Building Luxury Electric Cars According to These Eight Standards, Who Has More Opportunities
Building Luxury Electric Cars According to These Eight Standards, Whose Chances are Greater?
The advent of the electric era has directly changed the underlying logic of competition in the automotive market. For over a century, the "moat" established by traditional fuel vehicles has been gradually eroded. In this era of rapid change, the internal combustion engine has been ruthlessly compared to outdated and backward labels such as "feature phone" and "Nokia," while new energy vehicles are experiencing unprecedented development opportunities.
The launch of the new energy market benefited from the real launch of the low-end market represented by Wuling Hongguang MINIEV and the high-end market (300,000 – 400,000 yuan) represented by Tesla and Nio. After that, with booming sales of domestic brands such as BYD, new energy vehicles began to penetrate the market in the range of 100,000 to 200,000 yuan. It is also from this point that after several years of rapid development, the market structure of new energy vehicles began to accelerate its transformation from a "dumbbell-shaped" to a "spindle-shaped" structure.
Generally, vehicles with a starting price above 500,000 yuan are defined as luxury cars, and in this market segment, the competition for luxury electric cars is far from being as fierce as in the mainstream market.
Is there still an opportunity to build luxury electric cars? The answer is almost certainly yes.
Market Opportunities for Luxury Electric Cars
There is no car market quite like China's, with its fierce competition and abundant opportunities.
In a market where competition is not yet fully established, new brands can carve out a place for themselves by accurately targeting consumers and meeting their specific needs. Many new brands have proven this, such as NIO, Xpeng, and Li Auto.
Without the advent of the electric era, the Chinese automotive market may not have seen such rapid and dramatic growth. This opportunity is all thanks to electrification.
In 2022, China's production and sales of new energy vehicles reached 7.058 million and 6.887 million respectively, ranking first in the world for eight consecutive years. The penetration rate of new energy vehicles in the Chinese market is close to 30%, and some optimistic experts predict that it could reach 70% by 2030.
The rapidly growing Chinese luxury car market is becoming a key engine for global luxury car market growth. According to data, by 2030, the Chinese market for luxury cars priced above 500,000 RMB is expected to grow rapidly to 1.9 million units, with a 67% penetration rate for luxury electric vehicles. From 2025, the Chinese luxury car market is expected to enter a high-growth stage with an average annual compound growth rate of nearly 20%, and the period from 2025 to 2030 will be the best window for the luxury car market.
This is the result of the combined efforts of both the demand and supply sides.
First, let's look at the demand side.
Firstly, the number of high-net-worth and ultra-high-net-worth individuals continues to grow.
According to the 2022 Wealth Report by Knight Frank, the global high net worth population has reached 70 million and is expected to exceed 100 million by 2026. In addition, the ultra-high net worth population (those with a net worth of $30 million or more) is expected to increase from 610,000 in 2021 to over 780,000 in 2026, with a compound annual growth rate of over 5%. These two groups have strong consumer power, and their continuously expanding size will undoubtedly drive the luxury electric car market to new heights.
Secondly, high-end new energy vehicle users have a higher proportion of upgrade/purchase from luxury and joint venture car companies. Survey data shows that high-end new energy vehicle users mainly rely on upgrades/purchases, with their previous vehicle mainly being a fuel car from luxury and joint venture brands.
In response, Cui Dongshu, the Secretary-General of the China Passenger Car Association, believes that the strengths of traditional high-end brands are mainly in the field of fuel cars. Although multinational brands have a century of brand accumulation and foundation, they have not yet gained consumer recognition in the new energy vehicle market. Instead, Chinese brands that focus on high-end new energy vehicles have been accepted by the market and become "new high-end brands."
Thirdly, under the trend of electrification and intelligence, Chinese luxury brand consumers' focus on products has gradually shifted from internal combustion engine technology and powertrain tuning to the field of intelligence. It can be said that luxury has a new definition in the new era, and the moat of traditional luxury brands has become shallower.
The persistence in the combustion engine market dividend has caused traditional luxury brands to lag behind in electrification, intelligent cabins, and autonomous driving compared to new start-ups. At the same time, due to the relentless investment in the four modernizations of automobiles, the user awareness of Chinese new start-ups has rapidly increased. This is also an important reason why Chinese high-end new energy vehicle users prefer new start-ups.
Now let's take a look at the supply side.
Firstly, there is the supply of capital. In recent years, car companies committed to the development of the four modernizations of automobiles are more likely to be favored by capital markets and investment institutions. It is estimated that by 2022, investment in companies related to electric vehicles will reach more than $200 billion, with a projected compound annual growth rate of 20% by 2025.
