The automotive market is accelerating its reshuffling—how automakers can steadily advance in 2023

Although the automotive market in 2022 was affected by recurring COVID-19 outbreaks, chip shortages, and rising raw material prices, China's auto market achieved growth against the odds, thanks to supportive policies such as the halving of purchase taxes.

As we enter 2023, competition among automakers will intensify further, driven by factors such as the phasing out of new-energy vehicle subsidies and Tesla's price cuts. According to forecasts from the China Association of Automobile Manufacturers, China's total automobile sales in 2023 are expected to reach 27.6 million units, representing a 3% year-on-year increase. Notably, new-energy vehicle sales are projected to hit 9 million units, soaring by as much as 35% compared to the previous year. Looking at the broader market landscape, China's automotive industry will continue to face numerous challenges in 2023. Several second-tier new EV brands are already grappling with the risk of being phased out, while some struggling niche brands under traditional automakers are barely managing to stay afloat amid mounting difficulties. As a result, the domestic auto market is inevitably poised for an accelerated reshuffle. Under these dynamic conditions, how automakers can steadily advance while navigating this turbulent environment has become a topic of growing concern.
As 2023 dawned, China's new-energy vehicle market kicked off with a price war. On January 6, Tesla officially announced price cuts across its lineup, with the largest reduction reaching an unprecedented 48,000 yuan per vehicle. Following closely behind, brands like AITO and XPeng Motors also joined in, offering new car discounts ranging from 20,000 to 36,000 yuan. Soon after, numerous other automakers began participating in this price battle, albeit through more subtle, indirect means of lowering prices. However, looking at the broader trend of new-energy vehicle development, now is far from the ideal time for price competition. Many emerging EV startups are still operating at a loss, while the phasing out of national subsidies for NEVs has already pushed up the cost of each vehicle by at least 10,000 yuan. Under these circumstances, raising prices would actually be the more logical move. For instance, companies like BYD and Geely have already announced price hikes on their respective NEV models, passing on the increased costs—resulting from the subsidy rollback—to consumers. Even WM Motor, which has struggled with minimal sales, has chosen to raise prices as well.

However, Tesla's price-cut controversy has drawn numerous automakers into the fray. In particular, the struggling new EV startups—already grappling with massive losses—have been forced to follow suit, as failing to lower their prices could mean losing even more orders. Yet, cutting prices might actually provide these companies with a much-needed lifeline, making it an unavoidable move in their quest for survival. That said, a large-scale price war is unlikely to erupt in the 2023 new-energy vehicle market. The reason? Many automakers simply lack the financial resources to engage in such a battle. For the new EV startups, continuing to sell at a loss is simply unsustainable—they already face sky-high manufacturing costs. Meanwhile, Tesla stands out as the clear exception: its ability to slash prices stems from its remarkably low cost structure and exceptionally high profit margins. Even Toyota, one of the world’s most formidable automakers, can’t match Tesla on this front. Thus, rather than engaging in a relentless price race, emerging EV brands would do well to focus on reducing their own production costs. Only by driving costs down significantly can they position their products competitively in the market—and ultimately secure a sustainable foothold in the industry.
Recently, NIO, Li Auto, and XPeng have all been deeply reflecting on the various shortcomings they’ve encountered on their journey to building cars. Among them, William Li highlighted "eight key areas of inadequacy" in an internal letter, noting that the company’s resource allocation for 2023 is expected to increase only slightly. Instead, the focus will be on tapping into internal potential—particularly by thoroughly reviewing and optimizing inefficient organizations, teams, processes, and projects. At the same time, the company aims to achieve quarterly profitability by Q4 2023 and ultimately turn profitable for the full year 2024. Meanwhile, He Xiaopeng, during the 2022 annual summary meeting, emphasized the goal of achieving positive operating profits by 2025. To better align with this vision, he recently restructured the company’s internal organizational framework, shifting priorities toward strategy, product planning, and R&D. This move is designed to further enhance the brand’s sales capabilities as well as its service offerings. Additionally, XPeng has recently established an internal finance platform aimed at refining cost and expense management and strengthening the compliance of its financial systems.
Li Auto has also made significant adjustments to its management team and simultaneously initiated a shift toward a matrix-style organizational structure, adding five new functional departments: the Commercial Department, Supply Department, Process Department, Organization Department, and Finance & Economics Department. Looking at how leading new EV brands are adapting, "tightening belts" and pursuing steady yet progressive growth may well become the primary strategies this year. As for cost-cutting measures, automakers are taking different approaches—Tesla, for instance, focuses on technological innovation and economies of scale to drive down costs. Notably, Tesla’s innovations in the manufacturing process have proven to be a key weapon in cost control, with its pioneering integrated die-casting technology being a prime example. The rear subframe of the Model Y, previously assembled from over 70 individual stamped and welded parts, is now seamlessly formed through integrated die casting in less than two minutes. This not only reduces vehicle weight but also helps keep costs in check.

