New Straits Times

EXECS BULLISH DESPITE WESTERN PRESSURE

ELECTRIC vehicle executives at a top car show in China were bullish on prospects for growth, despite a gruelling price war and mounting Western pressure on the industry.

Thousands of car lovers and company representa­tives descended on Beijing recently for the Auto China show — a chance for industry giants to show off new designs and cutting edge technologi­es aimed at getting ahead in the fiercely competitiv­e sector.

And even as firms face down a cutthroat price war at home and mounting regulatory pressure overseas, executives and attendees were upbeat.

“I’ve never seen anything like this before,” said one company representa­tive who declined to be named. “There’s a lot of expectatio­n about what new models, new technologi­es Chinese carmakers will unveil.”

One of the stars of the show was Lei Jun, chief executive officer (CEO) of consumer electronic­s giant Xiaomi, fresh from declaring he had staked his “reputation” on the success of his firm’s first-ever EV, the SU7.

Lei was mobbed by scores of people, some shouting his memetic slogan “are you OK?” — a joke referring to the CEO’s broken English that fans reclaimed as proof of his likeabilit­y.

All were keen to get a snap of the latest player in the hotly contested EV sector.

Lei has said his SU7 is the most “Apple-friendly” EV on the market - tapping a prominent theme at the Auto Show: the emphasis on smart technology.

With everything from high-tech navigation systems to built-in karaoke machines, Chinese EVs can sometimes feel equipped with more gadgets than James Bond.

“Chinese customers are now more attuned to fast-evolving digitalisa­tion, Internet-stage and smart technology inside their vehicles,” said Brian Gu, president and vice-chairman of EV giant XPeng.

“Using voice, using large screens and relying on more smart-driving technologi­es — that’s also already becoming a hallmark of Chinese products,” he said.

European customers, he said, weren’t yet ready for that technology.

“It will take time, but I think ultimately, technology will converge,” Gu explained. “We’re very confident about that.”

But before that can happen, Chinese carmakers will have to get past European regulators.

The European Union launched an investigat­ion last year into Chinese state EV subsidies, which it said had given companies from the country an “unfair” leg up in the local market.

And Brussels — along with allies in Washington — has raised fears that Chinese industrial “overcapaci­ty” created by excessive state subsidies could see global markets flooded with cheap Chinese EVs.

“We certainly hope that there won’t be an introducti­on of tariffs. I think it is not good for consumers,” said William Li, CEO of Nio, another EV giant.

“Every place, region, and country has some considerat­ion for protecting employment in their own industries,” he said. “This is a reasonable demand, but we still hope to return to common sense.”

XPeng, Gu said, was also determined to make headway into the European market.

He compared the obstacles Chinese firms were now facing to the similar hurdles European giants such as Volkswagen faced when entering the Chinese market in the 1990s and 2000s.

“We may have to think about creative strategies, we may have to form relationsh­ips and partnershi­ps. Maybe Chinese players have to do the same in order to compete, and I think there’s no shortcut,” he said.

“We may have to do all of that to remain a player, a leading player, in Europe. So we’re prepared to do that, for the long term-market and long term opportunit­y there.”

Executives are also sanguine about an intensifyi­ng price war between EV companies, made all the more competitiv­e as consumer spending slows in China.

Beijing-based Li Auto recently slashed the prices of its models by up to 30,000 yuan.

That followed a decision by Elon Musk’s Tesla — which notably did not attend this week’s Auto China — to lower its prices by 14,000 yuan.

But top EV bosses point to the intense competitio­n in the Chinese market as one of the reasons why it is so innovative compared to foreign firms - even if it means that company profits might suffer as companies rush to offer the best products at the lowest prices.

“The price war is certainly a reality for all participan­ts in the competitio­n to face,” said Nio’s Li.

“It will, of course, reduce each company’s sales and there will be some impact on profitabil­ity,” he admitted. “On the other hand, this is a normal phenomenon of market competitio­n.”

XPeng’s Gu said the new Xiaomi EV was likely the last major brand to enter the market for the foreseeabl­e future.

And he admitted that when the price war stabilises, it will be “brutal”.

“Chinese players become productive, competitiv­e and in some ways technologi­cally more innovative because of the competitio­n,” he said. “That’s how you grow.”