Why Chinese electric car start-ups NIO, Xpeng are making a beeline for Norway

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Why Chinese electric car start-ups NIO, Xpeng are making a beeline for Norway

Tesla’s Chinese rival NIO is making a foray into Norway, with plans to export its smart electric vehicles to the Nordic country in September.

The company plans to sell the ES8 SUV this year, and the ET7 luxury car that can go nearly 1,000km on a single charge next year.

It comes after fellow mainland competitor, Xpeng Motors, delivered over 100 of its G3 smart SUVs to individual Norwegian customers in late December.

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Here’s why Chinese smart EV start-ups prefer Norway as their maiden export market.

High rate of EV adoption

Penetration of EVs in Norway is the highest worldwide, with pure electric cars making up over 54 per cent of overall new car sales. Last year, more than 140,000 new passenger vehicles were sold in the country, of which 76,789 were fully electric.

In China, although the penetration rate of EVs stood at 6 per cent last year, annual sales stood at 1.17 million units because of the much larger market. Some 19.3 million cars were sold last year on the mainland.

Incentives encourage use of EVs

In Norway, no purchase and import taxes are imposed on EVs. Buyers are also exempt from paying a 25 per cent value-added tax, while EV users can save at least 50 per cent on toll charges.

While the Norwegian government has decided to keep the incentives for zero-emission cars until the end of 2021, there are plans to revise the incentives and adjust them in accordance with the market development.

Bestselling EV models

The Audi e-tron SUV was the bestselling model last year, selling 9,227 units in Norway.

Tesla’s Model 3 was the runner-up, with sales of 7,770 vehicles, followed by Volkswagen’s ID.3 at 7,754 units.

Rounding off the fourth and fifth places were Nissan’s Leaf at 5,221 units and VW’s eGolf at 5,068 units.

Prospects of Chinese EVs

NIO and Xpeng will face tough competition in Norway. As latecomers, their success hinges on whether customers accept their technologies and the pricing of their products.

In China, the two start-ups along with Li Auto are dubbed as Tesla challengers. They delivered a combined 17,259 vehicles in March, representing less than half of Tesla’s sales of 35,478 units.

But NIO hopes its “battery as a service” (BaaS) model, which allows customers to buy an electric car while subscribing to a separate battery-leasing plan for a fee, will help it gain an advantage in Europe. BasS can help lower the upfront cost of owning an EV by about 20 per cent.

Xpeng announced recently that it planned to fit its P7 all-electric saloon car with a cheaper battery to appeal to price-sensitive customers. From this month onwards, a fast-charging lithium iron phosphate battery pack will be available as an option on the P7 along with the lithium nickel manganese cobalt oxide version currently in use.

Its upcoming P5 model, which is yet to hit the market, will be fitted with lidar sensors, making it among the first batch of cars to use the technology. Lidar is a critical technology for self-driving cars.

What about the big Chinese carmakers?

Apart from the start-ups, it is widely expected that a clutch of Chinese companies, buoyed by Beijing’s ambitions of becoming a global leader in EV, will expand to Europe soon.

Among them is Zhejiang Geely Holding Group. One of China’s biggest carmakers and owner of Volvo Cars, last month unveiled its new EV brand Zeekr. Geely has formed partnerships with many companies, including Baidu and Foxconn, to build smart electric cars as part of its ambitions to become a global leader in the automotive industry.

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