THEROADTOSUCCESSINCHINA’SELECTRICVEHICLEMARKETJune2022Theautomotivefutureiselectric–butnotjust.Whatappearsatthesurfacetobeamereswitchfromtraditionalfuel-basedpowertraintoelectrictechnology–NewEnergyVehicles–isinrealitythebeginofasubstantialchangeoftherolethatthecarplaysinpeople’slives.Inessence,thecarchangesfroma‘meansoftransportation’toan‘enablerofindividualmobility’.NowherecanthistransformationbeobservedmoreimpressivelythaninChina.Withinashortperiodoftime,mainlandconsumershaveconvertedfromrathertraditionalstatus-orientedbuyerstotrailblazersofdigitaladoption.Theyarebeingcourtedbyaplethoraofplayersinthemarket,fromlegacycarmakerstonewstartupstotechcompaniesenteringthefield.China’smarketforelectrifiedpassengervehicles,notablyBatteryElectricVehicles(BEV),haspassedthetippingpointwheregovernment’spushthroughstimulusmeasureshasresultedinaconsumerdemandpullthatisexpectedtodrivesteepgrowthinthefuture.Astheworld'slargestBEVmarketmovesintothemainstream,sustainablesuccesshasbecomenothinglessthananexistentialquestionforallmarketparticipants.Thiswhitepaper,thefirstinaseriesofquarterlywhitepapersinthecourseof2022,considerstheopportunitiesandchallengesinthisalreadyhighlycompetitiveBEVmarketandshowsactionablestepsforstakeholderstosuccessfullyaligntheirmarketingstrategiestotheneedsofprospectivecustomers.2TheroadtosuccessinChina’sEVmarketChina’sNewEnergyVehicle(NEV)market-Fromgovernmentpushtodemandpull-China’sNEVmarketcharacteristics-Batteryelectricisthefuture4FocusonBEVcustomers-Spendingpattern-AppusageFutureopportunitiesintheBEVmarket-Geographicalobservations-Spendingcategoryinsights-Appbehaviouraspects-Thenotionofpremium7172011ConclusionsReferencesAboutdentsuChinaAboutMaLogic3TheroadtosuccessinChina’sEVmarketContentChina’sNewEnergyVehicle(NEV)marketFromgovernmentpushtodemandpullThefirstnotableeffortstocreateastrongNEVmarketinChinadatesbackto2010whentheCentralGovernmentlaunchedapilotprograminfivecitiestopromotethesalesofplug-inhybridvehicles(PHEVs)andbatteryelectricvehicles(BEVs).Inthecourseofthefollowingdecade,thestructuralbasisofthemarketwascreatedbycomprehensivesupportactivitiesconsistingofinvestmentprograms,regulations,subsidies,purchaseincentivesandotherstimulusmeasures.Theseculminatedintheinclusionofnewenergyvehiclesandintelligent(connected)vehiclesasfocussectorstoincreaseglobalcompetitivenessinthe14thFive-Yearplan(2021-2025).In2018,NEVsalessurpassed1millionunits,accountingforhalfofallglobalNEVsales.ThishasenabledChinatoclaimtheundisputedtopspotintheworld.Thisperiod,withBYDtoppingthelistwithnearly250,000NEVssold,alsoheraldsthecriticaltransitionfromfleetbuyersoperatingthesevehiclesprimarilyfortheirride-hailingservicestoindividualcarbuyers,andissignificantlymarkedbythearrivalofTesla'slocalShanghaimanufacturingbaseandthesubsequentriseoflocalstartupslikeNio,XpengandLiAuto.Fastforwardto2021,China'sNEVmarketasreachedanothermilestonebyexceedingthe3-million-unitmark.Themarketisnowbelievedtohavepassedaninflectionpointtosustaingrowthwithoutsubstantialpublicstimulusmeasures.Whilepurchaseincentiveshavebeensignificantlyreducedandaresettobephasedoutbytheendof2022,theNEVmarketisexpectedtogrowstronglythisyearandwillcontinuetogrowinthecomingyears.Althoughrecentpricehikesduetorisingcommoditypricescouldaffectsomeprice-sensitivebuyersoflow-coselectricvehicles,thereisaconsensusamongfinancialanalyststhatastructuralimpactonfuturedemandisunlikely.4256431TheroadtosuccessinChina’sEVmarket1,2601,1801,3703,3345,50010,0005.3%5.5%6.8%15.5%24%40%0%10%20%30%40%02,0004,0006,0008,00010,00012,00014,00020182019202020212022…2025NEVshareChinaAnnualNEVsalesin‘000DeutscheBankestimation23.7m21.4m20.2m21.5m.AnnualPVsalesinChina23mest.China’sNEVmarketdevelopmentChina’sNEVmarketcharacteristicsThenumberofNEVssoldin2021roughlycorrespondstothetotalsalesofnewpassengervehiclesin2005.Then,onlyahandfulofcarmakers,mostlyforeignJointVenture(JV)companies,dominatedthemarket.China’sNEVmarkettoday,albeitinrelativelyearlydevelopmentstage,isalreadyhighlycompetitiveandshowsanotabledegreeofsophistication.Infact,China’sNEVsectorcanbebrokendowninto3quitedifferentgroups.AroundaquarterofallnewNEVmodelsareplug-inhybridsorbatteryelectricversionsofcombustionenginecars.Thesemodelsrepresentearlygenerationsofelectrifiedofferingsthatappealtomorerationalvehiclebuyerswhocanbenefitfrompurchaseincentivesandgreenlicenseplates.AwhoppingthirdoftheNEVmarketconsistsofMiniBEVs.Theseinexpensiveandno-frillscarsofferalow-costentrypointintovehicleownership,areidealforcommutingandappealprimarilytothefemaletargetconsumers.Thistypeofvehicleshasbenefittedfromhealthconcernsduringthepandemicastheyprovideanaffordable,yetsafeandcomfortablealternativetothenotoriouslycrowdedpublictransportsystem.CompetitioninthisMiniBEVsegmentissettoremainexclusivelyChinese,asforeignautomakers–apartfromGM,Wuling'sJVpartner–willnotbetookeenonthislow-marginbusiness.5TheroadtosuccessinChina’sEVmarketJVbrandsaremorelikelytotargetthethirdNEVsub-segment,consistingofsmartICVsaswellasotherBEVbrandsandnewlydevelopedelectricvehicles.Muchofthedynamicisdrivenbyanewbreedofstartupbrandswhichoffertheirusersamorebroadlydefinedapproachtomobilitywithawholerangeofconnectivityandotherdigitalservices.Technologicalinnovationisoneofthepredominantpurchasedriversforcustomersinthissegmentofthemarket.Withafewexceptions,notablyGermanOEMs,internationalJVbrandsarestilllargelyabsentfromthissmartBEVsegment.6BatteryelectricisthefutureConsideringthatChinaistheworld'slargestautomarket,itsgovernment'sdeterminationtofurtherstrengthentheroleofNEVs,thedynamicmarketenvironment,aswellasastillhugepent-updemandforvehicleownership,athoroughChinastrategyisforeveryautomakerindispensable.Whileplug-inhybridelectricvehicles(PHEVs)aresoughtafterbysomecarbuyers,thereareindicationsthatthelonger-termfocusshouldbeonbatteryelectricvehicles(BEVs):Eightoutof10newenergyvehiclessoldin2021wereBEVsShanghaiasoneofthecitieswithpassengervehicleregistrationrestric-tionshasselectedBEVsforpreferentialtreatmentbybanningPHEVsforissuinggreenlicenseplatesstartingin2023;thismaybeablueprintforotherregionsChina’scharginginfrastructureiswelldeveloped;bytheendof2021,thecountryhadcloseto75thousandchargingstationsproviding~2.6millionchargingpiles;inaddition,carmakersincreasinglyinvestintheirowncharginginfrastructure(e.g.Nio)Chinaisleadinginbatterytechnology,andhaswithCATLandBYDtwostrongplayersinthefieldwithhighR&Dpotential7891011TheroadtosuccessinChina’sEVmarketFocusonBEVcustomers7TheroadtosuccessinChina’sEVmarketCurrentbuyersofnewBEVsbelongtothegroupofearlyadopterswhoshapepurchasetrendsandhelpustoanticipatefuturebuyingbehaviourpatterns.IfweacceptthenotionthatNewMobilityismorethanthemeretransitionfromvehicleswithinternalcombustionengines(ICE)tobatteryelectriccars,theideaofwhatmotivatesconsumerstochooseaBEVtakesonanewandmuchwiderdimension.UnderstandingtheconsumptionchoicesofBEVbuyersatabroaderlevelcantellusalotabouttheirbehaviouringeneral,abouttheirpreferencesandtheirpriorities.This,inturn,willinformmarketersaboutappropriateareastoconnectandrelevanttopicstoengagewiththem.Unliketheconventionalpassengervehicle(PV)market,whichischaracterizedbyastrongpositionofinternationalJVbrands,China’sBEVmarketislargelydominatedbyChineseplayerswhichcontrolatleast75percentofthissegment.12The2021consumptionanalysisofChineseBEVbrandbuyers,basedonspendingdatafromUnionPayandAppusageinformationfromTalkingData,givesusagoodinsightintotheconsumptionbehaviourofthisparticulartargetaudience.SpendingpatternWalletdistributionDailylivingexpenses,abroadcategorythatincludesallkindsofdailynecessities,suchassupermarkets,grocerystores,departmentstores,etc.Automotiverelatedexpenses,e.g.carpurchase,carservicing,autoparts,etc.Thepatternoftheremainingwalletallocationcharacterizesthemasactiveconsumerswhopursuearather‘pleasure-oriented’consumptionbehaviour.Theirpurchasesrangefrombuyingallkindsofgoods(e.g.Home-decoration,Fashion,Jewelry,Electronics),goingtorestaurantsandcoffeeshops(includedinCatering),enjoyingcinemaandkaraoke(includedinEntertainment),andengaginginsportsactivities(includedinHealth),totraveling.8Theanalysisshowsanotablecorrelationbetweenthedifferentcategories,underscoringthefactthatbuyersofChineseBEVbrandsareactivelycateringtoawiderangeofdifferentconsumerneeds.Acrossallspendingcategories,buyersofChineseBEVbrandsspendanaverageof4,125RMBoneachpurchase.TheroadtosuccessinChina’sEVmarketFinancerelatedexpenses,includinginsurance,investments,etc.Datasource:UnionPayspendingdataChina2021RegionaldistributionCity-tierdistributionMostoftheconsumptionisconcentratedinthenorthernandeasternregions,whilethecentralandsouthernregionslagbehindsignificantly.Thedistributionofspendingiscomparableacrossregions,yetper-unitspendingishighestintheEast,whilebuyersofChineseBEVbrandsinCentralandSouthChinaspendlessonaverage.ThetopfourmetropolitanareasofBeijing,Shanghai,GuangzhouandShenzhenaccountforaquarterofallspending,asdothegroupofnewemergingcities(referredtoasTier2+)andallTier2cities.Tier1ChineseBEVbrandcustomersfaroutspendtheirpeersfromothercitiesintermsofaveragepurchaseamount,whileChineseBEVbuyersinlower-tiercitieshavemuchlowerpurchasingpower.9TheroadtosuccessinChina’sEVmarket4,1254,0194,6463,7163,74836%35%15%14%0%01,0002,0003,0004,0005,0006,000TotalNorthEastCenterSouthSpendingdistributionofChineseBEVbuyers–byregionsAveragespendingamount(RMB)ShareoftotalspendingNorth:Beijing,Hebei,InnerMongolia,Shanxi,TianjinHeilongjiang,Jilin,LiaoningGansu,Ningxia,Qinghai,Shaanxi,XinjiangEast:Anhui,Fujian,Jiangsu,Jiangxi,Shandong,Shanghai,ZhejiangCentral:Henan,Hubei,HunanSouth:Guangdong,Guangxi,HainanChongqing,Guizhou,Sichuan,Tibet,YunnanDatasource:UnionPayspendingdataChina20214,1255,5224,4684,1563,4203,4033,27825%26%23%13%9%3%0%01,0002,0003,0004,0005,0006,000TotalTier1Tier2+Tier2Tier3Tier4Tier5SpendingdistributionofChineseBEVbuyers–bytiersAveragespendingamount(RMB)ShareoftotalspendingTier2+:Dalian,Shenyang,Tianjin,XianNanjing,Ningbo,Qingdao,Xiamen,Suzhou,Wuxi,Wuhan,ChangshaChengdu,ChongqingDatasource:UnionPayspendingdataChina2021AppusageChineseconsumersuseawidevarietyofdifferentapplications(apps)ontheirmobiledevices.Unsurprisingly,theappsmostcommonlyusedbybuyersofChineseBEVbrandsaresocialcommunicationtoolsWeChat(~98percent)andQQ(~76percent)andmobiletoolAlipay(~84percent).OnlineshoppingplatformssuchasTaobao,Pinduoduo,MeituanandJDarealsoverypopularwithwellover50percentpenetration.Manyofthepopularappscatertospecificinterests,thereforeitisimportanttoevaluatehowwelltheyarebeingreceivedbytheirtargetaudience.Thiscanbedonebyanalysingtheirtargetaudienceindex(TGI).Inshort,theTGIindicatesthepenetrationofanappamongitstargetusers,withahigherscoreindicatingabetteracceptanceoftheapp.14TheroadtosuccessinChina’sEVmarket10Alookatthe100mostpopularappsusedbybuyersofChineseBEVbrandsshowsthatamongthetop15intermsofTGI,11areappsrelatedtofinancialservices.Topofthelistiscarservicesapp平安好车主(pinganhaochezhu),aone-stopserviceplatformthatprovidescomprehensiveservicingaroundthecar,frominsuranceandroadrescuetoparkingpaymentandemergencypowerconnection.Datasource:TaklingDataappusageChina2021,100mostpopularappsCategoriesofTop15AppswithhighestTGI–ChineseBEVbuyers11…numberofapps(361)…TGIvalueFinancialmanagement,11(266–1054)Mobiletool,2(269-279)Carservices,1(361)Travelservices,1(303)GeographicalobservationsFutureopportunitiesintheBEVmarketInordertoassessfutureopportunitiesontheBEVmarket,itisusefultocomparethepurchasebehaviorofcurrentBEVbuyerswiththatofcarcustomersasawhole(generalPVbuyers).ThisenablesustounderstandcommonalitiesandpointsofdifferentiationforfurtherrefinementoftheBEVstrategyinrelevantaspects.ConsumptionpatternsofbuyersofChineseBEVbrandsarecomparedtothepurchasebehaviourofbuyersofChina’stop15passengervehiclebrands.Intermsofregionalwalletshare,spendingofChineseBEVbuyersintheEastandtheSouthisunderrepresented.ThisindicatesacertaindevelopmentpotentialforBEVpenetrationintheselocations.Thisappearstobeparticularlytrueintheeconomicallyadvancedeasterneasternregion,whichlagsbehindby8percentagepoints.Inotherwords,thegapiswidestinthosemetropolitanareasthathavepassengercarregistrationrestrictionsinplace,thatfavourthepurchaseofnewenergyvehicles,astheyreceivepreferentialtreatmentinlicenseplateassignments.1115TheroadtosuccessinChina’sEVmarket28%43%10%20%36%35%15%14%0%NorthEastCenterSouthTop15PVbrandsChineseBEVbrandsDatasource:UnionPayspendingdataChina2021GeneralPVbuyersvs.ChineseBEVbuyers–byregionShareofwallet33%26%26%11%4%1%25%26%23%13%9%3%0%Tier1Tier2+Tier2Tier3Tier4Tier5Datasource:UnionPayspendingdataChina2021Top15PVbrandsChineseBEVbrandsGeneralPVbuyersvs.ChineseBEVbuyers–bytiersShareofwalletSpendingcategoryinsightsAlookattheaverageper-unitpurchaseamountsshowsconsistentlyhigherspendingacrossallregionsandcitytiersbygeneralPVbuyerscomparedtobuyersofChineseBEVbrands.ThemostnotablegapisfoundintheeasternregionandinTier1cities.ThisisanindicationthatgeneralPVbuyershavegreaterpurchasingpowerthanbuyersofChineseBEVs,withthelattermostlikelybeingmorepriceconsciousthantheformer.InrelationtotheBEVmarket,thismeansthatthecurrentChineseproductrangetendstoservethelowerandlowermiddlemarketsegment.Inotherwords,themiddleanduppermiddlesectionoftheBEVmarket,wherewecanexpectfuturemainstreammarketgrowth,appearsstilltobelargelyuntapped.ThelargestspendingcategoriesforgeneralPVbuyersareidenticalwiththoseofChineseBEVbuyers.Nevertheless,ashiftintheweightingofexpendituresisnoticeable.CaraswellasfinancerelatedcostsofgeneralPVbuyerstakeupamuchlargerwalletsharethanthatofChineseBEVbuyers,whilethedailylivingexpensesarecomparativelylower.12TheroadtosuccessinChina’sEVmarket5,3187,8694,6144,6124,5894,4494,2244,1255,5224,4684,1563,4203,4033,27801,0002,0003,0004,0005,0006,0007,0008,0009,000TotalTier1Tier2+Tier2Tier3Tier4Tier5Top15PVbrands(inRMB)ChineseBEVbrands(inRMB)Datasource:UnionPayspendingdataChina20215,3184,7496,9704,0954,7794,1254,0194,6463,7163,74801,0002,0003,0004,0005,0006,0007,0008,0009,000TotalNorthEastCenterSouthGeneralPVbuyersvs.ChineseBEVbuyers–AveragespendingByregionBytiersGeneralPVbuyersvs.ChineseBEVbuyersWalletshare–Top320%14%16%11%29%29%DailylivingFinancerelatedCarrelatedDatasource:UnionPayspendingdataChina2021Top15PVbrandsChineseBEVbrandsThisisinpartduetosignificantlyhighervehiclepurchasecostsforgeneralPVbuyers,whoserelatedspendingisonaverage50percenthigherthanthatofChineseBEVbuyers.Intermsofbroaderconsumerbehaviour,generalPVbuyersseemtoplacemorevalueonlargerticketpurchases(e.g.realestate,jewelry,etc.).Inviewoftheoverallhigherpurchasepowerofthisconsumergroup,thisiseasilycomprehensible.TheabovesuggeststhatthewalletallocationofChineseBEVbuyersmaydifferfromthatofgeneralPVbuyersduetobudgetconstraints,buttheunderlyingconsumptionstructurebetweenthetwoconsumergroupsremainsfairlysimilar.Theindicatedserviceindustrycategoriesappeartoberelevantareastoengagewithcustomers.13TheroadtosuccessinChina’sEVmarketLookingattheimportanceofthedifferentspendingcategoriesinconsumers’wallets(reflectedbytheirrespectiveranksinthewalletallocation)itappearsthatgeneralPVbuyersareexhibitingmanyofthesamebehavioursasChineseBEVbuyers,notablyintheserviceindustry:VisitcoffeeshopsandrestaurantsEngageinsportsactivitiesTravelEnjoycinemaandkaraokeGeneralPVbuyersvs.ChineseBEVbuyersWalletallocation–GapanalysisDatasource:UnionPayspendingdataChina202111-220-2020-200CarrelatedFinancerelatedDailylivingRealEstateCateringindustryHomeHealthJewelryTravelFashionEntertainmentElectronicequipmentMoreimportantLessimportantAppbehaviouraspectsThegeneralappusagebehaviorofChineseBEVbuyersisalsocomparabletothatofgeneralPVbuyers.Utilisationofbroaderappcategoriesisprettymuchthesame,withoverallspeakingcommunicationtools(e.gWeChat,etc.),mobiletools(e.g.Alipay,etc.)andmobilevideo/musicaudio(e.g.Youku,QQmusic,etc.)takingthetopspotsintermsofreachandTGI.Differencesareinthedetails.Alookatthetop15appsusedshowsthattheappvarietyiswideramonggeneralPVbuyers,whilebuyersofChineseBEVbrandstendtofocusononecategory,namelyfinancialmanagement.Thispointstothecentralroleoffinancialresourcesincoveringtheirconsumptionneeds.TheaverageTGIscoreamongthetop15appsforgeneralPVbuyersismuchlowerthanthatforChineseBEVbuyers(236vs.429).Thisunderscorestheimportanceofprecisetargetingtogetthebestresults.14TheroadtosuccessinChina’sEVmarket2111511