is talking to you. it sounds It sounds quite quite amazing and and quite compelling. i could understand why people would be drawn to to this technology.
00:10:53
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I have a question for but for those listeners who have not been to China. um the The traffic in China, for example, what what would you experience if you were outside driving a car in Shanghai where you live?
00:11:09
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You know, people imagine that there is endless traffic jams in China, in the big cities. is Is that one of the advantages of these cars? That they have so many features built in, including entertainment but because of the traffic?
00:11:26
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Yes, entertainment is a big factor that those EV cars have a advantage you over global competitors.
00:11:36
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we just ah talk to the car, like, please play what music and they choose so what what music and give me a sound playlist.
00:11:48
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oh They will just automatically do all these kinds of things and the play the songs for you. And that is exactly what. So very intelligent.
00:12:01
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It's like your DJ.
00:12:05
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And last last week in the podcast, we talked about the rise of the vertical drama and and companies like Drama Box. um Is this something that can also be watched in the car?
00:12:20
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I think that thing is workable. And I didn't watch and the vertical drama right now during the car, but that is workable. The technology can solve this bug easily.
00:12:33
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So that it brings together some of the different aspects of of what what the consumer loves. They have to go from one place to another in the car and they could potentially have the entertainment, including the vertical dramas right there right there with them.
00:12:49
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And the ah aside of but ah aside the from the technology part and the car, the seat, were far more comfortable than the seat i just ah of the Ford cars i I once was was there.
00:13:07
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And the the chair was so big. And you just, when you're sitting in the chair, and it just is so comfortable. And that you almost fall asleep when you're sitting in the chair.
00:13:20
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And the ah the the space is so big and so spacious. ah inside The inside of a car is so special spacious. And the and and that you you have a very comfortable experience when you're sitting in a car or you're driving a car.
00:13:37
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So ah much better than the yous experience is when I'm sitting in a Ford car. So that's my that's my experience, personal understanding.
00:13:51
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So contrary to what people outside of China might think, the Chinese consumer is really rational. they They're looking at superior technology in their eyes.
00:14:04
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They're looking at quality vehicles with comfort and a beautiful modern international styling. So it's a truly rational decision, not a decision driven purely by um patriotism.
00:14:21
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You are absolutely right. i think ah you wrap up correctly what I said. it is true that they are quite rational. They made rational decisions when purchasing a car.
00:14:34
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And it is out of the consideration of the affordable price for high technology and the comfortable driving and the sitting experience or so on. So that's true.
Leadership in Battery Technology
00:14:50
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Now on the on the parallel to the electric vehicle or the new energy vehicle, of course, you have to charge them. And it's impossible to have a conversation about these cars without talking about how do you fuel them or charge them.
00:15:04
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You and I in the past have talked briefly about your impressions of charging and some of the technology that's available. You mentioned at that time BYD and a fast charging feature.
00:15:17
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Yes, think that's amazing because revolutions in battery technology and the faster charging is upending the whole industry.
00:15:29
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So China is a dominant player are in the battery and the charging technology. So I was amazed. and as we just mentioned, there the technology,
00:15:41
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beyond BYD model will be capable of receiving peak charging power of 1000 kilowatts enable them to travel 400 kilometers ah on a five minute charge so you can say how fast the technology advanced in the past ten years and nobody can compete with the Chinese local players on battery technology and the fast changing faster charging technology. gene That's amazing.
00:16:17
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No, that's that's an incredible technological feat. I think that is the, as they say, the holy grail for most EV companies is to have fast charging that's almost the same time as as fueling a traditional internal combustion vehicle with with gasoline or with diesel.
00:16:39
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And the you know the charging technology make it ah possible for EVAs to charge as quickly as it takes to refill with petrol.
00:16:50
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So the EV becomes the future. If you don't buy EVA, you are just a leg behind the future.
00:17:01
Speaker
Absolutely. it It sounds that way to me. Of course, with more than half of the market now, ah being the sales being electric vehicles, so there have to be a lot of charging stations. Are these typically found in the homes, in the ah parking garages of the apartment buildings?
00:17:21
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Or is it street side? Where do people charge their cars? And then you know, ah I used to think it would be difficult for people to find the station to charge their cars, but that's not the truth.
00:17:35
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When I just was so in the EV cars with my sister's family, they can charge their cars just the downstairs of their apartment. That's very convenient.
00:17:48
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And the the one thing, be aside of the stations to charge your car, the battery technology is a key that the Chinese EV players are so competitive in the market. You know, chinese China's advantage in raw materials, labor costs, and the v the the vertical integration has made competing on price with a China almost impossible.
00:18:16
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So the battery technology is dominated by Chinese battery players like KTEL.
Branding Challenges for Chinese EVs
00:18:25
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they they They just dominate battery technology.
00:18:29
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Nobody can compete with them because they just ah ah is uncompetitable. yeah It cannot be compete on the price and the technology currently.
00:18:43
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And that China just dominated the vertical integration.
