29 November, 2023
Welcome to Looking Out, a newsletter and podcast that connects the dots across the automotive industry, mobility, design, and culture. Looking Out is brought to you by Joe Simpson and Drew Smith. If you like what you see and hear, tell your friends!
This is another episode packed with visuals. If you prefer to listen, click here.
As design researchers and strategists, it’s second nature to get out in to the world to try and understand how it works, and to bring what we learn back to the studio.
Drew even wrote about the importance of escaping the studio back in 2022.
So for Joe, being locked out of the world’s most dynamic car market was like being temporarily blinded.
This episode, recorded while Joe was high above Shanghai, takes us on a tour of that incredible city. We discuss how it’s changed since 2017, and what the present and future might hold for Chinese EV manufacturers.
Here are the main themes we discussed:
The evolution of the “car park”
Which is industry jargon for “what Chinese consumers are driving now”. At the top end of the market, European brands and their performance-oriented ICE cars still hold sway with Shanghainese consumers. But the lower- and mid-market is now completely dominated Chinese start-up EV brands. In a curious twist, unlike in the West, SUVs still don’t have a stranglehold on the consumer’s imagination. Sedans and fastbacks continue to dominate.
Sophisticated retail experiences
EV start-ups like Nio and HiPhi have created inviting retail spaces that double as places to do business and drink coffee. And in a dagger to the heart of any Western automotive retail strategist who’s watched their “gallery” or “store” concept fall flat on its face, the people of Shanghai are actually using them as intended. From the epic Flat White coffees in soothing surrounds to the no-pressure sales support, these often-sumptuous spaces welcome consumers in to a brand world and encourage them to put their feet up.
Brand advocacy to die for
The payback for this warm welcome? Well, in a move likely to strike wonder in to the heart of any hardened brand strategist, Chinese consumers are quite happy to play super advocates for their preferred brands. For free. From turning up at weekend car meets to share their stories to contributing live data about parking and charging facilities for the benefit of other owners, there’s an enthusiasm for new cars and the culture surrounding them that’s exciting to behold.
Influencer-led spec sheets
The power of Chinese influencers can be seen in the increasingly extreme content of Chinese cars. Screens that slide across the dashboard? Check. Self-closing doors? Check. Thousand-LED displays integrated in to the nose of your car that do nothing but show pixelated graphics? Check, check, and check. And a lot of it driven by what’s popular on TikTok, WeChat and Bilibili. It really does feel like the featurephone era but-make-it-cars, with manufacturers battling it out to add ever-more tinsel to their cars, yet seemingly unable to stop and ask the all important question: but why?
Tears before tea time
Volkswagen is selling their unloved ID.3 for the equivalent of €15,000 (EU price: €39,000).
Zeekr is selling the vastly-superior X for €24,000 (EU price: €40,000).
Nio is selling the EC6 for €43,000, while BMW’s equivalent iX3 is over €60,000.
And herein lies the dark side to all this exuberance: who’s making any money?
Volkswagen’s failure in China is so severe that they’re about to announce massive job cuts and have signed a new joint venture with Xpeng just to stay competitive. And Nio’s announced its own round of job cuts against a backdrop of eye-watering losses.
Joe reckons there’s going to be a bloodbath in the next couple of years as overcapacity in Chinese factories collides with cooling consumer confidence. The brands to watch will be those who have what it takes to make inroads in to international markets: here’s looking at you, BYD.
As ever, we’d love to get your feedback:
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