Author | Nie Yiyao

There is nothing harder than changing a person’s mindset.

In 1865, the British Parliament passed the Motor Car Act, which required every motor vehicle that traveled on the road to be driven by three people, one of whom had to hold a red flag 50 meters in front of the vehicle to ensure that it did not interfere with the travel of horse-drawn carriages before waving the flag to signal that the motor vehicle behind could continue to move forward. At the same time, the speed of motor vehicles must not exceed 6.4 kilometers per hour so as not to produce excessive noise that would startle the horse-drawn carriages.

This regulation was later mocked as the “Red Flag Law,” and its purpose was to protect people’s long-standing habits and stubborn beliefs in horse-drawn carriages, which represented high social status and position, and to exclude the new and devilish steam-powered cars, which were perceived to be coarse and ugly.

The “Red Flag Law” was not abolished until 1896, during which time the British automobile industry was almost at a standstill. As you can see, it is difficult to change a person’s mindset.

On June 21, Idealease’s second product, L9, was launched. On June 4, before the launch, Idealease’s founder, chairman, and CEO, Li Xiang, brought up the L9 product in his social media posts, saying that “Idealease L9 is the best home flagship SUV under 5 million yuan,” which aroused the attention and discussion of netizens. Therefore, the launch party two nights ago not only attracted many people to watch, but it also quickly pushed L9-related topics to the top of Weibo’s hot search.

However, the most upvoted comments under the hot search topics “Idealease L9 launch” and “Idealease L9 price of 459,800 yuan” were like this: “Friends who buy this 500,000 domestic electric car are really brave,” “intellitax,” “This price can buy many traditional brand names,” and “the domestic electric car is not cheap at all”…

To be honest, these netizen friends who quickly made comments perhaps did not even see the actual car nor seriously learn about the configurations of this “best home flagship SUV under 5 million yuan” that Li Xiang touted, nor did they have the opportunity to experience its performance and other feelings by driving it. They just made their evaluations under the primitive perception, which is prevalent for many years, that “domestic cars are low-end,” and their direct resentment against Li Xiang’s statement that the L9 is “the best home flagship SUV under 5 million yuan.”This is by no means a rational judgment. The highly marketing-effective phrase “the best flagship SUV for domestic use under 5 million yuan” inevitably raises the question “Is it?” With a selling price of nearly 500,000 yuan, it is also natural to want to know “why?”

However, the highly regarded comments from netizens and friends still reveal the depth of bias under the influence of old mindsets. I’m not just flattering, but I agree with a sentence from Wang Chuanfu, chairman of BYD, last year.

He said, “The old problem of looking down on domestic brands needs to change. We don’t object to ordinary people buying joint venture brands, but before buying, we hope they can come to the store, take a look, and compare.”

The traditional development process of the automobile industry encountered the watershed of the new energy track and the advent of the digital age. As a result, everything that existed before has the possibility of being rewritten. After several years of intense competition, native brands have already washed away their shame from the era of fuel cars, and are no longer passively following or lagging behind, but have taken up a leading position in the new energy field.

We don’t need to use the old mindset of “domestic cars are not good” to mock or belittle our native brands, without objective experience and comparison. Nor do we need to restrict the unlimited possibilities that native brands face in the new energy era with old prejudices such as “domestic cars cannot be luxurious and do not deserve high prices.”

As times change, domestic brands can also be high-end. In the industrialization era 100 years ago, Ford opened the first reshaping of the automobile industry with assembly line operations, making the United States the leader of the global automobile industry. In the information era 50 years ago, European carmakers opened the second reshaping of the automobile industry with multi-category products, shifting the center of gravity of the global automobile industry from the United States to Europe. Now, a new era of digitalization is coming. Under the catalyst of new technological revolutions such as electric intelligence and intelligent network interconnection based on the new energy track, China is becoming the main battlefield for the new round of reshaping of the automobile industry. And native brands are the protagonists.

With “automobiles changing” combined with “times changing,” it’s not just the attributes and values of cars that are changing. Cars are no longer just a simple means of transportation; they can be endowed with more definitions, such as intelligent terminals and mobile third spaces. Their value is not just in the brand itself, but more in meeting user self-needs.

