Volkswagen-backed Xpeng braced for lease war to win over EV-skeptics

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After Xpeng’s boss warned of a “bloodbath” of the industry caused by the deadly war, the Chinese carmaker is ready to do whatever it takes to get its models off the European battlefield.

The automaker launched in Germany last week, and is part of a growing number of Chinese brands expected to account for a third of European EV sales this year.

But it’s a rental war, rather than a price war, that will keep automaker Volkswagen in the hearts and minds of loyal German drivers.

War loan

“It is impossible for the customer to buy the car,” said Markus Schrick, the head of Xpeng in Germany. Chance.

Instead, an increasing number of drivers are choosing to lease their electric vehicles, perhaps out of fear that technological advances in the EV space will cause their vehicles to fall behind the industry.

“With the rapid development of electric mobility, with new technology coming very quickly. customers prefer not to own cars but to rent cars.”

Xpeng

Leasing could be a win-win for EV skeptics, who have shown a harder-than-expected move to abandon combustion engines.

While leasing is already strong among non-EVs, it’s about to explode in the EV market because of what Schrick mentions.

Schrick says the company is offering lease pricing for its vehicles, while the starting prices for actual ownership start at €​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​ special​​​​​​​7.

Leasing competition is a good thing for the automaker, with Schrick saying that four out of every five cars that go on the Xpeng segment are sold through leasing deals.

In comparison, data compiled by McKinsey & Co. found 35% of new cars were rented in Germany.

While coming in at a much higher price point than Chinese rival BYD, Xpeng also spoke about pricing, as companies like Tesla and Volkswagen have entered into a long-running price war.

“This year is the beginning of a fierce competition that may end in ‘bloodshed’,” Xpeng wrote to employees in February, CNBC reported citing an internal letter shared with employees.

As with price wars, Schrick says Xpeng is ready to go after its competitors in lowering rental rates if a new price war breaks out.

“We’re not going to say: ‘If rental rates drop by 20%, no, we’re not going to participate.’ “Yes, we will find a solution because we want and want to sell cars,” he said.

After launching in 2020, China’s automakers have moved to increase shipments this year, roughly triple them between the last quarter of 2022 and the same period in 2023.

The carmaker is already present in the Nordic countries and the Netherlands.

Freenemies

It will be interesting to see how Xpeng’s strategy plays out in Germany, due to its close cooperation with the country’s largest car manufacturer, Volkswagen.

Volkswagen bought 4.99% in Xpeng for $700 million in December, with plans for the two to produce two SUVs by 2026.

That could raise eyebrows from rivals about where the close alliance ends — yes, if Xpeng and Volkswagen can forge ways to split and give up.

Xpeng’s Schrick says that for now, the relationship between the Chinese automaker and Volkswagen is at a standstill.

However, Schrick said he would “not be happy” with the best deals with the German carmaker going forward.

“A smart technology manufacturer like Xpeng, together with a traditional and innovative company like Volkswagen, would be a good partnership.”

Schrick also thinks that the deal will give the company an advantage in the tough battle that Chinese companies are facing. brand awareness and consumer confidenceafter getting used to the household names like Volkswagen they owned.

“If Volkswagen sells something, for many German consumers, that’s a good sign,” says Schrick.

“If Volkswagen is going to invest €700 million in the production of other cars, they should have analyzed it deeply and thoroughly. And that decision was not made lightly.

“They have looked at the market a lot, and they chose Xpeng.”

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