June 25, 2024

First Washington News

We Do Spectacular General & News

Why more EV brands might not be good business for China automakers

SHANGHAI – While selling electric vehicles under their existing brands, major Chinese carmakers have launched a plethora of new EV marques since last year to fend off competition from Tesla and domestic EV startups. 

A similar brand explosion took place 10 years ago, underscoring how such a tactic could backfire as a brand needs to be nurtured over time rather than built in a haste.

At the Guangzhou auto show last month, Changan Automobile Co. unveiled its EV brand Avatr.

Prior to Changan, four other major state-owned automakers also created new brands for EVs. 

At the Shanghai auto show in April, SAIC Motor Corp. launched IM, the company’s second EV brand following the R marque introduced last year. 

Also last year, BAIC Motor Co., Dongfeng Motor Group and GAC Motor Co. each debuted an EV brand, known as Arcfox, Voyah and Vion, respectively.

Like SAIC, two leading private Chinese carmakers – Great Wall Motor Co. and Geely Automobile Holdings — have unveiled their second EV brands this year. 

At the Guangzhou show, Great Wall launched the Salon. The company’s first EV brand, Ora, was created in 2018.

And in April, Geely revealed the Zeekr, two years after the roll-out of the Geometry.

With initial products featuring rich infotainment functions and advanced driver assistance systems, these new marques are all marketed as premium EV brands, and their owners expect to build presence in the domestic market for smart EVs, dominated by Tesla and startups such as Xpeng, Nio and Li Auto.

SAIC is another example. The state-owned company now markets EVs under its Roewe and MG mass-market brands. This year, it has launched sales of EVs under R, labeled as a premium brand. Next year, the first product — a midsized sedan — is due to arrive in the market under its high-end brand IM.

Can the new brands really help build new business? 

For one thing, traditional Chinese automakers have long been producers of battery-powered vehicles converted from gasoline models. Hence, it takes time for their new marques to win customer recognition as premium EV brands.

Secondly, a multi-brand strategy would stretch thin the engineering and financial resources allocated for each brand at a company, which in turn would affect product quality.

In fact, this is not the first time Chinese carmakers have applied the multi-brand strategy. 

In 2009, Geely and Chery Automobile Co. — a state-owned light-vehicle manufacturer — each created three brands for their gasoline vehicles in an attempt to move upscale in the domestic car market.

Two years later, both companies started to phase out the new brands after product quality problems multiplied to drag down their sales. 

Haste makes waste. That lesson seems to have been forgotten at traditional Chinese carmakers today when it comes to exploring the domestic EV market.