Just as German majors once did in the gasoline-powered vehicle segment, Chinese carmakers are beginning to jointly build a reputation for luxury in the electric vehicle segment in their home country, according to Paul Gong, head of China autos research at UBS.

Why it matters: The comments point to a dramatic shake-up in the world’s biggest auto market as once-dominant foreign car brands lose ground while Chinese counterparts such as BYD and Li Auto have risen over the past year, often in step with each other. 

• Notably, Chinese status-conscious buyers are coveting local luxury-styled cars which have enjoyed a medium-to-high single-digit increase in average selling prices each year over the last decade, Gong told reporters in Shanghai on Tuesday. 

Details: China’s new cohort of EV makers have tended to sell pricier than average cars packed with high-tech features, inspiring their more established counterparts to improve their offerings and resulting in a positive net effect on all of the companies’ profiles, Gong said, pointing to “synergies” similar to those of the German majors in the fossil-fuel car era. 

• The “glass ceiling” of China-made car prices is being shattered, according to the Swiss bank, as Chinese EV models have gained popularity, especially models in the price range between RMB 200,000 and RMB 300,000 ($27,880-$41,820).
• However, it remains challenging for them to go further upscale into the super-premium segment where a car could be priced at RMB 1 million ($140,000), Gong added, citing a lack of confidence in luxury Chinese brands among older Chinese consumers.
• UBS projected that Chinese automakers will account for close to two-thirds of China’s passenger car sales in 2024, up from 56% a year ago, while absorbing 41% of the overall profit pool, compared with 17% in 2022, boosted by higher selling prices. 
• Gong envisioned China could be big enough to allow 10-12 domestic carmakers to sell significant volumes with different success stories by 2030 in the best-case scenario, rather than just three to five as some had previously expected.
• Tesla, Volkswagen, General Motors, and BMW were the only international car makers last month to record sales of more than 10,000 new energy vehicles, mainly all-electrics and plug-in hybrids, according to figures from the China Passenger Car Association on Tuesday.

Context: Having struggled to cope with the ferocious competition of repeated price cuts, Chinese car brands such as the established BYD and new entrant Xiaomi have sometimes turned to collaborations to generate buzz and support on social media. 

• BYD showcased a dozen Chinese-branded EV models, including those of rival Li Auto, in a show of solidarity at its headquarters in Shenzhen last August, TechNode reported. Meanwhile, a video clip posted by BYD has racked up nearly 24 million views on Twitter-like platform Weibo, which looked back at the developments of major domestic carmakers. 
• Xiaomi launched an advertising campaign on several digital outdoor billboards in China’s four top-tier cities to show its respect to competitors including BYD, Huawei, and Xpeng Motors, before the pre-launch event of its first EV model last month. In a post on his Weibo account, chief executive Lei Jun called his rivals “pioneers of China’s new energy vehicle industry.”