China electric car companies are heading for a make-or-break moment


China’s push to lead the global development of electric cars is nearing a moment of truth.

Two of the largest start-ups in the industry — both Chinese — launched new passenger vehicles in the last week. The announcements come with less than two years to go before Beijing’s subsidies are set to end, and as better-known brands such as Tesla move into the massive Chinese market.

Nio, a $7.9 billion Shanghai-based company listed in New York, announced Saturday its second line of commercially available SUVs will be available beginning June 2019. Prices for the ES6 begin at 358,000 yuan ($51,883), excluding subsidies. That’s about 400,000 less than the local price tag for models sold by Tesla, which is targeting the same luxury market as Nio.

In the medium-priced market, Guangzhou-based Xpeng announced last Wednesday that prices excluding subsidies for its first commercially available vehicle, the G3, will begin at 227,800 yuan (about $33,000) with deliveries starting that day.

“Given the size of the market, the Chinese (original equipment manufacturers) have the opportunity to go down the cost curve and build an advantage globally,” Pierre-Henri Boutot, a partner at Bain, said in a phone interview last week.

“There is an inflection point coming in 2020,” he said, explaining that’s when he expects consumers will find battery-powered electric vehicles just as competitive as internal combustion ones from a total cost perspective.

“This change will begin faster in China compared to global(ly). That’s a tremendous opportunity for local OEMs,” Boutot said.

The question is whether the Chinese players can survive when government subsidies end, or in regions where the state has less influence.