Author: Qiu Kaijun

On July 30th, the Politburo of the CPC Central Committee held another meeting to deploy economic work in the second half of the year.

Despite the still complex and severe external environment, we still need to tap into the potential of the domestic market. According to a meeting notice issued by Xinhua News Agency, the first thing to do in tapping this domestic market potential is to support the accelerated development of new energy vehicles.

China’s new energy vehicles have developed rapidly in the past decade. According to data from the China Association of Automobile Manufacturers, the penetration rate of new energy vehicles has reached 9.4% in the first half of this year, with a popularity rate that exceeds many most optimistic predictions.

However, if we talk about market potential, where is the biggest potential market for new energy vehicles?

The performance of pure electric A00-class models can give us some inspiration.

A00 models may be negligible in the traditional fuel vehicle market share. But in the pure electric passenger car market, A00 models have maintained a market share of more than 30% this year. Consumer research shows that many people who used to rely on bicycles, motorcycles, tricycles, taxis, and public transportation have purchased A00 electric vehicles.

To tap into the domestic market potential of new energy vehicles, we should first focus on the 150 million bicycle users, 300 million electric bicycle users, 90 million two- and three-wheeled motorcycle users, 70 million electric tricycle users, totaling more than 600 million. As long as 20% of them are converted to A00 pure electric users, it can create a market of over 100 million.

On July 30th, the Reding car & Hunan Satellite TV strategic cooperation conference and the launch of the designated car for “Chinese Restaurant 5” Reding Mango were held in Changsha. Reding Automobile and Hunan Satellite TV have formally reached a strategic cooperation and announced the official launch of Reding Mango, the designated car for “Chinese Restaurant 5,” with a starting price of 39,800 yuan.

Reding Mango is a pure electric A00 car with a low purchase price and low operating costs, suitable for both personal and family travel.

Starting with this car, Reding Automobile will focus on the short-distance travel and commuting market, aiming to build the Chinese K-Car category through a deep understanding of this market, tap into more electric travel demand, push A00 pure electric vehicles into a deeper market, and promote economic development.

Pure electric vehicles reinvigorate the A00 market

The A00 car market had all but disappeared. In the overall passenger car model ratio statistics by the China Passenger Car Association, the A00 market share accounts for less than 2%.

However, in the Chinese pure electric vehicle market, pure electric A00 has always had a relatively large market share. However, the early products relied too heavily on subsidies, did not respond to market demand, and had limited actual sales. Therefore, it was difficult to continue after the government tightened subsidy review and the large-scale subsidy cutbacks.Market share of small electric cars

Source: “Big Data Report on Small Pure Electric Passenger Cars in China”

However, in the past two years, pure electric A00 models have once again emerged. With the policy of subsidies for vehicles that can travel 300 kilometers, they mainly rely on attracting private consumers for their real and sustainable sales volume. Therefore, pure electric A00 models have formed powerful momentum, and their market share continues to increase.

Why are pure electric A00 models popular? Because they meet the needs of a large part of the population that have not been satisfied.

At the end of 2020, the National Big Data Alliance for New Energy Vehicles released the “Big Data Report on Small Pure Electric Passenger Cars in China”. The report revealed the secrets of the hot sale of small electric cars through real user data, including real-time operation data of 1.04 million small pure electric passenger cars and surveys of 2,035 small pure electric passenger car users. Although the definition here is A0+A00, the two types of products are similar, and A0 grade accounts for a very small proportion. Therefore, studying pure electric A00 has great reference significance.

First, in the past, first-tier cities were the main market for pure electric small cars during the “false prosperity” period. However, this genuine A00 hot trend based on real consumer demand, focuses on the sixth-tier cities. By 2020, the market share of the merged first and second-tier cities was only 35%.

Change trend of small cars’ distribution in cities of various levels in the past 5 years

Source: “Big Data Report on Small Pure Electric Passenger Cars in China”

Second, although these users drive their cars several times a day, their daily average driving frequency is more than 4 times. However, small electric cars have an average daily driving distance of only 30.5 kilometers.

Average daily driving distance of small electric car users

Source: “Big Data Report on Small Pure Electric Passenger Cars in China”

Third, many users of small electric cars have upgraded from two-wheeled or public transportation. After buying a car, they mainly reduce the use of bicycles/electric bicycles, buses, walking, subways and other public transportation methods, and use them for short-distance commuting purposes.

Types of transportation replaced by small electric car users

Source: “Big Data Report on Small Pure Electric Passenger Cars in China”## How can A00 pure electric vehicles move towards depth?

Therefore, what prevents A00 pure electric vehicles from gaining more users?

First, the high-quality A00 products are not diverse enough. In the first half of this year, there were only 7 pure electric A00 models sold, with a total sales volume of over 2000 units.

Second, there are several trends of homogenization in the current products. One is mimicking the Hongguang MINI EV in both appearance and function, while the other is retrofitting old A00 fuel models into electric ones repeatedly to the point where consumers are no longer interested. The third is not catering to short-distance commuting needs and pursuing a range of more than 300 kilometers, which only satisfies a small portion of users’ needs.

Many A00 vehicle distribution channels have not penetrated into towns and are still primarily focused on first and second-tier cities. These channels make it difficult to reach target customers and provide corresponding services.

For these problems, Leiding Motors, which has been focusing on short-distance commuting, has sufficient understanding and countermeasures.

Leiding believes that they can learn from Japan’s experience.

