Newcomers Shrug Off China’s EV Headwinds With Bets on Niche Cars

Article content

(Bloomberg) — For all the talk of China’s car industry being crowded with low-volume brands that struggle to turn a profit, the potential to carve out a share of the world’s biggest auto market is still proving irresistible for new entrants.

Article content

Whether with in-car kitchens or plans to take on one of the world’s fastest supercars, Chinese companies are still betting they can offer vehicles that are unique and innovative enough to build businesses around. That’s despite a gloomy medium-term outlook as competition intensifies and Beijing reins in the sprawling industry. AlixPartners estimates that by 2030, just 15 of the 129 brands in China that sell new-energy vehicles will be financially viable. 

Article content

Article content

Article content

While that points to significant consolidation in the sector as an aggressive price war squeezes automakers, suppliers and dealers, it’s also an opportunity for companies that can fulfill niche demands. Instead of scrutinizing fuel economy, Chinese drivers are increasingly eyeing models with novel add-ons or luxury cars that sell for far less than a legacy Western marque. 

Article content

Article content

“The fundamental change in the car’s identity from being a pure means of transport to a ‘mobile living space’ is setting off a complete restructuring of the industry’s value chain,” said Zhang Yichao, a partner at AlixPartners. 

Article content

Leading the charge of unlikely entrants is Dreame Technology. The Chinese manufacturer of robot vacuum cleaners says it can adapt its expertise in the kinds of high-speed electric motors found in home appliances to build an electric hypercar to rival Bugatti. 

Article content

The company plans to debut its inaugural model in 2027, according to local media reports.

Article content

While perhaps the most ambitious foray into the auto sector by a vacuum maker, it’s not the first. Dyson famously spent years and hundreds of millions of pounds developing an electric vehicle, only to scrap the project in 2019 as it couldn’t make it commercially viable. 

Article content

Article content

Rox Motor, by contrast, made it to market and is still around. Started in 2021 by Chang Jing, the founder of vacuum cleaner maker Roborock, the company began deliveries in late 2023. Its premium off-road extended-range EV, the Polestones 01, offers a compact built-in kitchen and is notching sales of around 1,000 units a month. 

Article content

The company secured a $1 billion investment in 2023 from Shandong Weiqiao Pioneering Group Co., the parent of major aluminum producer China Hongqiao Group, and which has its own auto aspirations. Weiqiao already counts BYD Co. and Xiaomi Corp. as customers for its products. It’s also reviving the 212 — China’s iconic military jeep — and bringing a tiny city EV to Europe. 

Article content

Others are looking to take on some of the industry’s heavyweights, like BYD, more directly in the mass market on expectations that demand for affordable, tech-focused EVs will endure in the face of future challenges in China. 

Article content

Tesla Inc. alumnus Zhu Renjie, who led Cybertruck manufacturing, is now heading a new venture — a unit of Sensteed Hi-Tech Group — focused on making a $10,000 extended-range EV for Chinese drivers. That puts it in the same price bracket as BYD’s popular Seagull.