Wall Street Journal: Foreign Automakers Struggle to Catch Up to Tesla in China

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China’s electric car sales have been booming. According to Trefor Moss at the Wall Street Journal, “Electric cars reached a milestone in the second quarter, capturing more than one-tenth of new Chinese auto sales for the first time. But other than Tesla Inc., foreign makers have failed to convince Chinese consumers that their EVs match the local competition.”

Image courtesy of Tesla

A prime example of this is Volkswagen’s ID.4, considered “an early test of the company’s ability to sustain its China dominance through the electric revolution, and of the public’s readiness to accept VW’s conversion to an EV company.” Thus far, the results have been underwhelming.

“The initial signs should be disconcerting for the German auto maker, said Tu Le, managing director of Sino Auto Insights, a consulting firm. Volkswagen has sold 3,300 ID.4s in its first three months on the market, according to Chinese autos website D1EV,” reports Moss.

When it comes to electric cars, Le says foreign automakers “don’t really understand technology, and they don’t have the software engineers who can build amazing EV products.” In turn, some observers have pointed to the ID.4’s “inability to receive software updates over the air the way models from Tesla [can].”

A look at the EV market in China (YouTube: CNBC International TV)

The big picture? “Global auto makers like Volkswagen, which built their brands with gasoline models, are struggling to repackage themselves as electric-vehicle companies in China, where the market is hurtling toward mainstream adoption of electric cars loaded with digital technology,” reports Moss.

And it’s not just about the software. “Some made the wrong bet several years ago, said Raymond Tsang, a senior partner at Bain & Co. They took the easier option of releasing plug-in hybrid versions of existing models — which mostly sold poorly — while their Chinese rivals were quicker to spot that consumers would gravitate toward discrete pure-electric cars.”

Meanwhile, the adoption of pure-electric cars in China is ramping quickly. Moss reports, “Electric cars accounted for 12% of total passenger-car sales in the second quarter, and first-half EV sales exceeded one million vehicles … [and] other than Tesla, which sold roughly 130,000 EVs in China in the first half, foreign brands barely registered in the country’s EV sales charts.”

“That has left foreign auto makers playing catch-up, putting their strong position in China in jeopardy as sales of their cash-cow gasoline cars dwindle,” reports Moss.

Originally published on EVANNEX.

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