It is reported that, in addition to the rear underbody of the vehicle frame, Tesla plans to adopt integrated casting technology in the future for producing components such as the front underbody and battery casings. Once this technology is implemented, it will replace the original 370+ individual parts, reducing the overall vehicle weight by 10% and increasing range by 14%. At the same time, it will help lower production costs and significantly accelerate the manufacturing process. Moreover, when it comes to power batteries—the most cost-intensive component—Tesla continues to maintain its core cost advantage by leveraging technological innovation to dramatically reduce the content of precious metals, thereby cutting battery costs substantially. Meanwhile, Tesla’s groundbreaking 4680 battery has drawn considerable attention thanks to several innovative designs, including its cell-to-body (CTB) architecture and silicon-based anodes. Tesla claims that, when combined with CTC technology, these advancements can boost electric vehicle range by up to 54%, while also driving a significant reduction in battery costs.
Another way Tesla reduces costs is through economies of scale. By establishing a factory in Shanghai, China, Tesla achieves significant scale advantages across its supply chain—and as vehicle sales continue to expand, these economies of scale further help the company spread its costs more efficiently. Thanks to both its technology-driven cost reductions and the powerful leverage of its scaling strategy, Tesla remains highly flexible when it comes to adjusting prices.
According to domestic media reports, Tesla’s next-generation product platform is expected to cost only half as much as the current Model 3 and Model Y platforms. If these reports prove accurate, Tesla’s vehicle prices could drop into the 100,000-150,000 yuan range, delivering a severe blow not only to the traditional internal-combustion engine car market but also putting significant pressure on the emerging EV startups. Notably, during Tesla’s Q3 earnings call in October 2022, Musk hinted that the new platform’s models would eventually surpass the combined sales of all existing Tesla vehicles. Should this model hit the market, its impact on China’s burgeoning new-energy vehicle sector would be nothing short of transformative—while simultaneously spurring established automakers and startups alike to accelerate their pace of technological innovation, aiming for cost reductions and efficiency gains. In essence, balancing cost-cutting, efficiency improvements, and robust sales growth will be critical in 2023. Put another way, achieving both cost efficiency and higher sales volumes isn’t just a strategic approach—it’s the very lifeline that will enable these new EV players to navigate the intense competitive landscape and secure their long-term survival.

It's foreseeable that BYD and Tesla will dominate the new energy vehicle market by 2023. The primary priority for these new car makers isn't to compete with established automakers, but to achieve profitability and stem losses as quickly as possible. In recent years, auto brands have mushroomed, particularly with the rise and growth of new energy vehicles, leading to a multi-tiered market segmentation. New and established car manufacturers have seized this opportunity to launch more personalized brands and tap into new market segments. The emergence of new consumer groups and demands has made personalization a growing consumer trend. BYD, which has been deeply involved in the new energy vehicle market, launched the Yangwang brand in January, focusing on the high-end new energy vehicle market. It also released a new energy off-road vehicle and a new energy coupe. GAC Aion also recently launched the million-dollar electric supercar brand, the Hyper, exploring a more niche high-end market.

Furthermore, Dongfeng Motor Group has launched the all-new Mengshi brand, targeting the luxury new energy off-road vehicle segment. With numerous world-first and industry-first advanced technologies and applications, it is striving for technological prominence and has successfully attracted a group of tech-savvy consumers. The first mass-produced vehicle will be available in 2023. BAIC New Energy also launched a new brand, KAOLA, in 2022, targeting mothers. Positioned as a "smart parent-child car," the new car focuses on mothers and helps them address issues such as children's health and safety in the car. Car companies have also made many attempts in the MPV market, which has always been considered a niche market. However, in 2022, BYD, Lantu, and Zeekr all launched new models in this segment, including BYD's Denza D9, Lantu's Dreamer, and Zeekr's 009 model.

