Eight Electric SUVs From New Chinese Brands, and One Car Sold Under Four Badges: the Beijing Auto Show Under a New Policy

Automakers take different views of the "new energy" policy, but the market has already been changed.

On Friday, April 27, the first day of "professional visitor day" at the 2018 Beijing Auto Show, Booth 03 in Hall W4 of the New China International Exhibition Center was packed. Everyone was there to see the Tesla Model 3.

This was not the first time a Tesla had driven into the Beijing Auto Show, but it was the first time Tesla the company had appeared there under its own name.

No launch event, and a booth a quarter the size of its peers'. Tesla put out three cars: a red Model 3, a blue Model X, a white Model S. Crowds climbed into the Model 3 to try it out; the Model S and X beside it were ignored.

All of this came a week after a large policy change. On April 18, China's National Development and Reform Commission said it would remove the cap on foreign ownership in new energy vehicle joint ventures before the year was out. The company that loosening affects most is probably Tesla.

A month earlier, Tesla CEO Elon Musk had asked Trump on Twitter: "Do you think the US & China should have equal & fair rules for cars? Meaning, same import duties, ownership constraints & other factors."

Word that Tesla would build a plant in the Shanghai Free Trade Zone had been going around for more than two years. On Tesla's third-quarter earnings call last year, Musk said he expected to start building electric cars in China within three years: "Tesla will build a factory in China, start production in 2020, and reach an annual output of 'thousands and thousands' of vehicles. This is the only way to make Tesla cars relatively affordable in China."

But the plant reportedly went nowhere, mainly because Tesla insisted on owning it outright while Chinese policy required a joint venture with the foreign side capped at 50%.

A tariff change was on the way too — China had already proposed cutting import duties on cars. Under the rules then in force, even if Tesla built electric cars in China on its own, it would still have paid a 25% import tariff.

Now the opening had arrived. But Tesla was not the only one riding in behind the policy.

A Wave of New Companies, Pushed Along by Chinese Capital

At the same time, a crop of Chinese car companies born of investment money turned up at the Beijing Auto Show for the first time — Byton, WM Motor, NIO.

There were so many new brands that Mark Tisshaw, an editor at the British auto website Autocar, told QDaily he had never heard of many of them. He took it as a sign of how hard China is pushing electrification.

These new companies spent freely, booking booths several times the size of Tesla's to show off their cars.

Ask the staff what a car costs, and almost every one of them starts the answer with "after subsidies."

Whichever hall you walked into at this year's show, you found a new energy startup exhibiting.

Across from Hyundai was Aiways, its main stand holding a methanol fuel-cell supercar with a range of 1,000 kilometers. Across from Audi was NIO, whose two-story booth was bigger than Audi's and held six ES8 electric SUVs in different colors. Singulato and WM Motor took the main entrances of Halls E3 and E4; the crowd at WM Motor's stand was far thicker than the one next door at Cadillac.

The new carmakers all said roughly the same thing.

Singulato CEO Shen Haiyin told QDaily that "the new electric car companies are facing a market of 30 million vehicles a year," and that the job at this stage is to teach buyers that "electric cars are more convenient than gasoline cars."

That 30 million refers to China's 2017 vehicle output of 29 million units, passenger and commercial, up 3% year on year. Of those, new energy passenger cars accounted for just over 400,000 in sales; add new energy commercial vehicles and the total comes to a bit more than 700,000.

When QDaily came across WM Motor CEO Shen Hui pitching his cars and his company's prospects at his own booth, the words were almost identical to Shen Haiyin's: "In this 30-million-vehicle market, new energy vehicles are only 700,000 today. Our room to grow is enormous."

The cars are alike too. SUVs are China's best-selling body style, taking a third of national car sales every year. The electric cars these new companies are rolling out come with much the same sales pitch: an electric SUV with five seats or more, an NEDC range of 300 to 400 kilometers, and a spread of electronics — connected-car features, health monitoring, remote control, Level 2 autonomous driving.

Nine electric car startups took part in the Beijing Auto Show. Eight of them — NIO, WM Motor, Singulato, Yudo, Byton, Chang Jiang, Hanteng and Aiways — showed an electric SUV, either in production form or as a concept. The ninth, Qiantu, showed an electric supercar that has little to do with ordinary buyers.

The two biggest problems for electric cars right now are range and price. Tesla held the Model 3's range at 400 kilometers while pushing the price down to around 300,000 yuan.

But the Model 3 is a four-door sedan. Among electric SUVs there was only the Model X, which costs more than a BMW X5, and the Jaguars and Porsches that cost more still.

That gap is the new companies' opening.

Building SUVs lets them serve the body style Chinese buyers like best, and undercut rivals such as the Jaguar I-PACE and the Model X on price. A maturing electric supply chain has also made building a car far less difficult than it once was.

Shen Haiyin told QDaily that Singulato and BAIC will cooperate on technology and jointly develop an electric vehicle platform. Joint development across the industry is a trend, he said, because it spreads the cost. Which means the electric cars buyers get to choose from in the future will most likely share much the same core parts — batteries and motors.

