The Chinese electric vehicle (EV) market is highly competitive, making up over 50% of the global EV sales with more than one million EVs sold in 2018. Notable EV brand Nio was listed on the US stock market last year, but its stock price has plummeted due to low sales and high costs. EV startups such as WM Motor (Chinese:威马汽车) see an opportunity to snap up market share. The game is on. Let’s see how these EV brands play it.
Product positioning
Founded in 2014, Nio targets a high-end, niche market, aiming to be the Tesla of China. Its first mass-produced product, the ES8, a 7-seater all-electric SUV, is priced at RMB 448,000 (USD 65,000) and is a high-end product with a relatively small user base. Industry insiders consider the ES8 an uncompetitive product whose limited functionality does not justify its high price. Furthermore, Nio does not even produce its own vehicles. Its EVs are manufactured by Anhui Jianghuai Automobile Group, which complicates Nio’s ability to guarantee the quality of its products. Back in April and June, Chinese media reported three cases of ES8s bursting into flame.
WM Motor (WM stands for WeltMeister) believes in the market potential of smart EVs with all-electric driving capabilities. To them, self-owned production facilities are the foundation for smart manufacturing. In 2017, the company built a facility in Wenzhou that was the first Industry 4.0 smart EV factory in the field. WM Motor has focuses on technology and R&D. Its first model, the EX5, has won an excellent reputation in the EV industry in a short period of time. The founder of the company, Freeman Hui Shen, bases his vision for the EV industry on his firsthand experience working as an executive in leading Chinese and foreign automotive companies including Geely and The Volvo Group. He knows how to build great cars and strong brands.
Under his leadership, WM Motor has its eyes on the mass market and has made its EVs more consumer-friendly. Its primary customers are middle class 21 to 49-year-old Chinese who want to purchase trendy, high-tech vehicles at reasonable prices. The company is known for continuously innovating its technology. This April, prior to the Auto Shanghai show, WM Motor released its Living Motion, Living Engine, and Living Pilot core technologies. Living Motion aims to build highly efficient, adaptable and safe electric engines, IGBT and batteries in a partnership with industry giants such as BorgWarner, Infineon and CATL Battery. The Living Engine uses a voice assistant to help drivers connect with an integrated Internet of Things (IoT) platform which not only improves driving efficiency and safety, but also meets various entertainment needs by integrating popular apps from Baidu, Tencent, and Xiaomi.
WM Motor’s Living Pilot Level 2 automated technology uses data from more than 100,000 hours and eight million kilometers worth of road tests with its partners. An EV with Living Pilot can reach speeds of 130km/h with assisted driving, minimizing fatigue and providing users with easy and safe driving conditions. WM Motor’s Level 2 automated technology has been mass-produced in 2019, making the cutting-edge technology more accessible. The company has established a strategic partnership with Baidu in developing upgraded autonomous driving systems. Its Level 3 automated technology will be rolled out in 2020. Next year, WM Motor will also launch its next-generation chip platform and introduce the Living Engine 3.0 system and smart cockpit compatible with 5G technology.
Market Strategy
The market will not lie about whether a business is succeeding. Despite that Nio’s Q3 sales report showed it delivered 4,799 EVs, a 35% increase from its Q2 sales, Wall Street analysts were reluctant to recommend Nio’s stock. The main reason is that the company’s Q2 financial report showed huge net losses. When Nio (NYSE: NIO) released its 2019 Q2 financial report, its stock price crashed, causing its market value to shrink 70% since it’s IPO. The report revealed its weak sales and high net losses, as it only sold a total 3,553 Nio EVs, including 3,140 ES8s and 413 ES6s. The company’s net losses were twice as high as its revenue: RMB3,285.8M in net losses and RMB1,508.6M in revenue. Li Bin, Nio’s founder, whose background is in building Chinese car trading platforms, has underestimated the difficulty of building EVs. In addition, Nio is losing its lead in R&D. Its Lane Tracing Assist (LTA) driver assistance system was only launched this June.
Nio poured cash into its high-end marketing strategy. Its flagship stores are located in landmark buildings in major cities, such as its Beijing branch in Wangfujing’s Oriental Plaza. Thus, its rent and operating costs are sky high. Nio’s concept is to invest in their high-end stores to display products, provide test drives, and sell EVs. Such a concept may create a unique customer experience, but it is also very expensive. Traditionally, automobile companies have relied heavily on dealers to provide efficient services and sell more cars.
WM Motor’s marketing strategy is sales-oriented, performance driven, and consolidates online and offline methods. The company has built a new retail 4S network to which they have given special names. For example, WM Motor named its flagship stores “Space” centers. Its “Spot” locations are where the company takes care of EV repair and maintenance. So far the company has built four self-operated “Spaces” in three tech hubs, Beijing, Shanghai and Hangzhou while working with smart mobility partners (SMP) to expand its sales networks. As of October 2019, WM had signed 186 sales networks which can cover 111 cities.
Partnerships have also helped WM Motor expand its charging services nationwide. The company pairs with multiple partners including TGOOD and Star Charge, which together have supplied 110,000 charging guns across 189 Chinese cities by September. In the future, WM Motor plans to supply 90,000 charging piles connected with the STATE GRID. Through its GetnGo App, WM Motor will increase the coverage density of its charging pile services. For example, in major cities such as Beijing, there will be a charging pile for WM Motor users every 0.7 square kilometers on average. That means it will only take three minutes for users to reach the nearest charging pile.
Nio is struggling as it faces multiple challenges. WM Motor is building a solid brand with caution and vision. The game is getting heated.
(Top photo from ATA)