121131Top15PVbuyersChineseBEVbuyersTravelservcesMusicAudioMobilevideoMobiletoolFinancemanagementDomesticservicesCateringservicesCarservicesDatasource:TaklingDataappusageChina2021,100mostpopularappsCategoriesofTop15AppswithhighestTGIThenotionofpremiumAparticularlypromisingsegmentwithintheBEVmarketaresmartICVs(IntelligentConnectedVehicles),inwhichthenewstartupcompaniesareactive.Someofthemdefinethemselvesaspremiumbrands.GiventheoverallpositioningofChineseBEVbrandsinthelowermid-tieroftheautomotivemarket,thequestionarisesastohowbuyersofICVbrandscomparetobuyersoflegacypremiumcarbrands.Toanswerthis,thepurchasebehaviourofbuyersofthe6ChinesestartupbrandsNio,Xpeng,LiAuto,Neta,LeapmotorandWeltmeister(collectivelyreferredtoasICV6)iscomparedtothebuyersofthemostprominentpremiumcarbrandsinChina,BMW,Mercedes-BenzandAudi(collectivelyreferredtoasBBA).SpendingpatternofICV6buyersindicatesthattheirpurchasebehaviourismorecomparabletonon-premiumcarbrandbuyersthantothatoflegacypremiumbrandbuyers.Theirper-unitaveragespendingamountismoreorlessonparwithnon-premiumcarbuyers.Incidentally,theaverageamountforvehiclepurchaseisalsoalmostthesameasthatofnon-premiumcars,whileitisonlyhalfthatofpremiumcars.CategoryspendingconfirmsasimilardemandstructurebetweenbuyersofICV6brandsandnon-premiumbrandbuyers,whichoverlapinmostrelevantcategoriesintermsofimportanceintheirrespectivewallets.15TheroadtosuccessinChina’sEVmarket5,3184,9286,8514,1254,99901,0002,0003,0004,0005,0006,0007,0008,0009,000Top15PVbrandsNonpremiumbrandsPremiumBBAbrandsChineseBEVbrandsICV6brandsDatasource:UnionPayspendingdataChina2021(inRMB)00001-1010-100Premiumvs.ICV6buyers1-1001-1011-200CarrelatedFinancerelatedDailylivingRealEstateCateringindustryHomeHealthJewelryTravelFashionEntertainmentElectronicequipmentWalletallocation–GapanalysisNonpremiumvs.ICV6buyersMoreimportantLessimportantPassengervehiclebuyers–AveragespendingThisraisestheinterestingpointaboutthenotionofpremiuminChina’sBEVmarket.Astheanalysisofpurchasebehavioursuggests,theunderstandingofpremiumnolongerprimarilyreferstoahighercarpricelevelandelevatedproductqualityalone.Rather,digitalfeatures,connectivityservicesandarichervehicleexperienceoverallbeyondjustdrivingseemstohavecontributedtoanewdefinitionofpremium.Thisredefinitionharboursopportunitiesandrisksforbothlegacypremiumbrandsandnewstartups.Legacypremiumcarmakersfacethechallengeofincorporatingeverchangingcustomerneedsandexpectationsintotheirstrongbrandproposition.Startupsneedtotranslatetheirdisruptiveproductandserviceoffersintoacompellingbrandpromise.Consumerchoicesandconsumptionbehaviouringeneralwillgivecriticalunderstandingoftheirtargetmarkettoboth.16TheroadtosuccessinChina’sEVmarketDespiteamultitudeofmarketplayerssteppinguptheiractivities,competitionforChina'smainstreamBEVmarketisjustbeginningSpendingbehaviouridentifiestheserviceindustrycategoriesasrelevantareasforinteractingwithBEVprospectsSpendingfiguresshowthatbuyersofChineseBEVbrandshavelesspurchasingpowerthangeneralPVbuyers.ThisleadsustobelievethatthecurrentrangeofdomesticBEVbrandsisgearedtowardstheneedsofaclientelewitharathermoderateincome.Whileafewofferingsexistatthetopendofthemarket,thelargemid-rangeoftheBEVsector,whereweexpectsignificantgrowthinthefuture,isunderserved