How can electric vehicles avoid homogeneous competition?

Tesla's market capitalization, surpassing $500 billion, continues to rise. Thanks to the "hot effect" of Tesla's electric vehicles, new domestic automakers like NIO have also seen their market capitalizations reach new highs this year. Traditional automakers, facing increasing pressure, are adjusting their strategies. SAIC, Dongfeng, Changan, and GAC are all focusing on high-end smart electric vehicle brands, while new brands like Zhiji, Lantu, and Aion are emerging.

However, with the growing number of competitors in the electric vehicle market, electric vehicle companies face a common challenge: how to avoid homogenization. Unlike fuel vehicles, which require complex and technologically demanding powertrains like engines and transmissions, electric vehicles, comprised of core components like batteries, electronic controls, and motors, offer a relatively low barrier to entry. This is one of the reasons for the rapid rise of many new automakers. However, while electric vehicles offer easy entry, future development faces significant challenges. Currently, there are limited battery suppliers, and many models rely primarily on batteries from a few suppliers like CATL. This makes it difficult for electric vehicles in the same segment to differentiate themselves, a problem that is prompting automakers to rethink and seek solutions. Currently, with the exception of a few electric vehicle brands like BYD that produce their own batteries, the vast majority of them purchase power batteries, often referred to as the "heart" of new energy vehicles. Due to the significant investment in battery technology, electric vehicle companies, including Tesla, initially adopted an integrated supply chain approach. However, this model is gradually evolving. OEMs will no longer rely solely on power battery companies for their production, but are increasingly experimenting with in-house battery production. Tesla, while relying on Panasonic, LG Chem, and CATL as its battery suppliers, has also acquired battery manufacturing and R&D companies Hibar and Maxwell, officially launching its "Roadrunner" power battery production initiative this year. Volkswagen, while sourcing batteries from CATL, is also investing nearly €1 billion in a battery factory in Germany. GAC, while sourcing power batteries from CATL, is also accelerating its own research and development of graphene-based super-fast charging battery technology.

The electric vehicle competition is only the first half of the race. The potential for growth in electric vehicle hardware itself is relatively limited; the second half of the race will see greater potential for growth in intelligent technologies. Tesla's innovations encompass not only hardware but also breakthroughs in software and business models. Its OTA (Over-the-Air) technology continuously upgrades data and mapping capabilities, becoming one of its key advantages in staving off competition from competitors.

Alongside the hardware battle, smart electric vehicles are also competing in the new software arena. While maintaining their hardware advantages, more and more traditional automakers are branching out from their traditional automotive circles, transforming into technology companies and exploring "software-defined cars." Recently, "Zhiji Auto," a high-end smart pure electric vehicle project jointly developed by SAIC Motor, the Pudong New Area, and Alibaba Group, officially launched. The project secured 10 billion yuan in its founding round of funding, aiming to enhance the new brand's core competitiveness through significant software innovations. GAC Aion, which recently achieved brand independence, is also accelerating its transformation towards electrification, intelligence, connectivity, and sharing. It is focusing not only on EV (pure electric vehicle) technology but also on pursuing new breakthroughs in ICV (intelligent connected vehicle) technology, accelerating its progress in the autonomous driving arena through continuous software iteration. However, compared to companies like Tesla, which have positioned themselves as "tech companies" from the outset, new factions emerging from traditional automakers lack an advantage in software. For this reason, traditional automakers are currently forming alliances as they develop new high-end smart electric vehicle brands. SAIC has partnered with Alibaba, GAC has partnered with Huawei and Tencent, and Changan has partnered with Huawei to jointly explore new breakthroughs in the integration of hardware and software.

Beyond the product itself, traditional automakers face numerous challenges in developing new smart electric vehicle brands. GAC Aion General Manager Gu Huinan explained that GAC Group separated the Aion brand into two independent brands alongside Trumpchi because new energy vehicles differ not only in product but also in channels, customers, technology, and services, as well as in consumer groups and applications. This independence allows Aion to better focus on its core business. A separate Aion brand will likely require adjustments to its R&D, manufacturing, marketing, service, and institutional mechanisms. The Aion brand plans to promote large-scale customized production through digitalization, integrating customization throughout the entire process from R&D to manufacturing and marketing services. This is one of its strategies to avoid homogenous competition in the electric vehicle market.

With the automotive industry undergoing a once-in-a-century transformation and the onslaught of new car manufacturers, not only domestic brands are facing pressure, but joint ventures are also under threat. While accelerating their transformation toward the "New Four Modernizations," they are also considering how to break the homogenous competition in the electric vehicle market. GAC Honda's First Business Headquarters Deputy General Manager, Toshi Yanagisawa, believes that the surge in market value for electric vehicle companies like Tesla stems from recognition not only for their products but also for aspects such as user experience. To avoid homogenous competition, in addition to focusing on product development, efforts must also be made to strengthen customer experience across the brand and vehicle experience, as well as drive innovation in marketing models. Otherwise, success is impossible.

With the continuous advancement of technology, a new ecosystem is gradually forming in the automotive industry. Automakers are exploring various approaches to avoid homogenous competition in the electric vehicle market and to differentiate themselves through integrated supply chain integration.