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The automaker launched in Germany last week and is an element of a growing wave of Chinese brands which can be expected to account for 1 / 4 of electrical vehicle sales in Europe this 12 months.
But it’s more of a leasing war than a price battle that would bring the Volkswagen-backed young automaker into the hearts and minds of brand-loyal German drivers.
Rent wars
“It’s not so much about the customer buying the car,” said Xpeng Managing Director for Germany, Markus Schrick Assets.
Instead, increasingly more drivers are selecting to lease their electric vehicles, partially out of fear that rapid technological advances in electric vehicles will cause their cars to fall in need of industry standards.
“With the rapid development of electromobility, new technologies are coming onto the market very quickly. Customers tend not to want to own the vehicles but instead want to lease them.”
Xpeng
Leasing might be a solution to persuade electric skeptics who’ve found it harder than expected to show away from internal combustion engines.
While leasing already has solid appeal in non-electric vehicles, it should explode in the electrical vehicle market as a consequence of the aspects Schrick mentioned.
Schrick said the corporate offers competitive leasing rates on its cars, with starting prices for full ownership starting at 49,000 euros ($53,000) for the usual P7 range.
A competitive leasing offer is an excellent thing for the automaker. Schrick says 4 out of 5 cars that roll off Xpeng’s lot are sold through leases.
In comparison, Data analyzed by McKinsey & Co. found that 35% of latest cars in Germany were leased.
While Xpeng is at a dearer entry point than fellow Chinese disruptor BYD, it has also been vocal about its pricing as firms like Tesla and Volkswagen enter a protracted price battle.
“This year marks the beginning of fierce competition that could end in a ‘bloodbath,'” Xpeng wrote to employees in February, CNBC reported, citing an internal letter shared with employees.
As with the price battle, Schrick says Xpeng is able to follow its competitors in reducing leasing rates if a brand new price battle breaks out.
“We won’t say: ‘If the rent falls by 20%, no, we won’t take part.’ Of course we will find a solution because we need and want to sell cars,” he said.
After launching in 2020, the Chinese automaker has moved to just about increase deliveries this 12 months they triple between the last quarter of 2022 and the identical period in 2023.
The carmaker is already represented within the Nordic countries and the Netherlands.
Enemies
It shall be interesting to see how Xpeng’s strategy develops in Germany, as the corporate has close ties with the country’s leading automaker, Volkswagen.
Volkswagen bought a 4.99% stake in Xpeng for $700 million in December and plans to develop two SUVs by 2026.
That could raise eyebrows amongst competitors as they consider where this close partnership ends – namely, whether Xpeng and Volkswagen could develop a method to divide and conquer.
Xpeng’s Schrick says that is the top of the connection between the Chinese automaker and Volkswagen for now.
However, Schrick said that he “wouldn’t mind” if there have been further strategic agreements with the German automotive giant in the long run.
“Such an advanced smart technology developer like Xpeng, together with a traditional high-tech company like Volkswagen, that can only be a good partnership.”
Schrick also believes the deal has given the corporate a head start within the uphill battle amongst Chinese brands for brand recognition and consumer trust after becoming accustomed to household names resembling its partner Volkswagen.
“When Volkswagen invests in something, that’s a good sign for most German consumers,” says Schrick.
“When Volkswagen invests 700 million euros in one other automobile manufacturer, they’ve carried out a really thorough and well-founded evaluation. And this decision was not made flippantly for us.
“They looked at the market intensively and decided on Xpeng.”
