[Asia Economy Reporter Changhwan Lee] As ultra-low-cost electric vehicles priced around 5 million KRW gain significant popularity in China, there is a growing outlook that Chinese-made electric cars have increased potential for overseas expansion.
On the 28th, the Korea Automotive Technology Institute released a report titled "China's Ultra-Low-Cost Electric Vehicle Craze and Its Implications," stating that the local sales volume of China's compact electric car, Wuling Hongguang Mini, is rapidly increasing.
Despite being launched in mid-last year, the Wuling Hongguang Mini sold 127,000 units, ranking second in global and Chinese electric vehicle sales in 2020. In March and April of this year, it achieved second place in total passenger car sales in China, including internal combustion engine vehicles.
SGMW, a joint venture established by Shanghai Automobile, GM, and Wuling Automobile, released the Wuling Hongguang Mini, a compact car with a boxy shape characterized by a height relatively high compared to its length and width. By domestic standards, its size corresponds to a microcar, but in terms of power output, it qualifies as a compact car.
The report analyzed that the popularity of the Wuling Hongguang Mini is based on providing the basic functions required of a car while boldly omitting auxiliary features to meet the demands of its main target demographic, the youth, thereby securing a strong price competitiveness in the low 5 million KRW range.
Due to the nature of electric vehicles, it also benefits from partial exemptions from Chinese government regulations. In major Chinese cities, vehicle purchase barriers exist, such as limited license plates being allocated through auctions or lotteries to curb traffic demand, but electric vehicles receive some exceptions from these regulations.
For example, in Shanghai, where license plates are allocated through auctions, the winning bid price typically exceeds 90,000 yuan (approximately 15.8 million KRW), a very high amount, but electric vehicles can obtain license plates free of charge.
The institute explained that while some view the success of the Wuling Hongguang Mini as merely an effect of vehicle registration regulations within China, there is also a perspective that it could serve as a starting point for the full-scale overseas market entry of Chinese automobiles in the future.
Lee Ho, a senior researcher at the Korea Automotive Technology Institute, said, "Using a unique product concept, the Wuling Hongguang Mini can target advanced markets where Chinese companies find it difficult to enter in major segments or serve as a vanguard for entering underdeveloped country markets based on its affordable price."
He added, "Especially when penetrating countries with low electric vehicle adoption rates, it can define the standard image of electric vehicles consumed in those countries, potentially hindering market entry of other types of electric vehicles and enabling early brand recognition."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
