With over 860,000 new-energy vehicles (NEVs) sold in the first 10 months of 2018, China is currently on the forefront of electrification.[1] Made in China 2025, China’s strategic plan tracing the energy transition and the internal development into a tech superpower, includes a significant increase of the EV proportion until 2025. The government is generously incentivizing producers and consumers to reach this goal.

Taking a qualitative perspective, how does supply match demand in this highly regulated segment? In this article, we analyze the main players in the industry and shed light on awareness, acceptance and confidence on the side of real-world consumers. The provided data was collected from Chinese social media in 2018 and analysed using Anacode’s text analytics technology.[2,3]

A vivid playing field for automotive producers

Both Chinese and international OEMs are motivated to compete for market share and pioneering technology in the EV race. The following chart shows the frequently mentioned players along with their sentiment:

Frequencies and sentiments of OEMs in e-mobility discussions

As expected for an industry with a strong vision and a favourable funding environment, startups were fast to pick up on the NEV wave. In terms of media attention and awareness, these dynamic lightweights compete on a par with the OEM incumbents:

Frequencies and sentiments of startups in e-mobility discussions

Sophisticated PR strategies, fancy concept cars and huge funding rounds generate a lot of buzz around startups. However, when it comes to actual products on the market, the discussion is dominated by NIO along with a range of OEM-produced models:

Frequencies and sentiments of NEV models

The ambivalent perception of Chinese consumers

Putting aside the famous Chinese entrepreneurial spirit, where are down-to-earth consumers on their journey of acceptance for the new technology and its long-term benefits? Are they willing to serve as test bed for technological experiments, pay higher prices and buy into – even temporary – trade-offs in terms of quality and convenience? And, most important, do they actually have trust or sense another bubble coming? To dig into these topics, we created and mined a comparative dataset of random samples of equal sizes (50k posts) relating to NEVs and internal combustion engine (ICE) vehicles. The following chart depicts the general image of NEVs and ICE vehicles:

Comparison of image attributes for NEVs and ICE vehicles

Product quality is the main concern for NEVs, as opposed to ICE vehicles where design is more prominent. In terms of sentiment, NEVs score lower on central aspects such as quality, design and price. These trade-offs can still be acceptable if there is high awareness for the long-term environmental benefits of NEVs. The following charts shows the discussion quantities and sentiments for environmental aspects on the comparative dataset:

Comparison of environment-related discussions for NEVs and ICE vehicles

 

Clearly, environment topics are more relevant to the NEV discussion. The opinions are not always optimistic and, more often than not, critical towards the domestic providers:

你说讽刺不讽刺,宣传“节能”的玩具车,还能呼叫“污染”的燃油车过来给它充电这是传说中的 #蔚来# 产品的移动燃油车充电宝吗? ​

Isn’t it funny that, in order to push their NEV toys, NIO offers a charging service where a non-electric car comes by to charge your “environment-friendly” NEV?

@惊奇大鸟

 

反正我不会买国产新能源汽车,要么丰田混动,要么汽油车。国产上新能源的原因还不是因为攻不破汽油发动机的技术堡垒,没办法无奈之下转型做所谓新能源。目前电池污染的处理根本达不到预计。为了圈钱一窝蜂上去,骗补贴,骗消费者。

I will not buy a domestic NEV. The two options I consider are a Toyota PHEV or a petrol car. Domestic OEMs jumped on the NEV train since they failed to produce high-quality gasoline engines and didn’t really have a choice.  The actual benefits of NEVs for the environment are currently far below expectation. They are just cheating on subsidies and consumers to move the money around.

@毒药Poison-S

Finally, consumer trust is also undermined on the financial level – the topics of excessive subsidies, subsidy fraud and the “burning” of large funding amounts are common topics in the discussions:

大实话!感慨一下,搞发动机变速器搞不出来,想搞电动,结果补贴了这么多钱发现电池、电机和电控顶尖技术都不在国内。

Domestic OEMs are not able to develop high-quality internal combustion engines and transmissions, so they had to switch to electric cars. But after many subsidies, consumers realized that the top technologies for NEV batteries, engines and electronic controls are still not from China.

– @喜欢吉普-男人帮

 

哎,国内没前途,政策跑偏了,补贴了一堆三年后电池没着落的所谓环保的电动车

This country has no future for NEVs. The policy has failed – it has subsidized a bunch of so-called environment-friendly NEVs that will have no market after three years.

@烂木头_Bernese

 

100亿融资还嫌不够,小鹏汽车与蔚来的赌局能赢吗?

10 billion RMB of funding is still not enough for these manufacturers! Can the NEV startup Xpeng win the battle against NIO?

@独角兽早知道

China has set highly ambitious goals for the energy transition and its internal technological development which are highly stimulating for players in the automotive industry. However, to create a sustainable business environment, consumer trust and acceptance have to match up to these ambitions. Once government subsidies decrease and gradually turn into “soft”, non-financial incentives, industry players should be prepared to assume responsibility for product-market fit and convince their customers based on reputation, quality and long-term trust and loyalty.

 

References

[1] CAAM (2018). 2018年10月汽车工业经济运行情况. Retrieved from http://www.caam.org.cn/xiehuidongtai/20181109/1505220056.html

[2] Weibo data 2018 on e-mobility topic. Retrieved from https://www.weibo.com

[3] Anacode GmbH (2018). Anacode MarketMiner: Web-based Text Analytics for International Market Intelligence. Retrieved from http://anacode.de/wordpress/wp-content/uploads/2017/11/Anacode_Technology_Whitepaper_v1.pdf