Produced by | Frontier of Entrepreneurship

Art Editor | Xing Jing

Reviewed by | Song Wen

Five years ago, if you walked into Sanlitun in Beijing, Xintiandi in Shanghai, or Taikoo Li in Chengdu on a weekend, you would likely find several stylish compact cars in the parking lots—two-door, rounded, and often adorned with personalized decals. The owners might be independent designers or fashion-conscious individuals.

This was a rare brand in the Chinese automotive market with a clear user profile—personality, uniqueness, along with being easy to drive and convenient.

At that time, smart was not just an ordinary mode of transportation but a declaration of a lifestyle: I don’t need large space; I just need flexibility. I don’t need to please my whole family; I just need to please myself.

Founded in 1998, the brand etched the concept of the 'city microcar' into the minds of global consumers and also garnered a loyal following in the Chinese market.

However, if you visit the parking lots of these commercial districts now, you will notice a new scene: those spots once occupied by smart are now taken by new energy vehicles like the Wuling Hongguang MINI EV, BYD Seagull, and Geely Starwish.

Meanwhile, smart has transformed into a lineup of increasingly larger all-electric SUVs—smart #1, #3, and #5.

This shift represents a strategic pivot driven by shareholder intentions and industry cycles. The new smart is built on Geely’s SEA (Sustainable Experience Architecture) platform, with its product positioning elevated from 'city microcar' to 'affordable luxury urban electric SUV.' The vehicle size has expanded, and prices have risen above 150,000 yuan, with some models reaching the 250,000 yuan range.

But market feedback has been colder than the strategic blueprint. In 2022, shortly after its launch, the smart #1 briefly exceeded 3,000 monthly sales but then entered a decline, now hovering around 2,000 units per month.

Its former 'empire of small cars' has been taken over by Chinese brands in a different way: the Wuling Hongguang MINI EV became a national commuter car priced at around 30,000 yuan, while the BYD Seagull and Dolphin set the standard for smart compact cars in the 70,000–120,000 yuan range. The Geely Starwish has even dominated the sales charts since last year.

The A0-segment has become a battleground for new energy vehicle brands.

An industry insider pointed out smart’s predicament: it wants to grow larger, but what consumers miss is precisely its former small size.

In other words, smart’s challenges are not just about product iteration but also a struggle for 'urban mobility discourse.'

When Chinese brands turned micro-electric vehicles into social currency, made intelligence a standard feature, and priced them at levels unimaginable for smart, this pioneer that once defined the 'city microcar' lost its presence in its strongest arena.

1. The 'Urban Elf' Falls Behind in Sales

According to Dongchedi data, in May 2026, smart’s total brand sales were 2,122 units.

This figure places it outside the top 50 in China’s automotive retail sales rankings. For context, Geely Automobile Group’s monthly sales have surpassed 240,000 units, with smart contributing less than 1%.

This is not a sporadic slump but a three-year downward trend. From averaging over 3,500 units per month in 2023 to potentially less than 2,100 units per month in 2026, smart’s market presence is being eroded bit by bit.

How did a once-dazzling urban elf, a hybrid brand backed by Mercedes-Benz and Geely, and an electric vehicle sample built on Geely’s SEA platform, go from highlight to margin in just three years?

smart’s electric transformation began dramatically.

In 2019, Zhejiang Geely Holding Group and Daimler AG announced the establishment of a smart brand joint venture, with each holding a 50% stake.

This was a classic 'power couple' collaboration: Mercedes-Benz brought its century-old luxury brand design capabilities and global reputation, while Geely contributed its electric platform, manufacturing efficiency, and deep understanding of the Chinese market. Headquartered in China with a production plant in Xi’an, smart transformed from a niche European brand into a new player truly participating in China’s electric competition.

In June 2022, the all-new smart #1 officially launched. This was the first all-electric SUV in smart’s history and the first product of the Geely-Mercedes collaboration.

Based on Geely’s multi-billion-yuan SEA platform and designed by Mercedes-Benz, it entered the market at a starting price around 150,000 yuan—significantly lower than the previous gasoline-powered smart models, which often started above 200,000 yuan.

The market responded enthusiastically at first. In 2023, smart achieved 42,292 retail sales in the domestic market, marking its first highlight year after electrification.