It's clear that the new-energy vehicle market is currently experiencing a vibrant era of diverse offerings—ranging from micro-city cars and rugged off-road vehicles to high-end supercars priced at over a million yuan. In fact, virtually every type of vehicle with ties to the new-energy sector can be found on the market today. Moreover, automakers are not only intensifying their efforts in popular segments like SUVs and sedans but are also actively exploring niche markets such as off-road vehicles, sports coupes, and MPVs, aiming to capture the growing demand for more specialized, albeit smaller, consumer groups. This trend first gained momentum in 2022 and shows no signs of slowing down in 2023. In fact, even before this wave of segmentation took hold, Li Auto’s Ideal ONE had already made a significant impact in its segment by appealing to “dad-car” buyers with its spacious interior and impressive long-range capabilities, quickly becoming a best-selling model in that particular niche. Similarly, Great Wall Motors’ ORA brand has successfully targeted female consumers by addressing their unique needs and preferences. With compact designs and fresh, pastel color schemes, ORA vehicles have swiftly won over many women shoppers upon launch. These success stories highlight how automotive consumption is increasingly shifting toward highly segmented demands. Recognizing the importance of these niche markets, automakers are now leveraging personalized trends to accelerate their expansion into previously underserved segments.
For automakers, tapping into more niche markets is just the first step—what matters even more is effective management. In today’s fiercely competitive landscape, establishing a solid foothold is an essential challenge. By leveraging targeted marketing strategies in these niche segments and further enhancing the advantages of new-energy vehicles, brands can significantly strengthen their overall appeal and competitiveness. Currently, electrification and intelligent technologies are undeniably the dominant trends driving the industry forward, prompting all automakers—including traditional ones—to accelerate their transformation toward new energy solutions. In fact, for many conventional automakers, their established brand image and positioning have, to some extent, slowed down their transition to electric mobility. To break free from the legacy of traditional internal-combustion vehicles and truly connect with diverse user groups, rebranding and reinvention are the crucial first steps. As a result, the automotive market has seen a surge of new, high-end, smart EV brands emerging over the past two years—brands like Avatr, Rising Auto, Salon, and Lantu—all of which are positioning themselves as premium, cutting-edge electric vehicles while elevating their overall brand identity to meet evolving consumer demands.
Industry experts have also shared their insights on tapping into niche markets. They note that the current automotive market suffers from severe product homogeneity, making it crucial for automakers to emphasize their unique brand identity. Launching personalized products isn’t about overly exaggerated designs—it’s instead a strategic move aimed at addressing consumers' real pain points when it comes to vehicle use. By leveraging tailored marketing approaches, automakers can effectively attract customers and cater to the specific psychological needs of smaller, yet highly targeted segments. Of course, once automakers zero in on these more specialized markets, they must also prioritize product quality—covering aspects such as styling design, intelligent features, and safety—while delving deeper into understanding users' genuine requirements.

Although personalized branding is becoming increasingly prominent, China's market remains vast, with an even more impressive user base. As a result, many brands are leveraging niche markets to achieve transformative growth and upgrade their brand positioning. That’s why, once Tesla’s electric pickup truck, the Cybertruck, begins deliveries later this year, it wouldn’t come as a surprise if domestic companies also launch their own electric pickups. After all, range anxiety has never been fully addressed in the realm of new-energy vehicles—on the contrary, countless potential buyers have been discouraged precisely because of this concern. Many EV owners can personally attest to the challenges that come with relying solely on battery power. Yet, after years of rapid development, the new-energy vehicle market is now undergoing a remarkable shift. Today, intelligent features, extended ranges, and sleek, eye-catching designs have become commonplace, while Chinese new-energy brands are steadily moving upmarket, striving to capture premium segments of the automotive landscape.
During this process, technological approaches such as pure electric vehicles, hybrid vehicles, plug-in hybrid vehicles, and range-extended electric vehicles have blossomed in diversity, collectively shaping the landscape of China's new-energy vehicle market. This diversified approach to technological development in the NEV sector has, to some extent, alleviated users' range anxiety. In the past, many people were dismissive of new-energy models, but recently, this perception has clearly shifted—especially now that word is spreading about a new-energy vehicle capable of running on both fuel and electricity, with a range exceeding 1,000 kilometers. Such innovations are undoubtedly encouraging news for the continued growth of the NEV industry.

