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October 20, 2014

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Home » Supplement » AutoTalk

Diverse tactics on mileage anxiety

By Lu Nengneng and Ding Yining | October 20, 2014, Monday | Print Edition

A vehicle purchase tax exemption for electric car buyers that started in September has provided the perfect backdrop for two very different market players to lift their game.

That tax was equal to 8.5 percent of the price after subsidies.

Seizing on the exemption benefits are Denza, the joint venture between Daimler AG and Warren Buffett-backed BYD Co, and domestic carmaker BAIC.

Denza, which launched an all-electric car in Shanghai last month, is forecasting “significant sales” for the vehicle.

The company plans to expand into the Beijing and Shenzhen markets and create a dealership network commensurate with its market position, said Arno Roehringer, chief operating officer of Shenzhen BYD Daimler New Technology Co.

“We’re very happy about this new tax policy, though we didn’t focus on it at the very beginning of our work,” Roehringer said.

Targeting the premium market, the company’s first product, called the Denza, carries a sticker price of 369,000 yuan (US$60,000). With central and local government subsidies, the actual starting price drops to 272,000 yuan — relatively high compared with other new energy cars.

At that price level, the vehicle purchase tax exemption plays a smaller role than in the budget-car segment. Roehringer said the company wants to offer good quality and value for money. The car model boasts a range up to 300 kilometers on a single charge and features luxury-level specifications, such as a 2,880-millimeter wheelbase and exquisite interior decor.

Domestic carmaker BAIC is choosing to approach the electric car market from a different angle.

Its compact electric car E150EV, whose promotional program across 10 cities invites consumers to test drive the car for a whole day at a cost of 1 yuan, boasts cost-effective green mobility.

After including government subsidies and heavy discounts offered by BAIC, the car is being marketed at less than 90,000 yuan.

Though cost controls limit its maximum mileage range to 160 kilometers, Zheng Gang, general manager of BAIC BJEV, doesn’t seem concerned.

He said the expectation that an electric car should be able to run 500 kilometers on a single charge is superfluous because 90 percent of people travel less than 90 kilometers a day according to the company’s consumer studies.

“Mileage anxiety is more a force of habit because people are so used to gasoline-powered cars running between 400-700 kilometers before needing a refill,” he said. “It is hard to change that perception overnight, but more exposure to electric cars and good charging services will accomplish that in the long term.”

BAIC, an arm of Beijing Automotive Industry Holding Co, is investing heavily to help electric car buyers build their own charging poles at home at a cost lower than market price or even for free.

Still, Roehringer said he believes the long driving range of Denza will give it a big competitive edge.

“It’s a major concern for consumers,” he said. “At a time when charging infrastructure is still in the very beginning stages, customers want to feel safe when they’re driving in the city.”

Meanwhile, Denza is expanding charging devices not only for customers at home but also in company parking lots. It will be much easier to bring new technologies into the market when charging standards become more unified and facilities become widespread, Roehringer said.

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