By the end of March 2024, Xiaomi SU7, priced starting at 215,900 yuan, hit the market. Perhaps everyone has only paid attention to its appearance and interior fully replicating Porsche, as well as Lei Jun's various high-profile promotions. Its popularity has remained high, sparking widespread discussions across society.

Alongside Xiaomi SU7, there are also the Zeekr 007 and IM L6, priced starting at 209,900 yuan and 219,900 yuan, respectively. If we expand the scope further, Xpeng G6 is priced between 199,900 yuan and 276,900 yuan, Lixiang L6 is priced between 249,800 yuan and 279,800 yuan, Wenjie M7 is priced between 249,800 yuan and 329,800 yuan, Star Era ES is priced between 198,800 yuan and 339,800 yuan, Jiyue 01 is priced between 219,900 yuan and 309,900 yuan, and Haobo HT is priced between 213,900 yuan and 329,900 yuan.

Almost all the Chinese new energy vehicle brands we can count have made layouts in the 200,000-level niche market. And these models (whether SUVs or sedans) are also the top-selling models of their respective brands.

So the question arises, why do new forces represented by Xiaomi prefer this niche market, rather than the broader 100,000-level niche market?

Long-held obsession

Looking back at the era of fuel vehicles, 200,000 yuan was the pricing ceiling for Chinese independent brands. At that time, joint venture brands heavily concentrated in the 200,000-level market. Models like the Magotan, Passat, Camry, Accord, Tiguan, CR-V, RAV4, and X-Trail were among the best, and even luxury brands had launched entry-level models and extended their hands to this market.

It can be said that consumers were in a passive situation at that time. If they wanted to buy a model around 200,000 yuan, they only had the choice of joint venture brands. Although there were many brands, they didn't have to worry about sales back then and always maintained a superior attitude towards consumers.

Back then, independent brands were eager to enter this price range, and brands like Chery, FAW, Dongfeng, Chang'an, Great Wall, and Geely all launched models priced between 150,000 yuan and 200,000 yuan, but none of them managed to gain a foothold.

In a sense, reaching a product price of 200,000 yuan has become a long-held obsession for Chinese brands.

It was only after China's auto market entered the new energy era that Chinese brands finally fulfilled their dream.

The new auto forces of NIO, XPeng, and Li Auto initially launched models priced above 300,000 yuan, targeting luxury brands. With eye-catching exterior designs, electric and intelligent driving experiences, as well as top-tier configurations previously only seen on luxury models priced at 400,000 to 500,000 yuan, they broke through the constraints of their brands.

Let's look at some data. In 2021, the total number of insurance claims delivered by BMW, Benz, and Audi (excluding imports and exports) was 1.8621 million (down 2.84% year-on-year), while the combined number of insurance claims delivered by NIO, Li Auto, and XPeng during the same period was 278,800 (up 167.82% year-on-year).

The growth curves of the two sides are completely different. Luxury brands felt the pressure and had to offer greater terminal discounts. Now, the starting prices of luxury models have dropped below 300,000 yuan.

Accordingly, the prices of joint venture brands have also dropped. A more important point is that more and more Chinese new energy brands have seen the benefits and begun to replicate the successful path of NIO, XPeng, and Li Auto, using various leading experiences in the 200,000-level niche market to "beat" luxury and joint venture brands.

Choosing the 200,000-level market is deliberate because it aims to ensure profits while covering a larger audience. The 200,000-level market is the optimal choice.

Perhaps heroes think alike, as many new auto brands have chosen to enter the 200,000-level market. Even brands like NIO and Zero that previously focused on lower-end models are now thinking of entering this market. It can only be said that this niche market is now too crowded, with a wide variety of models, adding many happy troubles for consumers with choice paralysis.

No one can beat BYD

As for why new forces don't choose the larger and cheaper 100,000-level niche market?

The most direct answer is that it's BYD's territory, and no one can compete with it.

In 2023, BYD's overall sales reached 3.02 million vehicles, making it the undisputed leader in China's new energy vehicle market. Models like the Qin PLUS sold over 450,000 units, the Song PLUS sold 420,000 units, the Seagull sold 280,000 units, the Dolphin sold 360,000 units, the Seal sold 120,000 units, the Destroyer sold over 90,000 units, and the Yuan PLUS sold 420,000 units. These models accounted for most of BYD's sales, and their main sales models are priced below 200,000 yuan.

The most important factors that enable BYD to become a unique existence are its DM-i super hybrid technology and blade battery. Compared to other plug-in hybrid models, BYD doesn't have a multi-speed DHT, and its acceleration performance is not as fast, but it excels in stability. The achievement of selling over one million vehicles per year has demonstrated market recognition. Secondly, in terms of design, BYD's models are very balanced compared to models of the same level. In this price range, BYD's models are positioned as ordinary family cars. What ordinary family cars need is simplicity and practicality, not gimmicks or exaggeration. Having intelligent features is a plus, but it's not essential.

Here, it's not to say that consumers at this level don't care about intelligent configurations, nor is it to say that BYD doesn't care about intelligent experiences. It's just that the demand for cars is so simple. Having intelligent experiences is great, but lacking them doesn't matter much. To put it in popular terms, BYD's products priced below 200,000 yuan have a long list of shortcomings but a high floor.

From this perspective, BYD's grasp of user needs can be compared to Li Auto.

Another important point is BYD's strong control over vertical integration, which can reduce production costs to a level that competitors cannot reach. The combination of these factors makes BYD invincible in the niche market below 200,000 yuan.

However, due to their lack of BYD's first-mover advantage and cost advantage, new auto forces are reluctant to enter this niche market and can only choose price ranges above 200,000 yuan.

Of course, this situation is only temporary. XPeng Motors is expected to launch the MONA in the second half of the year, with a rumored price range of 100,000 to 150,000 yuan. NIO's third brand, Huozai, is scheduled to launch in 2025, positioned as a premium compact car priced at the 100,000 yuan level. In the future, new auto brands are bound to compete directly with BYD.

The Chinese auto market is destined to be turbulent in the next few years.

People's Car Review

This perhaps illustrates a fact: in the future, there may be significant changes in the production factors of China's new energy vehicles. This is just a guess, such as a further reduction in costs to a level similar to BYD's vertical supply chain. Otherwise, how would new auto brands have the confidence to compete head-on with BYD?

We will continue to observe how the market trends develop in the future.