Even the routes these companies take to building cars are converging. At the Beijing Auto Show, Singulato announced a partnership with BAIC New Energy covering design, R&D, manufacturing and sales — though back in 2016 Singulato had announced it would build its own plant in Tongling, Anhui.

Just before the show, Byton held a press conference to announce an agreement with FAW Group on R&D and manufacturing — though in January 2017 Byton had announced it would invest 11.64 billion yuan in a battery-electric plant in Nanjing.

Add NIO, which has announced tie-ups with JAC and then GAC and is rumored to be building a plant in Shanghai. In short, these new car companies either build their own factories, or partner with an established automaker to make cars until their own factory is up and they have a manufacturing license.

The carmakers all know the competition has moved up a level.

Two Cars From One Company, Sold Under Four Badges: GAC, Toyota, Mitsubishi and FCA

There are three cars that are all but identical: the GAC Trumpchi GS4 PHEV, the GAC Mitsubishi Qizhi PHEV and the GAC FCA Yuejie PHEV.

The biggest difference between them is their names. The GS4 PHEV, the Qizhi PHEV and the Yuejie PHEV are in fact the same car. And they will be sold in three different brands' dealerships.

At the Beijing Auto Show we found two of these apparently identical cars, one at the GAC stand and one at Mitsubishi's. Both wore GAC badges front and rear. The only differences were the shape of the taillights and grille, and the maker's name on the tailgate — GAC Trumpchi on one, GAC Mitsubishi on the other. The GAC FCA Yuejie PHEV, which wasn't at the show, is much the same story.

The GS4 PHEV, the Qizhi PHEV and the Yuejie PHEV all launched in 2017. They all come off GAC's own lines, and they all end up in three different brands' showrooms. The show had one more car like this, another double of the GAC GS4 New Energy: the GAC Toyota ix4 EV.

It is a rebadged GAC Trumpchi GS4 EV, a car launched back in 2015 with a claimed range of only 240 kilometers, and whose sales have never been disclosed in the two years since. At the Beijing Auto Show, Toyota promoted this old car as the first battery-electric vehicle from Toyota China.

Early this year GAC said a rebadge much like the ix4 would also go on sale at GAC Mitsubishi. The one purpose of all this selling of one car under many names is to satisfy the Chinese government's dual-credit rules.

Put simply, from April 2018 any automaker operating in China must build enough electric and plug-in hybrid cars. Those cars earn credits calculated from vehicle weight and average energy use, and the credits offset the negative credits a company racks up building gasoline models. If a carmaker doesn't build enough electric cars, it can't sell gasoline cars either.

By 2019, new energy vehicle credits must reach 10% of the fuel-consumption credits for a company's whole fleet. Toyota, Mitsubishi and others short of new energy models of their own are selling GAC's rebadges in their own stores, and it is hard to read that as anything but a way to hit the target.

And 10% is only the beginning.

Toyota is the world's largest maker of hybrids — cumulative hybrid sales, the Prius included, top 10 million cars — and not one of them meets China's definition of a new energy vehicle. Chinese rules require that a "new energy" hybrid have a plug to charge from, even though the plug itself has little technical bearing on whether a car actually saves energy.

The dual-credit scheme is fairly involved. Each gasoline car a company builds is scored on weight, fuel consumption and other factors, and the scores add up to a total fuel-consumption credit for all its conventionally powered cars. Each new energy car is scored on type and performance, and under the new 2019 rules the second number must reach 10% of the first.

For Toyota, a plug-in hybrid Corolla is worth 2 points; a rebadged GAC Toyota ix4 EV is worth 3.6. If Toyota and its joint ventures miss their total at year-end, the penalty is that new gasoline models don't get production approval.

To Please the Chinese Market, Nissan and Toyota Bring "China-Only" Cars

Kazuhiro Kobayashi, head of Toyota's China operations, opened the press conference with sales figures, to make the point that China matters to Toyota: 1.291 million cars sold in China across 2017, up 6.3% year on year, and 320,000 in the first quarter of 2018, up 10%.

Toyota is clearly not happy with those numbers. In 2017 it ranked second in the world with 10.16 million cars sold, a narrow gap behind Volkswagen's 10.41 million. But in China it ranked fourth among foreign brands, its 1.13 million far behind Volkswagen's 4.18 million.

Toyota's answer is more small SUVs and more new energy cars. The stage at its press conference went to two China-only models built to fit China's new energy policy: the plug-in hybrid Corolla and Levin.

While promoting the two cars, Kobayashi quoted his boss, Toyota Motor Corporation president Akio Toyoda: "China matters most."

The plug-in hybrids Toyota is pushing really are unusually important in China. In 2017, in the compact new energy sedan class the hybrid Levin and Corolla sit in, the best seller was the BYD Qin at 20,000 cars, most of them in Shanghai and Guangdong, where license-plate and subsidy policies favor them. Meanwhile the cars these plug-ins are based on — the hybrid Corolla and Levin that can't be plugged in and get no license-plate break — each sold more than 40,000 a year.

