Model 3

Tesla is spurring innovation in China’s EV market, says startup president

The president of Chinese EV startup Xpeng Motors recently compared Tesla to Apple, in the way that its emergence is triggering a wave of innovation and competition from rival companies.

The statement was expressed by Xpeng Motors vice chairman and president Brian Gu. Speaking to CNBC News, Gu noted that he believes Tesla’s continued push into the Chinese market bodes well for local carmakers.

“Tesla reminds me of Apple. It educated the high-end market for China, but it also spurred a lot of competitive, diverse brands like Xiaomi and Huawei to come up with really cool and affordable products,” he said.

Just recently, Chinese President Xi Jinping announced that the country would be cutting import taxes for vehicles that are brought in from abroad. What’s more, Xi further stated that China would be lifting ownership restrictions on foreign-owned facilities operating in the country.

With these developments, Tesla’s vehicles would no longer be faced with steep 25% import taxes, making the electric cars far more competitive in the Chinese market. Tesla CEO Elon Musk welcomed Xi’s announcement, stating that China’s decision to lift import tariffs and remove ownership restrictions is “a very important action” that would “benefit all countries.”

While Tesla’s premium electric cars loom in the background, the Chinese EV startup president stated that Xpeng can still carve a niche in the competitive EV market in China. According to Gu, dedicated features in Xpeng’s vehicles, such as smart parking, mapping, and auto-navigation systems that are tailored for the Chinese market, will give the company an edge among its competitors.

“I think Xpeng has a different approach because we are local. A lot of our features are designed for the China market. So we feel like we are a lot more local and we can take on Tesla in this market.”

China’s decision to lift import taxes and ownership restrictions comes at a perfect time for Tesla, which is attempting to establish a facility in the country. Earlier this year, reports emerged that Tesla was in disagreement with Shanghai officials over the ownership of a car factory that it is planning to build. Not long after the reports emerged, however, Shanghai officials issued a statement, saying that Tesla and the local government maintain a “shared goal” to build and operate the planned facility.

Tesla’s China factory will likely focus on the production of the Model Y, the company’s upcoming crossover SUV. The Model Y is expected to be priced similarly as its sedan counterpart, making it competitive in the Chinese market. Apart from its price, the Model Y is also rumored to feature an even simpler build than the Model 3, using only 100 meters worth of wires as compared to the electric compact sedan’s 1,500 meters of wiring, thanks to the incorporation of Tesla’s “flex circuit.”

Tesla is spurring innovation in China’s EV market, says startup president
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