Introduction

Introduction

There are many factors influencing the development of pure electric vehicles, but currently, they are doing quite well.

Is anyone still paying attention to the micro pure electric (A00-class) market?

At the Chengdu Auto Show four years ago, the legendary "God car," the Hongguang MINIEV, was officially launched. With its unique market positioning and competitive advantages, the new car quickly became a phenomenal product. Since its launch, the Hongguang MINIEV has sold over 1.1 million units in less than three years, ranking first in sales of pure electric vehicles among Chinese brands for 28 consecutive months, with a monthly sales record of over 50,000 units.

Remarkably, the popularity of the Hongguang MINIEV not only served as an important carrier for the "God car" gene of Wuling Hongguang but also explored a new blue ocean in the micro pure electric vehicle market at a low price of just 28,800 yuan, leading a new trend in the automotive market.

Four years have passed quickly, and another Chengdu Auto Show is upon us. With the backdrop of a surge in the penetration rate of new energy vehicles, the automotive market continues to evolve. Huawei and Xiaomi have entered the fray, while BYD leads the way over Tesla, and independent brands continue to expand their brand influence. Few people are paying attention to the micro pure electric vehicle market that once generated a strong response.

However, after reviewing data and my own observations, I discovered that this niche market, which once saw a frenzy followed by a chill, is quietly undergoing tremendous changes.

The market is rebounding, but there's no longer a clear leader

"They sell well. This year, we've sold more than last year, with sales of up to 10 units per month."

"People who live in their hometowns find it convenient for grocery shopping and picking up kids."

These two responses were given to me during market research trips to Qingdao and my hometown in Xinyang. Although the locations and brand stores visited were different, the answers from the 4S store salespeople were surprisingly similar. In their view, micro pure electric vehicles have been selling well in the first half of this year.

This phenomenon is not only reflected in terminal sales but also in statistical data.

Data shows that in the first half of this year, retail sales of micro pure electric vehicles reached 440,000 units, an increase of 35% year-on-year, indicating a sign of recovery in the micro pure electric vehicle market amidst price wars and the noise of new vehicle launches in various niche markets. Notably, this growth rate is second only to the 54% increase seen in mid-to-large SUVs among various vehicle types.

Such achievements are not easy for the micro pure electric vehicle market.

Over the past four years, since the Hongguang MINIEV entered the market as a "dark horse," the micro pure electric vehicle segment has experienced rapid growth, sharp declines, and a recovery from its wounds, all filled with the romanticism of ups and downs. Especially looking back at its emergence from the quagmire of a narrowing market in 2023, the current market recovery is even more valuable.

In 2023, the cumulative sales of micro pure electric vehicles were 950,000 units, a year-on-year decrease of 12%, or a decrease of 130,000 units from 1.08 million units in 2022, equivalent to the annual sales of a popular model. At the time, the industry generally believed that the micro pure electric vehicle market would decline from its peak, particularly in the first half of 2023, when cumulative retail sales were only 300,000 units, a significant year-on-year decrease of 42.1%.

In my article "God Car, Fallen," I also wrote about the severe decline of the Hongguang MINIEV and the shrinking micro electric vehicle market. At that time, the monthly sales of the Hongguang MINIEV plummeted from over 40,000 units to less than 20,000 units within just three months, and the micro pure electric vehicle market also began to stagnate.

However, who would have thought that this year, the micro pure electric vehicle market would suddenly reverse its decline and continue to make progress on its comeback trajectory, from a near-halving year-on-year to a 35% year-on-year increase, slapping the faces of pessimists while proving that the micro pure electric vehicle market remains a rigid demand. During my visits, relevant sales personnel also expressed to me their intention to "increase the inventory of pure electric compact cars."

Concurrent with the rebound of the micro pure electric vehicle market is the loss of the magic touch of the "God car," the Hongguang MINIEV.

This is not to say that the Hongguang MINIEV's terminal performance is lacking, but rather that its once-dominant position is no longer there.

