Chinese NEV Customers – Shifting Expectation

New-energy vehicles (NEV) is not a new concept for Chinese consumers with rapid change in the market, according to a research conducted jointly by AutoForesight and KPMG in March 2018 on 150 NEV owners in Beijing, Shanghai, Shenzhen, Hangzhou and Jinan. With a broad range of NEV owners included , the research sheds the lights on three distinct aspects: the transformation of NEV owners’ attitudes, owners’ experiences, and their ensuing impressions of new NEV brands. 

In the same report, KPMG and AutoForesight also interviewed over 382 potential NEV buyers across Beijing, Shanghai, Shenzhen, Hangzhou and Jinan/Qingdao, and to understand the varieties of potential customers’ perception on NEVs.

NEV Owners – higher preference of NEV

As put forth in the research, the attitudes of consumers towards NEV are undergoing a transformation, thus indicating a growing percentage of consumers are willing to purchase NEVs. Among the surveyed consumers, 69% of them claim willingness to purchase NEV, among which 13% are strong advocates. Compared to the research conducted in 2017, the 24% growth rate indicates us that NEVs are becoming more favorable to consumers. 

Rather than license plate and government subsidy, NEV usage reality appears to be a more significant factor for NEV consumers, who show their interests in NEV’s environmental-friendly nature such as fuel-saving and emission reductions. Additionally, the quality of vehicle itself is not the only concern for Chinese consumers anymore like decades ago. Vehicles’ safety performance and warranty periods are also frequently mentioned by NEV owners.

While technology is pouring in the automotive industry and provides new perspectives to consumers, NEV owners become more realistic as they prefer blind spot monitoring and automatic parking instead of automatic driving, which is too far to realize relatively. It is believed that the concept of car ownership is changing as 74% of owners are willing to use their cars for ride sharing while last year over 50% of people would say no to ride sharing in their own cars.

As for NEV owners’ experiences, most complaints come from driving range and few charging piles. NEV owners find it acceptable that the NEV price is just 5%-25% higher than ICE car and they are more inclined to purchase NEV in full payment. Two traditional Chinese NEV manufacturers enjoy highest popularity among NEV owners due to high brand awareness and high OEM reputation.

67% of people charge in the community and 29% of them expect the quick charge to be within 0.5 hour while 31% expect it to be at 0.5-1 hour, while in the previous research, 51% of people expect the quick charge to be within 0.5 hour. Noticeably, NEV owners seems to have lowered their mileage and speed expectation. 28% of NEV owners, the highest percentage, expect driving range to be at 251-300 km while 42% of people preferred 301-400km last year. Most NEV owners expect highest speed to be 100km/h and 130-140 km/h while the highest speed expectation of previous survey turns out to be 120-150 km/h, mostly at 140-150 km/h. The lower expectations are mainly from more entry-level mini-EV owners in Jinan and Hangzhou.

Regarding new NEV brands, most owners are unfamiliar with brand names, with two new NEV entrants enjoy high brand reputation, and one is marked by novel product design. 95% of NEV owners are willing to purchase new NEV brand models, and they expect new NEV brands with high quality, novel design and professional services.

Potential Customers – more positive perception of NEV

Chinese NEV potential consumers show increasingly positive perception towards NEV. Despite the perception on potential NEV buyers has not being changed much comparing to last year, more consumers see NEV as normal as a conventional. With 67% commuting up to 20km per day from home to work as well as a 51% weekly travel distance between 50km and 200km, NEV is a reasonable alternative. Main factors for potential buyers remain unchanged: cost saving (47%), contribution to environmental friendliness (31%), government subsidy and access to license plate (combined 43%) are amongst the main reasons for a NEV purchase. Interestingly, charging does not seem to be a huge concern for potential buyers.

When potential customers considering purchasing the first vehicle, five of the top six most recognizable brands among potential buyers are Chinese and one from the US, while a number of new generation domestic brands are also shaking up the market. Even though the newcomers have yet to create a strong brand identity, the survey findings revealed that the majority of respondents (78%) are willing to buy from them.

Brand awareness appears as the dominant criteria to potential customers - far beyond technical reputation or high service efficiency

The heightened competition could spark new and innovative business models. Almost 58% of potential buyers are open to purchasing an NEV without a battery and are receptive towards renting one instead. Moreover, an increasing number of potential buyers are interested in purchasing NEVs via electronic means (9.2%) although retail stores remain the dominant sales channel. BEV is the most popular vehicle type within the market, with 82% of potential buyers willing to buy one as their first vehicle.

High expectations for innovation & technology

The future of China’s NEV market is to be shaped by innovation and technology. While there are still shortcomings in the technology and infrastructure surrounding NEVs, such issues will be resolved as the market continues to mature and develop. Moreover, with China already boasting the world’s largest NEV market, Chinese automakers have the advantage to position themselves as the leaders of the new age of digital mobility.

The article is written by

Huu-Hoi Tran

Partner | Head of Automotive Sector

KPMG Advisory (China) Limited

Yale Zhang

Managing Director

Automotive Foresight (Shanghai) Co. Ltd.