Secondly, in the era of intelligent and electric vehicles, the automotive industry is facing a new round of disruptive technological change.
Currently, the autonomous driving and artificial intelligence wave is booming, and the traditional automotive supply chain, with traditional production and manufacturing as its core, is gradually extending towards software intelligent scenario-based experiences and mobile travel services. With the advent of the 800V high-voltage fast charging era and the increasing perfection of infrastructure such as charging piles, the era of new energy vehicles will also accelerate.
Finally, the number of participants in the luxury electric vehicle market has continued to increase. From the second half of 2022 to the first half of 2023, Dongfeng Motor Corporation's Mengshi, BeyonCa Automotive, and the "Looking Up" brand were successively released, and Chinese new energy brands began to focus on the new energy luxury car market in the 500,000 to 1 million yuan price range.
This shows that new start-ups and Chinese brands have already proven their strength in the mainstream market through sales. They have begun to push their brands upwards, continuously seeking to gain dominance in the high-end luxury market by relying on insights into user needs and the application of innovative technologies.
This is a tough battle. In the future market competition, whether domestic brands can take the commanding heights of the luxury electric vehicle industry will determine whether China's automotive industry's strategy of overtaking in a curve can truly succeed. It is also an important symbol of the transformation from "Made in China" to "Created in China", from "China's speed" to "China's quality", and from "Chinese products" to "Chinese brands".
How to Create a Luxury Electric Vehicle
When we talk about luxury, what are we really talking about?
Luxury to some extent is like a pyramid, built layer by layer from design to craftsmanship, and then to details and quality. If any link is missing, there can be no luxury.
For high-end luxury electric vehicles, classic design, exquisite craftsmanship, intelligent experience, and the unique luxury value brought by ecological services are all indispensable.
It is not an exaggeration to say that design is the soul of a luxury car brand. When we look at any well-known luxury car brand in the world, one thing they all have in common is their own unique and classic design style. While car shapes may change with the trends of the times, classic design stands the test of time.
As an iconic model in the sports car world, the Porsche 911 has always been known for its classic appearance and outstanding performance. Its design, which combines a sense of power and elegant temperament, has become an eternal classic. Over the course of 50 years and 7 generations of models, the design has become increasingly modern, but the style has remained unchanged, with features such as the frog-eyed lights, fat rear end, and rear-mounted, horizontally opposed 6-cylinder engine becoming hallmarks of the 911.
In addition, for luxury cars, whether it is a highly recognizable brand logo, an exquisite and elegant appearance, or a comfortable rear seat experience, they can all provide consumers with a more ultimate experience.
Secondly, exquisite craftsmanship is also crucial.
Survey data shows that compared to consumers of mainstream brands, luxury brand consumers still value some traditional luxury features and functions, such as high-end audio systems, interior design, and rear seat functions. The rankings of these traditional luxury features are higher among luxury brand consumers than among mainstream brand consumers. Luxury brand consumers are willing to pay more for luxurious interiors, and some configurations that enhance the sense of luxury, such as audio systems and cabin ambient lighting, have more premium pricing in the luxury market, with consumers willing to pay 1-2 levels higher than the overall market.
For a luxury brand, only by striving for perfection can ultimate luxury be achieved.
Take Bentley as an example. The Bentley factory in Crewe, UK has a measurement and testing workshop that strictly controls temperature and lighting environments. The workshop is equipped with high-end precision measuring instruments that can reach the level of aerospace agencies or university science laboratories. Through precise instrument measurement, Bentley's measurement accuracy can reach the micron level, from leather texture to cylinder bore size, with some tolerance values of parts needing to be less than 1 micron.
In addition, in the era of electric cars and intelligence, intelligent cabins and intelligent driving have become inherent standard configurations of "new luxury".
In addition to maintaining traditional advantages in luxury style and features in fuel cars, automakers also need to transform from the previous interaction mode, mainly mechanical buttons and simple electronic cabins, to multi-dimensional interaction and full of black technology in intelligent cabins, in the fields of electrification and intelligence. With the support of intelligent driving technology, they can create a completely different intelligent luxury car experience.
Finally, the unique luxury value brought by user-centric ecological services.
Cars are not just a means of transportation, but will evolve into a mobile intelligent space. In the long run, intelligent cars will be the second largest internet service integrated products after intelligent phones, becoming a new carrier for work, life, and entertainment. This means that brands need to focus on users and create full-lifecycle services inside and outside the car.
With the continuous improvement of ChatGPT artificial intelligence neural network algorithms and NVIDIA GPU technology, the human-machine interaction experience inside the car and personalized service experience outside the car for luxury cars will be greatly improved in the future.