To enable the general public to own cars, it is necessary to focus on increasing the number of cars per thousand people. However, China’s current level is around 200 vehicles per thousand people, while Japan’s car ownership per thousand people is 591, ranking fifth in the world.

However, the number of microcars, K-cars, comprises nearly one third of Japan’s car ownership. If China also vigorously develops K-cars and creates a third of the new market, it will undoubtedly help Chinese citizens own cars.

Therefore, Leiding has positioned itself as “China’s first new car-making force focusing on K-Car category” and established the “Leiding model” of “focusing on upgrading short-distance commuting for the people + sinking all factors to serve users.”

Leiding’s representative product for this positioning and model is the Leiding Mango.

In August 2020, Leiding Mango debuted in Xiamen as the first model for Leiding to build China’s K-Car category. In April 2021, the first mass-produced Mango vehicle was released, starting at 29,800 yuan. On July 30th, the Mango designated version for “Chinese Restaurant 5” was officially launched, starting at 39,800 yuan.

It may also be a pure electric A00 model, but Leiding Mango is a different kind of car.The Leiting Mango has dimensions of 362016101525mm and a wheelbase of 2440mm. It is a 4-door, 4-seater car, which is spacious enough for 4 adults to ride comfortably. It also has 15 storage spaces, with a conventional trunk space of 420L, and 1250L of space with the rear seats folded down.

For the short-distance commuting car market that focuses on cost-effectiveness, consumers have an obvious purchasing rule: choose a larger size for the same price, and choose a cheaper option for the same size. Mango’s four-seat design and size will bring greater competitiveness.

Although it belongs to the A00 segment, Leiting Mango also emphasizes safety. Mango has 15 safety configurations, a 67% ultra-high-strength safety cage body, and is equipped with safety airbags. It also has four intelligent safety assists and a collapsible energy-absorbing front end.

In addition, Leiting Mango emphasized appearance from the beginning, with a stylish and technological design, and eye-catching colors such as Dewdrop Green, Cheese Yellow, Cloud White, and Moon Rock Gray.

In terms of endurance, Leiting Mango has three versions with ranges of 130 kilometers, 200 kilometers, and 300 kilometers. The 300-kilometer endurance version supports fast charging, with a 30% – 80% charging time of only half an hour.

Furthermore, potential consumers of pure electric A00 vehicles are mainly dispersed in towns across the country. Leiting’s marketing strategy can be summed up as “reaching the sky and going to the ground”.

The “reaching the sky” part involves Leiting Mango’s high-profile branding, including this cooperation with Hunan Satellite TV, a high-traffic platform that directly targets the intended consumer group. Leiting put forward the slogan “watch Mango TV, drive Mango car,” hoping to use Hunan Satellite TV’s “happiness” concept to connect with consumers.

The “going to the ground” part is the “all-element sinking service for users”. From 2008 to 2021, Leiting Automobile has established 10,000 county-level stores, accumulating experience in the most grounded network channels. Specifically for the Mango brand, from February this year to the present, Leiting Mango stores have established 432 outlets, with 175 of them already approved, and 250 stores still under construction.

With such a large and targeted channel network, it undoubtedly makes it easier for more people to understand, purchase and maintain electric vehicles. These advantages have also made LeiDing Mango’s initial performance outstanding. LeiDing’s general manager, Shu Xin, revealed that since Mango was launched 100 days ago, it has received full payment orders for 20,387 vehicles.

The LeiDing of the 3.0 Era

LeiDing, which has been continuously cultivating the short-distance travel market for 13 years, is also innovating in response to changes in consumer demand.

At the Changsha event, LeiDing also reiterated that it has entered the 3.0 era, defining it as an era that focuses on “real-life urban mobility scenarios for the common people”.

Currently, one LeiDing Mango model cannot fully meet the needs of urban dwellers. LeiDing has also revealed that it will create a series of K-car models, including cars for 1 person, 2 persons, 3/4 persons and even multiple people, with sedans, SUVs, MPVs and even sports cars.

These products have different users and scenarios. However, LeiDing’s expectation is that they will all be “phenomenal” products.

Specifically, Shu Xin believes that the elements of a “phenomenal” product are: first, high cost-effectiveness, which can meet the needs of consumers’ high-frequency short-distance use scenarios. The price is generally between 30,000 and 50,000 yuan. The second is that the usage cost will be very low. For example, the cost of travel per 100 kilometers for the LeiDing Mango is only 5 yuan, but the travel experience is excellent.

Currently, the pure electric A00 market also needs more “phenomenal” products. It is impossible to convert the short-distance travel tools of 600 million people into pure electric A00 with just one or two popular models.

More directly, the pure electric A00 market needs more enterprises that understand the market, do things sincerely, pragmatically explore demand and define products, and are closer to the construction of sales and service channels.

It would seem that SAIC-GM-Wuling, located in Liuzhou, Guangxi, has rediscovered the pure electric A00 market. In order to deeply cultivate the short-distance travel market, LeiDing, located in Weifang, Shandong, with many years of experience in this field, and other pragmatic and reliable enterprises such as SAIC-GM-Wuling, can only push the popularization of pure electric A00 to a deeper level.

“The south is Wuling, the north is LeiDing” working together. The space for the pure electric A00 market is difficult to estimate.

This article is a translation by ChatGPT of a Chinese report from 42HOW. If you have any questions about it, please email bd@42how.com.