From here on, plug-in hybrid Corollas and Levins that satisfy China's new energy policy will bring Toyota not just more sales but more government money: a plug-in hybrid that meets the policy currently draws a 22,000-yuan cash subsidy from the central government, plus a local subsidy of up to half that again.

Kobayashi also said Toyota will launch 10 "electrified" models in China by 2020, plug-in hybrids and EVs, and will localize production of batteries, motors and inverters. Once localized, the batteries qualify for a subsidy scaled to their capacity.

Nissan, in Hall W2, made it plain at this show that its strategy will center on electric cars.

On its stand Nissan showed the Dongfeng Nissan Sylphy Zero Emission. Built on the platform of the Dongfeng Nissan Sylphy compact sedan and drawing on the Leaf, the battery-electric car Nissan launched globally, it is a new energy model developed for China.

Jose Munoz, Nissan's chief performance officer and chairman of its China management committee, said this was the first electric car Nissan has launched under its own brand in China, and that over the next five years the company will launch 20 electrified models across the Nissan, Venucia, Infiniti and Dongfeng brands.

The Sylphy Zero Emission looks much like an ordinary Sylphy apart from the sealed panel where the grille goes. That panel is very close to the one on the Leaf: a reflective material that reads as a solid slab of black from the side, but throws back a blue diamond pattern head-on.

Besides the Sylphy Zero Emission, Nissan had driven three brand-new Leafs onto its main stand. The three, in different colors, carried plates with the car's Chinese name, Lingfeng — but step inside and all three turn out to be right-hand-drive Japanese-market cars. Which suggests the work of bringing this car to China is still at an early stage.

The Leaf is Nissan's veteran electric car; a new generation went on sale in Japan in September 2017. It is still the best-selling battery-electric car in the world by cumulative sales. Nissan announced at the show that it will bring the Leaf to China by the end of this year.

Last May, Ford announced it would cut $14 billion of costs by 2020 and put the money into electric vehicle and autonomous driving research. Afterward, Ford and China's Zotye announced a memorandum of understanding to jointly fund a joint venture that would develop and sell electric cars in mainland China.

Yet the only electric car at Ford's stand was the Mondeo plug-in hybrid, launched at last year's Shanghai Auto Show.

Volkswagen may have the most aggressive electric plan of any big global automaker: $40 billion by 2030 to put more than 300 electric models on sale worldwide, some designed from scratch, others electric versions of existing cars. We couldn't find a new electric model at Volkswagen's stand either.

Volkswagen went to JAC and Ford went to Zotye only after China started paying new energy subsidies. The partners they picked are companies that sell a lot of new energy cars. JAC's and Zotye's micro electric cars grab market share with very basic equipment at fairly low prices; Volkswagen and Ford get, out of these partnerships, the credits that let them keep selling gasoline cars in China.

The Biggest Automakers Are Playing Along With the Policy, Just Not With New Electric Cars

174 vehicles — that's the official count of new energy cars on display at this year's Beijing Auto Show.

But apart from joint ventures like Toyota and Nissan bringing cars aimed at China's electric market, a good number of overseas brands that lead sales at home and in China still care mainly about selling more cars.

Honda, for one, showed the Accord Hybrid, due in the second half of the year, and the Inspire, the Accord's sister model built by Dongfeng Honda — both volume mid-size sedans of the conventional kind. Its only electric car was the Everus EV concept, from Everus, GAC Honda's own brand. It looks a lot like the Vezel, the small SUV Honda builds now, and nothing at all like the electric concept sports cars Honda has shown in Europe.

At the Detroit Auto Show in January, Dieter Zetsche, CEO of Mercedes-Benz parent Daimler, said the company would invest at least $11.7 billion in electric cars and launch 10 battery-electric and 40 hybrid models, with the goal of electrifying its entire lineup. But at the Beijing Auto Show there was no production version of the Generation EQ electric SUV Mercedes showed last year.

What Mercedes promoted instead was the A200L, a gasoline sedan "built specifically for the Chinese market," and an "ultimate luxury Maybach" concept that looks 20 years away from any production line.

The "ultimate luxury Maybach" concept has a strange shape, like a sedan jacked up on stilts, and had never been shown anywhere before. Korean and Japanese reporters were livestreaming in front of it; we caught the words "luxury" and "first time."

On the second floor of the Mercedes stand, several gentlemen carrying neither cameras nor backpacks took a deep interest in the AMG G63 off-roader Mercedes unveiled earlier. They took no photographs. They opened the door and shut it, over and over, marveling at the sound.

An even stranger car drew an even bigger crowd: the BJ80 6x6 at BAIC's stand. It is a huge six-wheel-drive off-roader — six tires, three portal solid axles, body-on-frame — and it looks very much like the Mercedes AMG G63 6x6. The difference is that this BAIC, apparently built for extreme off-roading, has a charging port in its flank, the kind you only find on a plug-in hybrid.

On the show floor, most visitors were still more interested in the traditional luxury brands: Audi, Mercedes, BMW.

But with subsidies, credits and license plates all pushing the same way, the carmakers will have to sell more and more electric cars in the end.

Unless otherwise noted, all photos were taken by QDaily. Banner image by Carlo D'Agnolo on Unsplash.