Next, addressing the range issue of new-energy vehicles remains the top priority—and also serves as a key competitive advantage for automakers in the market. Currently, the industry is pursuing two main approaches to tackle this challenge: one focuses on vehicle technology strategies, while the other centers on power battery solutions. Let’s start by examining the vehicle technology routes. At present, new-energy vehicles primarily fall into three categories: pure electric, plug-in hybrid, and range-extended models. Among these, range-extended electric vehicles have recently gained significant traction in the market. Since the successful sales of range-extended EVs led by brands like Li Auto, numerous automakers—including Neta, Leapmotor, Changan, and Geely—have already begun making strategic moves in this segment. For instance, Neta unveiled an extended-range version of its Neta S model, the Shenlan S7 extended-range variant has already been approved by the Ministry of Industry and Information Technology, and Leapmotor’s C11 extended-range model has even kicked off pre-sales.
Despite ongoing industry debates surrounding range-extended vehicles, several automakers have still chosen to enter this market. Today, range-extended models are not only maintaining their presence in the new-energy vehicle market—they're actually gaining momentum, spreading rapidly across the landscape. The sudden surge in consumer interest in these vehicles can be directly attributed to their ability to address key pain points for drivers. Currently, range anxiety remains an unavoidable challenge for pure electric vehicles, particularly during extended holidays when long lines at highway charging stations and reduced winter range further exacerbate users' concerns. In contrast, range-extended vehicles offer the unique advantage of running on both gasoline and electricity, enabling longer-distance travel while still providing the flexibility to recharge as needed. Moreover, it’s important not to overlook another significant factor: the growing popularity of range-extended vehicles has led to a richer variety of products in this segment. These cars now boast improved aesthetics, enhanced features, and superior performance compared to earlier models. At the same time, in urban environments, range-extended vehicles can easily function as pure electric vehicles, with a 200-kilometer all-electric range that’s more than sufficient for everyday driving needs.

BYD is a leading player in the plug-in hybrid market, leveraging its hybrid technology to become the sales champion among domestic brands. BYD's DM-i Super Hybrid model focuses on fuel efficiency, relying primarily on a high-power, efficient electric motor to significantly reduce fuel consumption. Furthermore, to provide users with an even better driving experience, BYD has also introduced DM-p technology, which prioritizes performance. Both plug-in hybrid models have performed very well in the market, ranking high on the monthly sales charts released by the China Passenger Car Association.

In addition to BYD, Great Wall Motors is also continuously developing plug-in hybrid technology. Its flagship Lemon Hybrid DHT, with its all-speed, all-scenario, high efficiency, and high performance, has become a representative example of hybrid technology. A large number of new models will be delivered this year. Other automakers, such as Wuling and Changan, are also expanding into this market segment. Alleviating range anxiety will ultimately depend on power batteries. Nowadays, stacking battery packs and increasing energy density to increase battery life is a thing of the past. Pure electric vehicles produced in this way basically have a range of around 600-700 kilometers. Continuing to increase battery packs is no longer attractive. What is more worth looking forward to is improving charging efficiency and battery replacement.

Since last year, 800V high-voltage fast-charging technology has been steadily gaining momentum, with models such as the Xpeng G9 (specifications | price inquiry), Avatr 11, Jihu Alpha S HI Edition, and Great Wall Salon Mech Dragon all embracing this cutting-edge tech. Notably, the Xpeng G9 features an 800V silicon carbide platform paired with a 480kW fourth-generation ultra-fast charging station, significantly boosting charging efficiency. By 2023, the "charge for 5 minutes, gain 200 km of range" experience enabled by 800V high-voltage fast charging is set to become a major selling point for new vehicles. Companies like Xpeng, Li Auto, BYD, Aion, Zeekr, Changan, and Lotus have already unveiled their own 800V high-voltage platforms, and new models built on these platforms are expected to arrive one after another in the near future.
Additionally, battery swapping is set to become another key growth driver in the 2023 new-energy vehicle market. Currently, besides NIO, automakers such as FAW, SAIC, Changan, BAIC, GAC, Dongfeng, and Geely have already begun deploying battery-swapping infrastructure, signaling that competition in this space will intensify further. Overall, the new-energy vehicle market in 2023 is expected to remain on an upward trajectory. With hybrid vehicles enjoying strong sales, coupled with advancements in battery technology and the maturation of battery-swapping solutions, automakers are facing a golden opportunity they simply can't afford to miss—especially as multiple development paths continue to converge simultaneously.

Translated from Sina Auto

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