To build a luxury electric car from scratch, it is not enough to just satisfy the four elements that define an electric luxury car. Four key capabilities are also needed to build a luxury electric car - technology path and standards, supply chain resources, product planning, and brand operation.
First, there is the technology path and standards.
This includes two aspects: platform/module development strategy and luxury car quality management system and standards. Luxury brands often rely on mature platforms to conduct vehicle research and development, and use modular strategies to quickly bring differentiated products to market, thus achieving cost reduction and efficiency improvement in R&D work. The core of modularity, which is the realization of maximum sharing of components across models on the same platform, is a complex system engineering that requires a high level of expertise from the R&D team. From Volkswagen to Bentley, from Toyota to Lexus, from Nissan to Infiniti, almost all mainstream automakers will incubate high-end brands under their existing large platforms. The birth of a luxury car requires strict control over the entire process from design, R&D, to production, testing, and more.
Second, there is supply chain resources.
This includes both domestic supply chain cost management and international luxury car parts supplier resource management. Generally speaking, if China's automotive supply chain is strong, then China's automotive industry is strong. Similarly, a car company can only have real market risk resistance and competitiveness if it has strong control over the supply chain, and its products can stand undefeated.
Third, there is product planning capability.
Whether a company can formulate long-term goals for products that can grasp market opportunities and meet consumer needs based on market changes, technological developments, customer demands, competitive situations, and the company's own situation and development direction, including product categories, structures, positioning, product combinations, and lifecycle planning, this is a great test of a car manufacturing team's strategic vision and adaptability.
Fourth, there is brand operation capability.
An important difference between luxury cars and mass-market cars is brand premium. It can be said that a brand is a comprehensive reflection of a company's and even a country's competitiveness. For a long time, China's manufacturing industry has been burdened with the stigma of "large but not strong in manufacturing, comprehensive but not refined in products, and numerous but not superior in brands". In the international market, Chinese products are often seen, but Chinese brands are rarely seen. Therefore, brand operation is also a critical capability that needs to be possessed in order to build luxury cars.
Which Chinese Carmaker is Capable of Creating a Luxury Electric Vehicle?
Clearly, building a luxury electric vehicle is not something that anyone can do.
Looking at the Chinese auto market, there are not many new energy vehicle companies capable of building luxury electric vehicles. Apart from NIO, which has already established itself in the luxury car market, and the 800,000 yuan-priced HiPhi, Chinese automakers have recently turned their attention to the million-yuan-level new energy vehicle market, such as BYD's high-end brand Hongqi and the luxury intelligent electric vehicle brand BeyonCa.
As a brand focused on high-end electric vehicles, HIPHI has made a name for itself in the market with the label of "technological luxury." From a team perspective, HIPhi's management team has both international characteristics and high efficiency. Take its founder Ding Lei as an example. He has rich experience in traditional car company management and has also served in government departments, which means that he not only has rich experience in car manufacturing, but also has a broader macro perspective to examine his manufacturing path.
Ding Lei once summarized HiPhi's core competitiveness as advanced "soft power," which means that the company is constantly evolving in architecture, software and system technology, while also possessing the ability to combine very complex hardware and software. According to HiPhi, the HiPhi Z has three major features: "future fashion, digital life, and electronic era control."
However, while HiPhi's focus on "technological luxury" is distinctive, it has also been criticized for being "rich people's toys" and "not mainstream enough." Therefore, the company plans to launch the more affordable HiPhi Y to break the sales bottleneck.
NIO is a successful example of the high-end transformation of Chinese electric vehicle brands, establishing a place for Chinese independent brands in the high-end car market priced between 300,000 to 500,000 yuan.
In the early stages of the brand's development, NIO successfully established a luxury label through differentiated services. A perfect service system is the core competitiveness of NIO's luxury branding. NIO has always focused on customer experience, creating a unique brand culture and standing out in the market by establishing a complete user ecosystem and continuously innovating business models.
The genes of a company are closely related to the experiences of its founder. NIO's founder, Li Bin, is known as the "father of mobility." His entrepreneurial investment experience is concentrated in the internet + mobility fields, and he has rich experience in automotive e-commerce and internet marketing, with a core management team comprising of top-tier executives from Tesla, BMW, Volkswagen, and other leading car companies.
However, NIO is currently facing the challenge of sluggish sales growth. Some believe that this is related to the problem of often creating difficulties for customers to choose between NIO's offerings.
As a brand targeting a million-unit sales level, the confidence of YangWang comes from the blessing of BYD's leadership position in new energy and profound technological accumulation.