In the first half of this year, the Hongguang MINIEV sold over 83,000 units, still ranking first in the niche market. However, second place went to Changan Lumin with sales exceeding 60,000 units, and third place went to Geely Panda with sales exceeding 49,000 units... It is evident that these "latecomers" are continually narrowing the gap with the Hongguang MINIEV, working to break the old market structure.

Moreover, from the perspective of individual model sales, most of these pure electric models are produced by mainstream automakers. Behind this phenomenon lies the advantage of large automakers in manufacturing pure electric compact cars - from scale to cost sharing, from technological accumulation to R&D and production, and from brand influence to market layout capabilities, consumers are more willing to believe that mainstream brands can better meet their needs.

Disappearing, surging, or stabilizing

Based on the performance of micro electric vehicles, industry insiders have suggested that the A00-class market is returning to the competitive landscape of 20 years ago.

Indeed, since the 1990s, China's car ownership has begun to soar. Smaller, more cost-effective cars began to fill the streets and alleys, becoming the mainstay of China's automotive market at that time. Public data shows that more than half of the top ten best-selling sedans in 2005 were small cars, such as Chery QQ, Changan Benben, Xiali, Alto, and others, becoming indelible memories for a generation.

Today, with the rise of new energy sources, small gasoline-powered cars have faded away. Amidst upgrading consumption and intensifying market competition, once popular models have gradually withdrawn from the market, while companies like Geely, Changan, and Chery have brought more diversified A00-class compact cars back into the mainstream market after 20 years, offering incremental potential for micro electric vehicles.

In these 20 years of market changes, before the launch of the Hongguang MINIEV and after the abandonment of gasoline-powered compact cars, the demand for small cars in the market was largely met by "old man's joy" (low-speed electric vehicles), which explored short-distance, convenient, and low-cost travel to the extreme, continuing to sell well in third- to fifth-tier markets.

It could be said that during that time, "old man's joy" delighted the old men!

With the arrival of the Hongguang MINIEV, "old man's joy" was instantly disrupted. With advantages such as a starting price of just 28,800 yuan, a range of 120KM, customizability through modifications, and a cuter design, the Hongguang MINIEV crushed "old man's joy" and captured every corner of the market - "old man's joy" was no longer joyful, but the old men were even happier.

It is evident that micro electric vehicles have played a catalytic role in the transition from the abandonment of small gasoline-powered cars to the narrowing of "old man's joy" penetration, but ultimately, it is the ever-present consumer demand that drives the market. These once popular models are tangible manifestations of consumer demand across different industrial processes. Therefore, as long as consumer demand persists, the market will not perish.

As such, industry insiders believe that the micro electric vehicle market will not disappear but is more likely to stabilize. In their view, even in countries with high per capita vehicle ownership such as Europe, the United States, Japan, and South Korea, the micro car market remains substantial, existing in various forms such as "street guerrillas," "housewife shopping carts," and "fashion items," and deeply loved by consumers.

Therefore, based on the current stage, the demand for pure electric compact cars remains strong, and the advantages of this vehicle type are temporarily irreplaceable.

Especially in lower-tier markets, a considerable number of consumers still choose micro electric vehicles. They are attracted by their affordable prices, low operating costs, convenient charging, and ease of driving and parking. According to market research, the monthly charging cost of a micro electric vehicle is less than 100 yuan, and even when insurance premiums and routine maintenance are included, the monthly expenditure does not exceed 400 yuan.

However, in the future, micro electric vehicles are more likely to compete in a boutique format. With escalating consumer demand, users will become more discerning, and pure electric compact cars need to consistently convey the message that "low price does not equal low quality" and incorporate personalized needs, such as distinctive exterior design and enhanced configurations.

Of course, policy support is also crucial.

In 2010, China introduced subsidies for new energy vehicles, leading to the unchecked growth of pure electric compact cars. However, with adjustments to the new energy subsidy policy in 2018, the market share of micro pure electric vehicles plummeted from a high of 70% to 30%. It was not until the Hongguang MINIEV reintroduced pure electric compact cars to the "50,000 yuan era" that a new market blue ocean was opened up.