One of Tesla’s biggest challengers in China has called on the US government to offer Chinese electric vehicles equal access to the American market, arguing carmakers should not be enmeshed in political tensions between the superpowers.
William Li, founder and chief executive of Shanghai-headquartered Nio, questioned why Chinese companies faced hurdles selling their high-tech cars to American consumers while Tesla boss Elon Musk was given red-carpet treatment by senior Chinese government officials last month.
“The world should be more open and stop politicising business,” Li said in an interview with the Financial Times. “The global political climate has become totally different from that when we set up our company back in 2015, especially after the pandemic stirred up division and antagonism.”
Nio has international credentials. Li noted that as well as being listed in New York, more than three-quarters of the company’s investors came from outside China.
His criticism of US protectionism highlights the uncertainty over foreign market access for Chinese companies, just as a clutch of rising EV makers, including BYD, Xpeng and Li Auto, are aggressively expanding overseas.
Exports have become increasingly important for Chinese EV companies. The domestic car market — the world’s biggest — has been extremely competitive since Musk sparked a price war last year in a bid to chase market share.
Last week, Nio joined a group of Chinese carmakers and Tesla in a pledge to enhance “core socialist values” and compete fairly after Beijing directed the industry to rein in the months-long price war.
However, access to the US is complicated by high tariffs on vehicles from China. There is also uncertainty over access to subsidies and the treatment of Chinese-branded vehicles and China-made EV components under Joe Biden’s Inflation Reduction Act, which is aimed at boosting domestic manufacturing and cutting American economic dependency on China.
“Chinese consumers have a wide range of [new energy vehicles] to choose from. Why can’t these products be enjoyed by US consumers as well?” Li said.
While Nio has yet to export a single car to the US, it faces growing competition at home. The company delivered 23,520 vehicles in the second quarter in China. Its share in the domestic market for pure electric cars and plug-in hybrids shrank to 1.3 per cent from 2.3 per cent in the first quarter.
Nio recorded a net loss of $699.5mn and a gross margin of 1.5 per cent in the first three months of the year, compared with a loss of $281.2mn and a margin of 14.6 per cent in the first quarter of 2022. Following analyst criticism of its cash burn rate as it tried to boost sales, the company secured a $740mn investment in June from Abu Dhabi-backed CYVN Holdings.
Li’s call for improved US market access comes as China is expected to overtake Japan as the world’s biggest car exporter this year after taking the second spot from Germany last year.
Given the barriers to selling cars to Americans, Nio and its fellow Chinese EV makers are focusing their efforts on Europe, where new emissions rules are incentivising a rapid switch to EVs from the internal combustion engine.
Nio last year began deploying battery swap stations across the region, where vehicles batteries can be removed and swapped out for fresh ones instead of recharged in a process that takes just minutes. It is targeting close to 1,000 such stations by 2025.
Li is betting that technology and services will be a key point of difference from legacy carmakers, which are already struggling to keep up with Tesla. Among premium services popular with middle-class Chinese consumers are free designated drivers and shared office spaces, as well as free repairs.
Li also hit back at perceptions that the company’s success in China — and the decline of some foreign rivals — has been driven by rising patriotism among younger Chinese consumers.
“Chinese consumers are just like consumers everywhere around the world, they focus on quality,” he said, warning that foreign brands failing to keep pace with Chinese innovation would end up in a “dangerous situation”.
Source: Economy - ft.com
