Pricing Wars Escalate in China’s EV Market
XPeng Introduces Preferential Charging Policies for its Customers, Further Escalating the Pricing Competition Amongst Chinese EV Companies
XPeng Motors (小鹏汽车) is going to provide a welfare incentive for its customers. XPeng Motors announced the opening of six Service Centers in China; located in Beijing, Shanghai, Guangzhou, Shenzhen, Nanjing, and Dongguan, on March 26th, 2019. During the ceremony, HE Xiaopeng, the chairman and CEO of XPeng Motors, stated that the company will provide a welfare subsidy for the XPeng owners. The owners will be pleased by a 50% energy discount in charging within the first 5 years or 100,000 kilometres at the self-operated supercharger stations.
With a bit of algebra; it can be estimated that XPeng will create benefit for its customers over CNY 10,000 within the first 5 years.
Presently, the average price of EV charging is CNY 1.6/kWh. After imposing a 5% discount, the price will be CNY 0.8/kWh. Based on the assumption of driving 20,000 kilometers in a year; XPeng G3 will have a range of 365 kilometres when the car is fully charged (47.6 kWh) which will save around CNY 2,086 (CNY 20,000/365)*47.6*0.8) a year for every owner of G3, while the cumulative discount for five years will be over CNY 10,000.
If extreme weather and road conditions are taken into consideration; each kWh of electricity can be used to drive for 6 km, and 16,660,000 kWh will be needed for 100,000 km, and the cumulative discount will reach CNY 13,300. What’s more, XPeng owners can park for two hours at the charging station for free, which saves considerable parking fee as well. The discount policy will be in effect from July 1, 2019.
It should be noted that this preferential policy can only be enjoyed if the owner's account and the frame number of the charging vehicle meet the requirements of XPeng; i.e. the discount will only be offered to XPeng EVs.
With the launch of large-scale delivery, XPeng Motors is speeding up the construction of the layout supercharger station in order to ease mileage anxiety. On March 18, 2019, XPeng opened 30 supercharger stations in Beijing, Shanghai, Guangzhou, Shenzhen, and Wuhan.
In addition, XPeng has access to more than 100,000 third-party charging piles nationwide. XPeng will realize the layout of 1000 overcharge stations and get through the full-chain service of pile finding, charging, payment and settlement in the next three years.
Since Beijing announced a subsidy cut for EVs; there is a considerable panicking among Chinese EV makers. This is because the EV market has never experienced organic growth without any incentive from the government in China. However, Brian Gu’s XPeng is a confident one.
“Naturally subsidies are helpful for us to expand our business, however, in the long term, we as EV makers, have to survive and thrive our business without subsidies” says Brian Gu.
Apparently, XPeng is preparing for the long-term EV winter by innovative pricing models.