In early April of this year, BYD released the world's first new energy-exclusive intelligent vehicle body control system, Cloud Rail, which rewrote the history of vehicle body control technology relying on foreign countries. This is also another breakthrough in safety technology for BYD after the blade battery, CTB, and E-Platform 3.0. Thanks to the aforementioned technology, the YangWang U8 has strong off-road capabilities, such as turning in place, agile turning, emergency floating, and extreme anti-skid control and body stability control.
It can be foreseen that the YangWang brand will embody BYD's advantages in technology innovation and supply chain management. However, the design of the YangWang U9 pure electric supercar received criticism for being too flamboyant and lacking in aesthetics when it was first unveiled. At the Shanghai Auto Show in April of this year, the newly unveiled U9 had undergone some updates to its design.
The luxury electric vehicle market has a new rising star that cannot be ignored - BeyonCa. As a new brand, it deserves more attention.
BeyonCa's positioning is very clear: with Porsche as a reference, it aims at the luxury car market with a guiding price of over 500,000 yuan and the highest gross margin.
At the brand's debut last year, BeyonCa showcased its first concept car, the GT Opus 1. This car embodies BeyonCa's profound understanding of luxury electric vehicles.
In terms of design, the car features a highly recognizable logo - the world's first intelligent dynamic emblem - with a V-shaped design language running through the front, back and interior. The car's proportions exude a self-evident sense of luxury and ensure comfortable seating space. In fact, the comfort of the rear seats is one of the classic standards for judging luxury cars.
BeyonCa believes that the luxury design of the interior needs to take into account sensory perception, touch, materials, colors, and overall coordination of the interior and exterior. This philosophy will be integrated into the entire design and development process and is one of BeyonCa's core competitive advantages in luxury car product development.
It is worth mentioning BeyonCa's core management team, which is an international, world-class team of top talents spanning multiple countries and industries. Most of the core team members have served as global leaders in research and development, design, production, and quality management for brands such as Bentley, Mercedes-Benz, Audi, and Volkswagen. More than 20 legendary car models, such as the Bentley Bentayga, Mercedes-Benz S-Class, and Lamborghini Urus, were created by this team.
Among them is Hans-Joachim Rothenpieler, who served on the Audi Board of Management and was responsible for the Volkswagen Group's technical development department. During his time at Volkswagen, he personally supervised the development of more than 20 car models, including the Bugatti Chiron, Bentley Bentayga, Mercedes-Benz GT and R-Class, Lamborghini Urus, Porsche 911, and Audi R8. Undoubtedly, BeyonCa will also inherit the quality management system of luxury car models such as Audi and Porsche.
In addition, the key members of BeyonCa's styling and design team have held major design positions at luxury car brands such as Lamborghini, Audi, Bentley, and Mercedes-Benz, as well as well-known luxury goods brands. BeyonCa's chief designer, Dirk Van Braeckel, previously served as design director at Bentley and Audi, and personally led the design of successful models such as the first-generation Audi A3 and the Bentley Continental GT.
It can be said that since its inception, BeyonCa has had industry-leading experience in core areas such as research and development, design, lean manufacturing, and quality management. More importantly, as BeyonCa's strategic investors, Dongfeng Group and Renault Group are expected to form industrial synergy with BeyonCa in the supply chain field, further enhancing BeyonCa's advantages in top international supplier resources.
What's impressive is that BeyonCa has introduced a health concept as a point of differentiation from other car brands.
Health as a Service (HaaS) - a cutting-edge mobile health diagnosis and treatment concept - is the biggest feature of BeyonCa's intelligent health services. It can organically integrate health data from smart watches, mobile phones, and smart cabins to provide personalized health advice, as well as end-to-end intelligent health and remote medical services both during and outside of travel.
It is worth mentioning that BeyonCa's intelligent high-quality health management and healthcare solutions are an innovative solution that combines biometric sensor technology, multimodal data fusion technology, and cloud computing technology. It is also the biggest highlight of BeyonCa's intelligent health service ecosystem. Its deep application scenarios not only provide consumers with health protection in and around the car, but also extend to outside the car, integrating online and offline medical resources to provide timely, proactive health monitoring, guidance, and emergency assistance.
If BeyonCa's differentiated service concept is implemented, it may establish a new benchmark for intelligent space and scene ecological service experience terminals in the automotive mobility field.
Currently, BeyonCa has unique advantages in understanding and building luxury electric vehicles. According to its product plan, the first mass-produced car will be launched around 2025.
During the transition period from old to new energy, the pattern of the Chinese automobile market has not yet developed to a clear degree. As mentioned earlier, 2025-2030 will be the best window period for the luxury car market. It will also be a time to see the true colors of the players. This is BeyonCa's opportunity, as well as an opportunity for all new players.
Reporter Wu Jing from Auto Business Review