China EV makers to take
on Tesla's Model 3 through price, local manufacture
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[April 19, 2017]
By Norihiko Shirouzu
SHANGHAI
(Reuters) - It's not due to arrive in China until next year, but already
Chinese-funded, smart, connected plug-in car start-ups are scrambling to
launch cars to go head-to-head against Tesla Inc's "mass market" Model 3
sedan.
For leading Chinese electric vehicle (EV) start-ups such as Future
Mobility, WM Motor and Singulato Motors, the key is that they will
produce their cars locally, making them better able to match the Model
3's price.
Tesla, which has largely enjoyed a monopoly in the premium electric car
market, is expected to price its Model 3 from $35,000 in the United
States. Buyers in China would expect to add 25 percent to that in import
tariffs.
The founders and CEOs of Future Mobility, WM Motor and Singulato
acknowledge the Model 3 is the car to beat.
The first vehicles they aim to launch in the next couple of years will
be priced around 300,000 yuan (roughly $43,500) or below, they told
Reuters ahead of the Shanghai auto show, which opens to the public on
Friday.
"Between 200,000 yuan and 300,000 yuan," said Singulato's co-founder and
CEO Shen Haiyin.
The Chinese-funded firms' strategy is to beat the Model 3 in China by
making their cars more premium and yet cheaper than Tesla's mass-market
all-electric battery car.
The three start-ups see California-based Tesla's weakness in its
inability to produce cars in China, the world's leading market for
plug-in cars.
Tesla has denied recent talk in China that it was considering
manufacturing its cars locally. "Tesla is deeply committed to the
Chinese market, however these rumors are not true," the company said.
To be sure, Tesla will be no pushover. It this month overtook Ford Motor
Co in market value as investors embrace CEO Elon Musk's strategy of
offering stylish, high performance cars that are continually upgraded
with features that rival automakers are still only testing.
Tesla has to date competed only in premium price classes at relatively
low volumes. The Model 3 will need to appeal to more price-sensitive
consumers to reach its projected annual sales of 500,000 vehicles.
"COMPETITIVE" PRICING
Daniel Kirchert, president and co-founder of Future Mobility, says his
company plans to launch three models. The first, a premium midsize
crossover sport-utility vehicle (SUV), will arrive "before 2020",
followed within three years by a sedan and a 7-seater multi-purpose
vehicle (MPV).
[to top of second column] |
A prototype of the Tesla Model 3 is on display in front of the
factory during a media tour of the Tesla Gigafactory which will
produce batteries for the electric carmaker in Sparks, Nevada, U.S.
July 26, 2016. REUTERS/James Glover II/File Photo
All
will be based on the same vehicle underpinning architecture and share major
components, "to achieve this very attractive entry price of about 300,000 yuan,"
Kirchert told Reuters in a telephone interview.
"It's a bit more than $40,000, a very competitive price positioning ... because
Tesla customers buying the Model 3 in China would have to shoulder the cost of a
25 percent import tariff on the car", unless it's produced in China, he said.
"We
will be competitive because we produce the car locally," he added.
As well as making its car in China, at a planned assembly plant in Nanjing,
Kirchert said Future Mobility plans to make the SUV bigger than the Model 3 and
more luxurious.
"In the end, it's really about how premium you are. That's the real challenge."
Singulato Motors unveiled its first "mass-production" car, also a crossover SUV,
in Beijing last week, and says it will be priced below 300,000 yuan. It has
started taking pre-orders for a limited period from customers willing to put
down a deposit of 2,017 yuan.
WM Motor plans to launch its first car, an electric plug-in crossover SUV, in
the second half of 2018, again priced to compete with the Model 3, co-founder
Freeman Shen told Reuters.
The car will be the first of three electric vehicles the Shanghai-based firm
plans to launch by 2020, by which time Shen says WM Motor should be selling
around 100,000 cars a year.
WM Motor showed a concept car to reporters on Tuesday in Shanghai, which Shen
said hinted at the mass market model. The company aims to get the car to
showrooms by September 2018.
(Reporting by Norihiko Shirouzu in SHANGHAI, with additional reporting/editing
by Joe White in SHANGHAI; Editing by Ian Geoghegan)
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