With “automobiles changing” combined with “times changing,” consumers, especially young consumers, are also changing their understanding of their own needs, as well as their new understanding and acceptance of new products and brands.Younger consumers are more willing to let go of biases and no longer bring the history of the inferiority of homemade brands in the era of fuel vehicles and the perception of low price and low quality into the new consumer concept in the new era. Foreign brands or joint ventures with seniority no longer have a natural advantage in their choice, and homemade brands are being placed on an equal balance.

Homemade brands seize this opportunity to break into the high-end luxury market, which is undoubtedly reasonable. The fact also proves that more and more younger consumers are not only increasingly willing to pay for homemade brands, but also more willing to pay for expensive homemade brands in the field of new energy vehicles.

Take Ideal ONE as an example. With a price of 349,800 yuan, Ideal ONE had a sales volume of over 10,000 in May 2022 and an absolute advantage of 11,496 cars, becoming the best-selling mid- to large-sized SUV. Although the price of Ideal ONE is nearly half that of the BMW X5, the sales volume is 8,531 cars more than that of the second-ranked BMW X5.

There Is Still a Long and Arduous Road Ahead; Success Needs Time to Prove Itself

Homemade brands seizing the opportunity of the times to enter the high-end market can only be said to have just begun.

Although there have been so many attempts by so many companies to achieve high-end, it is difficult to touch the high-end discourse power in the context of traditional fuel vehicles. It can only be seen as striving toward the long-cherished goal and foundation of one day entering the high-end and luxury market. Homemade brands have truly taken a step into the high-end camp in the last two years.

As for new forces, NIO is undoubtedly the first person to knock on the high-end electric vehicle market and is currently the most successful new force brand with an average price of over 400,000 yuan.

Following closely is Ideal, which has opened a territory for family users with a price range of over 300,000 yuan with only one Ideal ONE, which is worthy of praise.

Bolder brands such as GAC are directly in the high position of over 600,000 yuan, catering to the more affluent and adventurous part of the group.

In addition to brands directly targeting the high-end market, launching high-end products is also a path that new forces are trying. For example, XPeng G9, which is expected to have a starting price of 300,000 yuan, will be launched soon.

In addition to new forces, the high-end of homemade brands of traditional car companies has also opened in the last two years. JIKE, Salon, Voyah, JIHU, and DENZA launched by BYD are all trying to quickly seize a place in the high-end field of new energy vehicles.

The comprehensive layout and overall operation of new forces and traditional car manufacturers in the high-end new energy market are conducive to independent brands standing firm in the high-end new energy market more quickly and better.

However, it is still too early to claim success. Success is not achieved overnight, nor is it a momentary or periodical glory. From the perspective of the industrial attribute of the automobile scale effect, the high-end brand of car companies also needs the support of scale. Having a high-end brand alone cannot form product scale and cannot be considered as success.

Taking NIO as an example, in May 2022, NIO’s sales volume was 7,024 vehicles, with a year-on-year growth rate narrowing to 4.6%; from January to May this year, NIO’s cumulative sales volume was 37,900 vehicles, a year-on-year growth of 11.8%.

Compared with the high-growth trend of the previous year, NIO’s sales volume has weakened after entering 2022. NIO urgently needs to improve its sales volume to continue to consolidate the foundation of scale and continue to inject blood for the upcoming high-end competition. This is an interconnected process. The importance of product scale is realistic but cruel.

Ideal ONE is indeed successful, but it remains to be seen whether the Ideal L9, which costs over 400,000 yuan, can quickly tap into the affluent dads among family users compared to the Ideal ONE costing over 300,000 yuan, although Li Xiang himself is not worried about this.

Other high-end independent new energy brands are also facing the problem of product scale, or this is a problem that no one can escape.

It is still too early to talk about success, but the dawn of independent brands entering the high-end luxury market has already shone into reality. For the sake of this dawn, no matter what, we must be prepared to greet the sun.

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.