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INSIGHTS | 3 Dimensions for Carmakers to Industrial Transformation

Double V. Consulting researches marketing news from various industries and is dedicated to designing marketing strategies for brands in line with the marketing environment.

In recent years, China, which is highly dependent on oil reserves, has given great policy support to new energy vehicle industry to ensure energy security and to strive for power in the global clean energy system. Also, even though China lacks advantages over European, American and Japanese carmakers in terms of software, hardware and chip suppliers, a highly open ecosystem of Internet development and applications allows cars to grow highly intelligent in China.

In this article, we will discuss what traditional carmakers can learn from the new energy vehicles in 3 dimensions - target customers, product development and marketing strategies.

Rising Sales of New Energy Vehicles

According to Dec 2022 statistics from China Passenger Car Association, the annual sales of new energy vehicles have increased significantly from 352,000 cars sold in January to 598,000 cars sold in November.

Data via @China Passenger Car Association, Chart via @Double V. Consulting

Although gas-powered vehicles still hold the largest market share, the share of new energy vehicles has risen from 19.4% of sales in January to 35.9% in November. As a result, the share of gas-powered vehicles fell. The growth in sales of new energy vehicles is strong, and their impact on the role of gas-powered vehicles is promising.

Data via @China Passenger Car Association, Chart via @Double V. Consulting

Policy Hindrance on Gas-Powered Vehicles

Traditional carmakers' challenges are closely tied to China's automotive policy.

According to the chart, we can learn that Chinese provinces and cities are at different stages of development in the automotive industry. According to the technical complexity, from the hardest to the easiest, there are 4 stages:

1) The stage of developing fuel cell electric vehicles

2) The stage of developing new energy and intelligent vehicles

3) The stage of rolling the charging stations out for electric vehicles

4) The stage of encouraging consumption of vehicles.

In short, the automotive industry's policies are formulated for new energy and intelligent vehicles.

The 14th Five-Year Plan (2021-2025): China's Automotive Industry Policy Stages in Each Province

Data via @前瞻经济学人APP, Chart via @Double V. Consulting

Double V. Consulting suggests that traditional carmakers renew their mindset on target customers, product development, and marketing strategies and keep up with policies for industrial transformation.

Identify the Target Customers

As a new product born in the Internet age, new energy vehicles are highly accepted by the new middle class and Gen-Z living in 1st- and 2nd-tier cities. They are well educated, have good taste, and are willing to pay for premium products with fancy designs, high tech, and unique brand philosophy.

Besides, in 2021,, China's automotive information platform, obtained an over 90% growth in sales leads of new energy vehicles in the low-end market, which means the low-end market customers might drive the future sales growth of new energy vehicles. According to the Customer Behavior Insight Report for New Energy Vehicles Industry for the Low-End Market, customers in the low-end market are more likely to choose new energy vehicles than those in 1st and 2nd-tier cities because new energy vehicles help save money on gasoline and car maintenance.

But unlike the new middle class and Gen-Z in 1st- and 2nd-tier cities that value design and pioneering technology, customers in the low-end market value more utility, i.e., configuration parameter and price.

Customers from different classes have diverse user behaviors, needs, usage scenarios for cars, and affordable price ranges, which lead to various customer preferences and niche products. Please refer to the chart below:

Data via @东吴证券, Chart via @Double V. Consulting

Traditional carmakers need to deeply understand various user needs and identify the target customers in different price ranges and usage scenarios.

Improve the Car Safety

China's automotive industry policy has pointed out the direction of product transformation for traditional carmakers. China's New Energy Vehicle Industry Development Plan (2021-2035) states, "The CASE - i.e. Connected, Autonomous, Shared and Electric - will be the trend in the automotive industry."

Although the slogan is catchy, customers are still doubtful about new energy vehicles.

In the questionnaire designed by the Chinese mainstream media China Times for Consumer Rights Day 2021, safety (>30%), brand impact (26%) and price (18%) ranked as the top three factors that affect customers' car purchase intention. Followed by costs, intelligence and store of value. What customers are concerned about most is safety.

On 22 July 2022, the famous Taiwanese racing driver and singer Jimmy Lin's Tesla Model X quickly caught on fire after a collision in the front of the car. Even though the cause of the accident still needs to be identified, the news that Jimmy Lin was nearly killed in the car accident brought the safety crisis of new energy vehicles to the public.

The front of Jimmy Lin's Tesla turned to ashes

Image via @新浪财经APP

A study on the Causation Identification Methodology of Fire after Collison on Electric Vehicles, a paper by the China Vehicle Forensic Center (Beijing), indicated that electric vehicle fires could be caused by an electrical fault, gas leak or short circuit caused by extrusion of the battery pack, or the combination of multiple factors.

How is the heating of the battery pack triggered?

Image via @新浪财经APP

To avoid a bad brand reputation, carmakers need to pay particular attention to the selection of battery materials, design and manufacture.

Strengthen the Brand Impact

Mainstream new energy carmakers are mainly independent brands, new carmakers, joint venture brands, and crossover brands that have yet to start mass production, such as Baidu, Xiaomi and Apple etc.

33% of customers judge the quality of a car based on configuration parameters rather than brand names. They believe that every brand has a knockout product. For these customers, carmakers need to focus on product quality.

And 67% of customers choose cars based on brand impact: 25% of customers prefer cars from independent brands; 22% prefer cars from joint venture brands; 18% prefer cars from new carmakers; Only 2% choose crossover brands that have not started mass production (China Times 2021 statistics). For these customers, carmakers shall take the marketing strategy for brand impact seriously.

Brand impact refers to a brand's ability to develop markets, capture market share and earn profits, and is made up of brand awareness, brand recognition, brand reputation and brand loyalty.

Carmakers can find problems based on sales:

1) For less-known brands, the strategic goal is to raise brand awareness.

2) If customers tend to pick competitor brand's cars with the same capabilities in the same price range, the problem might be that customers are not familiar with the brand, then the strategic goal is to raise brand recognition.

3) Suppose customers do not have strong feelings, needs and preferences for the brand's products. In that case, they need education through content seeding, such as partnering with influencers to promote the product on social media to reach their target customers and generate leads.

4) Brand loyalty is based on the above foundations.

If you are interested in improving your brand's impact, please follow and contact us. Double V. Consulting is looking forward to exploring the wonders of branding strategies with you!


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