E28: The Smart EV for China’s Emerging Middle Class

Automotive, Healthcare, Financials Author: Yusuf Tuna Mar 22, 2019 01:35 PM (GMT+8)

XPeng Motors to launch its second EV partnering with NVIDIA

Dawn at Shanghai...   Credit to: Pen Tsai

President and Vice Chair of  XPeng Motors (小鹏汽车) Brian Gu confirmed that E28 is going to be on the podium during the Shanghai Auto Exhibition on April 16 to 25. “It is going to be an esthetic sport-sedan” said Mr Gu and revealed that it is expected to be manufactured by the end of 2019.

XPeng Motors is yet another Chinese smart EV maker. It has already accumulated more than USD 1.3 billion after seven funding rounds and is preparing to launch its second product E28.

Brian Gu was appointed as Vice Chair to XPeng Motors in March 2018. Prior to that, he had been working as the Chairman of Asia Pacific Investment Banking for JP Morgan; where he worked for 14 years. During that, he has participated in significant deals from Alibaba’s IPO to Ctrip’s raising. For such an experienced banker to change his entire activity scope and pivot his focus onto an EV maker start-up; he must have foreseen something tangible.

Mr Gu specifically points out that E28 will be the first vehicle globally, that is equipped with NVIDIA’s Xavier; which is an AI chip designed particularly for autonomous driving vehicles.
 

 “Tesla brought high-quality supply chain to China; besides, the Chinese market got acquainted with EVs, thanks to Tesla. However, our customer segment is completely different from Tesla’s; and unlike Tesla’s cars, E28 is designed specifically for Chinese customers and landscape.” Gu stated. 

For the present, XPeng is not targeting the international market. What’s more, the company targets middle class Chinese in particular. XPeng has a well-defined market and customer segment. Arguably, the price of E28 might be in the range of CNY 250,000 to 300,000.

Previous research findings into the autonomous driving market have been consistent with and converged to an explicit point that postulates China’s clear domination in autonomous driving industry. IHS forecasts that in 2035, more than 5.7 million autonomous cars will be sold in China by making up the biggest market globally, followed by the USA with 4.5 million vehicles. Yet, the necessity of designing “an autonomous car with Chinese Characteristics” does not merely originated from China’s enormous market, but also the compatibility of the autonomous vehicle chips and pieces of equipment with unique Chinese traffic ecosystem. 

LIDAR is a laser-based scanning device that detects and senses the objects around the car by processing 3D images. It is a fundamental technology in autonomous vehicles. If China’s unique traffic conditions considered -bicycles, small electrical cargo cars and other phenomenons that are part of the daily traffic in China-, supplementary systems might not be working well as they do in the USA.  According to GS, LIDAR itself will create a huge market potential with around USD 98 billion in 2050. Just like any other consumer goods, smart EVs are to be designed based on the market conditions, as well. Especially autonomous vehicles are such products that are especially affected by the surrounding conditions. In this respect, Mr Gu’s “Chinese E28” could be efficiently implementable and fruitful for the market.

As of now, the technical details of E28 has not been unveiled. What’s known is that it will be the first sport-sedan EV that is produced by Chinese EV makers. Neither NIO nor WM Motor has produced a Sedan EV yet, but instead, they’ve chosen to move forward with SUVs. Although XPeng and Tesla address different customer segments, they both will be the Sedan EVs in the Chinese market.

With its experienced and sophisticated management team, together with affordable smart EVs and humble expansion policies; XPeng is climbing up silently and carefully. However, it is hard for one to be sure about XPeng’s success in getting middle class Chinese with E28. Who targets Chinese Middle class; shall face with the highly competitive environment.