00:18:49
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So we've talked about the actual product, the technology, the charging, the you just mentioned the vertical integration, which leads to and advantage in pricing.
00:19:01
Speaker
What about branding? This is your field of expertise. um The brands that are known internationally, like NIO, BYD, Xpeng, What can you say about the brands and how they've developed themselves locally to Chinese consumers? Is there anything that stands out about the the branding?
00:19:22
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Actually, that is a pity. Compared with technology advancements, the branding building is quite a lag behind. And the i don't think ah the the the brands and invest a lot in their brand building.
00:19:37
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but to put all their money in the technology or advancement. So that's a pity because they can, if they invest a lot of money and they invest the proper money in the brand and beauty, they can just gain a a lot of marketing share from the overseas market because for the overseas market, the audience outside of China would love to buy brand rather than ah before but ah ah advanced technology. They want to first ah ah have the trust
00:20:15
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in the brand before they invest the money in the technology. So I certainly wish that the Chinese local players can just refocus on brand building rather than put their money in one basket.
00:20:35
Speaker
Now that sounds like like for them, for the Chinese players, a good word of advice, both for the local markets and especially as they move outside of Chinese borders into into Europe or or other parts of the of the world, that brand building is something that should be higher on their priority list.
00:20:53
Speaker
Yes, i got at this moment, ah I want to just ah talk more about this. At this moment, you can win the marketing share by your advanced technology and the affordable price.
00:21:06
Speaker
That is only a short term. The oh why a brand building is and not about the short-term games, it's a long-term version.
00:21:20
Speaker
If you want your brand to thrive and the really just a become icon brand i like a Mercedes-Benz or ah or massive spen and the german German brand car brand in the history, you have to just ah rethink ah how to put money in the brand building to win the trust of the local consumers.
00:21:47
Speaker
So that's a long term vision and the they need to just ah refocus.
00:21:57
Speaker
I agree with you. That takes a long time to build a brand. Of course, you have to have action and and have proof points that your brand supports what do you actually do.
00:22:11
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So that's one thing. The Chinese player local eBay players have achieved a lot. so at this moment, they should be humble and then not be complacent about their achievements right now.
00:22:25
Speaker
They should put their eye on the future. So win a watch the trust of the overseas audience it takes the time and the patience. And the the brand new image is also very important.
00:22:38
Speaker
ah s an asset of your brand equity. So you have to invest on that part as well.
00:22:49
Speaker
it's It's interesting how you put this into perspective because it sounds like the foreign brands in China are in exactly the opposite position.
Competitive Landscape and Future Trends
00:22:57
Speaker
They have a long brand history.
00:23:00
Speaker
And they also have a long history in China, but it sounds like their brand is in place, but their technology is not in place and their and their value is not in place, at least for the Chinese consumer in this moment.
00:23:15
Speaker
Yes, I think they they can learn from each other how to just complement. Maybe the international players like can those Mercedes-Benz and the VW can learn from in Chinese so players and the Chinese and local players can also learn from global competitors. They can learn from each other and complement.
00:23:39
Speaker
Now, that sounds ah like of a very ah plausible way. Unfortunately, of course, they're locked in ah in a massive price war against each other. So i'm not sure how much learning is being done at this moment. Yes, yes, yes. They they just ah compete fiercely in the market that because...
00:24:00
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The Chinese eBay players are really just taking advantage of the technology advancement. So that's amazing. But I think the time will prove everything. It takes time.
00:24:16
Speaker
to just the eye on the future, not just the right ah at the moment. So as a brand of strategies that we always eye on the future, not at the moment, we have long term very beings to guide us.
00:24:32
Speaker
I think also that is a great place to end this week's episode ah when you talk about the future, because I know that next week in the following episode, we're going to come back and we're going to talk about it your forecasts and predictions on trends in China.
00:24:51
Speaker
So this may be a good place to take the pause. And then the next time we come back together, ah we'll have a conversation about what you think is in the pipeline as far as consumer culture and trends and branding in China.
00:25:08
Speaker
I'm looking forward to
00:25:11
Speaker
Great. Well, thank you, Grace, for joining again this week for part three. Great conversation, an eye-opener for people who follow the ah the industry, the auto industry, specifically the developments in China.
00:25:26
Speaker
And I look forward to then talking again and hearing what you have to say about the future. Yes, and see you next week. Thanks for having me. That sounds good.
00:25:38
Speaker
You're very welcome. Okay. Thanks. To our listeners, thank you very much for joining again this week on the Auto Ethnographer. I hope it's been a great journey learning about the consumer in China and their perception of the Chinese new energy vehicles or electric vehicles.
00:25:56
Speaker
We'll be back again with another episode next week. Until then, keep on driving.
00:26:03
Speaker
Thank you for joining us on today's journey. Please remember to like and subscribe to The Auto Ethnographer and leave us a rating or comment. For more information, visit our website at auto-ethnographer.com.
00:26:15
Speaker
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