Wuling: big hopes for mini-electric cars in China
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Tesla’s rise to the top of Chinese electric car sales did not last long. More galling, the local carmaker that has taken the lead has done so with a smaller, slower vehicle.
The Wuling Hong Guang Mini EV has a top speed of 100 kmph and a 170km driving range. Once scoffed at for its size and weak horsepower it has become the most sold electric vehicle in China this year.
A $4,500 pricetag helps. Tesla’s Model 3 costs about $39,000 in China. Wuling has worked around the issue of high fixed battery prices by making its car small and light, meaning smaller and cheaper batteries can be used. The car is made by SAIC-GM-Wuling Automobile, a joint venture known as Wuling in which state-backed SAIC Motor and Guangxi Automobile Group own a combined 56 per cent and US automaker General Motors 44 per cent.
Sales of Wuling-made electric cars almost tripled in 2020. Yet SAIC shares (one of the listed components of the joint venture) have fallen 15 per cent this year as its other foreign joint ventures, including SAIC Volkswagen, have underperformed. Local demand for cheaper EVs has hurt sales of pricier vehicles. SAIC trades at just 9 times trailing earnings. This is a steep discount to both EV and traditional automaker peers.
The share price decline make this a good time to buy. Tesla’s slowing sales in China come amid increased government scrutiny, including reported bans on parking Teslas in Chinese government offices. This gives Wuling a chance to capitalise on growing mainstream demand amid a price war that Tesla’s locally made Model Y sparked last year.
Like the slogan “Young and Eager” painted on Wuling’s headquarters, there is ample room for growth. EVs account for less than a tenth of all cars in China, the world’s largest auto market. Narrow streets, young demographics and small budgets in nearby countries such as Vietnam and Indonesia offer significant potential too. Longer term, it might even have a chance at capturing low price EV car sales in Europe and the US.
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