.TheanticipatedriseofthelucrativemiddlesegmentoftheBEVmarketoffersawealthofopportunitiesforinternationalJVbrandsthatarelateinenteringtheBEVgame.ButitalsoopensupfurtherpossibilitiesforChineseautomakerstouptheirgameandtakethecompetitiontothenextlevel.Theyhavemadeemarkablestridesinproductdesign,qualityandbrandinginthepastandcanbenefitfromtheirrecentNEVexperience.Consumerscatertoawiderangeofdifferentneedsastheyspendinvariouscategories.Inadditiontobuyinggoods,Chineseconsumersindulgeinpleasantexperiencessuchasvisitingrestaurantsandcoffeeshops,goingtothecinemaandkaraoke,engaginginsportsactivitiesortraveling.ThepurchaseanalysisrevealsthatseveralserviceindustrycategoriesaccountforahigherproportionofthewalletsofChineseBEVbrandbuyersthanthoseofgeneralPVbuyers.Atthesametime,car-relatedexpenses,whileimportantoverall,accountforamuchsmallerproportion.Conclusions17AlookatthedistributionofspendingattheregionalandcitylevelsshowsthatspendingbyChineseBEVbuyersisunderrepresentedintheeasternandsouthernregionsandTier1cities.Theseregionsareamongthosewiththehighestpurchasingpower,though.Thissuggeststhatcompetitionwillbemostintensethereandwillrequirespecialattention.TheroadtosuccessinChina’sEVmarketAnalyzingtheconsumptionbehaviourofChinesecarbuyersofferssomerelevanttakeaways:Incorporatingappsintothemar-ketingmediastrategyrequiresprecisetargetingUserexperienceseemstobecomethenewpremiumforBEVsIndeed,judgingbytheirpurchasingbehavior,currentbuyersofChineseBEVscanbedescribedaslesscar-enthusiasticandmoreshopping-orientedthangeneralbuyersofPVs.Thiscouldconfirmthegeneraltrendthatthecarperseasaproviderof"physicalmobility"willbelessasourceofrevenueinthefuture,whilenewoffersof"digitalmobility"willgaininimportance.Therefore,itisallthemoreimportanttounderstandthenotionofexperienceforprospectivecustomersandultimately“pickthemup”fromwhereitisrelevantforthem.Inadditiontosomepopulargeneralinterestappswithveryhighreach(likeWeChat,Alipay,QQ,etc.),Chineseconsumershaveavarietyofspecialinterestappstochoosefrom.Justasitisimportanttounderstandthenotionofpurchaseexperienceforbuyingbehaviour,itisessentialfortheevaluationofappstoidentifythepersonalinterestsoftargetcustomers.customers.Onlyappswithanoptimizedbalanceofreachandtargetgroupefficiencyareidealvehiclestoreachpotentialcustomersforprecisecommunication.Asshownbythespendingpatternsofbuyersofthe6ChineseICV(IntelligentConnectedVehicle)brands,theirpurchasingbehaviorismorecomparabletothatofnon-premiumcarbuyersthantothatoflegacypremiumcarbuyers(eventhoughsomeoftheICVbrandsdefinethemselvesaspremium).SpendingamountssuggestthatpremiumcarbuyersaremoreprosperousthanthebuyersoftheseICVs.Serviceindustryspendingoncatering,entertainment,healthandtravelaccountsforalargerproportioninICVbuyers'walletsthanpremiumbrandbuyers.Thisagainpointstothenotionofuserexperiencewithinthewiderconsumptionbehaviour,whichnodoubtextendstothepurchaseanduseofvehicles.ChineseBEVbuyersareshowinggreatinterestinfinancialmanagementapps,whichislikelyduetotheirconsumptionplansdespiterelativelylowerpurchasingpower.ForgeneralPVbuyers,therangeofappcategoriesismuchwider.18TheroadtosuccessinChina’sEVmarketInsummary,theanalysisofconsumerspendinghighlightstheimportanceofunderstandinggeneralpurchasingpatternsinordertoanticipatevehicleexpectationsinthebroadercontextofchangingconsumerbehaviour.AdetailedlookatthespendingbehaviourofpotentialcustomershelpstopavethewaytosuccessfulcompetitionintheBEVmarket.19TheroadtosuccessinChina’sEVmarketReferences20TheroadtosuccessinChina’sEVmarketChinaAnnouncesPlantoSubsidizeEVsandPlug-inHybridsinFiveMajorCities,https://web.achive.org/web/20100605040731/http://blogs.emunds.com/greencaradvisor/2010/06/china-announces-plan-to-subsidize-evs-and-plug-in-hybrids-in-five-major-cities.htmlOutlineofthePeople'sRepublicofChina14thFive-YearPlanforNationalEconomicandSocialDevelopmentandLong-RangeObjectivesfor2035,http://www.gov.cn/xinwen/2021-03/13/content_5592681.htm2018NEVsalestargetcompletion,http://autonews.gasgoo.com/china_news/70015639.htmlChinaautosalesup3.8%YoYin2021,https://autonews.gasgoo.com/china_news/70019541.htmlDeutscheBankexpectsBEVsalesinChinatoreach5millionunitsnextyear,https://cnevpost.com/2021/12/13/deut-sche-bank-expects-bev-sales-in-china-to-reach-5-million-units-next-year/FitchsaysChinaEVdeliveriestoremainstrongdespiterisingprices,https://cnevpost.com/2022/04/04/fitch-says-chi-na-ev-deliveries-to-remain-strong-despite-rising-prices/Chinaautosalesup3.8%YoYin2021,https://autonews.gasgoo.com/china_news/70019541.htmlShanghaiNEVdevelopmentpoliciesshowfuturepreferencetoBEVindustry,https://autonews.gasgoo.com/m/70018118.htm-l#:~:text=However%2C%20the%20Shanghai%20Plan%20clearly,the%20development%20of%20PHEV%20industryChinahas2.617millionEVchargingpilesbyendof2021,https://autonews.gasgoo.com/new_energy/70019543.htmlNIOreportedlyintalkstolicensebatteryswaptechnologytorivals,https://cnevpost.com/2022/04/05/nio-reported-ly-in-talks-to-license-battery-swap-technology-to-rivals/CATL'smarketshareinChinadropsto48.02%inFeb,https://cnevpost.com/2022/03/11/catls-market-share-in-chi-na-drops-to-48-02-in-feb/Chinacountsmorethan3millionNEVsalesin2021,https://www.electrive.com/2022/01/11/china-counts-more-than-3-million-nev-sales-in-2021/ChineseBEVbrandsrefertodomesticbrandsdedicatedtobatteryelectrictechnologyandincludeAion,Geometry,Ora,Leapmotor,LiAuto,Neta,Nio,RoeweR,Weltmeister,Xpeng,etc.TalkingDataTargetGroupIndex(TGI):Theproportionofinstallationsofanappinthetargetaudience/theproportionofinstallationsoftheappinthebroadermarketTop15PVbrandsin2021accordingtoChinaAssociationofAutomobileManufacturersare:VW,Toyota,Honda,Geely,Nissan,Changan,Buick,Wuling,Haval,BYD,BMW,Chery,Audi,Mercedes-Benz,Tesla12345678910111213141521TheroadtosuccessinChina’sEVmarketMaggieTanMaggie.Tan1@dentsu.comAboutdentsuChinaPartofdentsuInternational,dentsuChinaismadeupofsixleadershipbrands-Carat,dentsuX,iProspect,Isobar,dentsuMB,Merkleandsupportedbyitsspecialistbrands.dentsuChinahelpsclientstowin,keepandgrowtheirbestcustomersandachievemeaningfulprogressfortheirbusinesses.Withbest-in-classservicesandsolutionsinMedia,CXM,andCreative.Contact:AboutMaLogicWithdualheadquartersinbothShanghaiandHongKong,MaLogicisatechnology-enabledmarketinggroupthatprovidesinnovativebusinesssolutionsbyintegratingresearchinsights,brandstrategy,bigdataanalyticsandproprietaryprecisionmarketingplatformstovariousindustrysectorsacrossAsia.Contact:ElizaWONGeliza.wong@malogicgroup.comKlausPAURklaus.paur@malogicgroup.com