The #1 quickly attracted a batch of young female users, urban professionals, and families purchasing an additional vehicle, thanks to its cute appearance, refined interior, and Mercedes design pedigree. On social media, the smart #1 frequently appeared in Topic Ranking (translated as 'trending topic lists') like 'Girls’ First Electric Car,' 'Urban Commuter Essential,' and 'Mercedes Alternative.'

But market enthusiasm didn’t last long.

In 2024, smart’s annual sales dropped to 33,280 units, a 21.3% year-on-year decline. In 2025, sales further fell to 30,799 units, down another 7%. By 2026, the decline became steeper: cumulative sales from January to May reached only 8,516 units, a 24% year-on-year drop.

Behind these numbers lies a brand’s journey from 'anticipated' to 'ignored.'

Even more concerning is the imbalance in the model lineup. In May 2026, out of smart’s total 2,122 units sold, the #1 accounted for 1,266 units (nearly 60% of monthly sales); the #5 sold 528 units; the #3 sold just 195 units; and the newly launched #6 EHD sold only 133 units.

What does this mean? It means smart currently relies almost entirely on the #1 model. The #3 and #6 EHD, with monthly sales below 200 units, have essentially lost market competitiveness. While the #5 fares relatively better, as a mid-size SUV priced above 200,000 yuan, it faces direct competition from Li Auto, NIO, Zeekr, and other strong rivals, with limited growth potential.

When people think of smart, many still associate it with a 'small, cute urban car'—but today’s smart is no longer that.

2. Internal Competition: 'Same Root, Different Fates' Under the SEA Platform

If smart’s challenges were solely due to intense market competition, external pressure might be blamed. However, competitors created internally under the same platform could also be this compact car’s 'hidden' rivals.

The Geely SEA Vast Architecture (translated as 'Geely SEA Sustainable Experience Architecture') powering smart is a universal pure electric platform under Geely Automobile Group. Covering multiple sizes from A-class to E-class vehicles and supporting various body styles like sedans, SUVs, MPVs, and sports cars, it is hailed as the 'technical foundation' of Geely’s electric transformation. Popular models such as the Zeekr 001, Zeekr 007, Zeekr X, Lynk & Co Z20, and Geely Galaxy E8 all originate from this architecture.

What has the SEA platform brought to smart? First, a mature and reliable three-electric system (battery, motor, electronics); second, significant platform-based cost advantages; third, abundant supply chain resources. Theoretically, smart should leverage this architecture to quickly establish product competitiveness and secure a market position.

But in reality, the same architecture has led to vastly different fates across brands.

Take the Zeekr X as an example. Also based on the SEA platform, this compact luxury electric SUV targets a user base highly overlapping with smart’s—young urbanites seeking design appeal and intelligent features. Yet the Zeekr X 'overpowers' smart in multiple dimensions: stronger power performance, higher intelligence configuration, more prominent autonomous driving capabilities, and a far more extensive service network.

Consumer psychology is straightforward: when budgeting 200,000 yuan for a stylish electric SUV, the Zeekr X often proves more persuasive than smart after comprehensive comparison.

This 'internal rivalry' puts smart in an awkward position.

Especially in core experiences like intelligence, autonomous driving, and cabin technology, smart’s iteration speed lags noticeably behind its sister brands. On June 11, the new smart #6 officially launched, finally announcing the integration of the Thousand mile intelligent driving ASD (translated as 'Thousand-Mile Intelligent Driving ASD') system.

(Image / smart China’s official Weibo account)

Even more nuanced is the brand relationship. One of smart’s selling points is 'Mercedes design,' which it consistently emphasizes in promotion to highlight its luxury pedigree.

However, beyond its awkward position within Geely’s ecosystem, Mercedes itself is stretched thin with resources allocated to high-end electric models like the EQE and EQS, diluting smart’s 'Mercedes endorsement' effect.

Thus, smart finds itself caught between two fires: externally, it competes with Tesla, BYD, XPeng, NIO, and other strong rivals; internally, it vies for resources and users against Zeekr, Lynk & Co, Galaxy, and even Mercedes’ EQ series. Sandwiched in the middle, smart receives neither sufficient strategic attention nor an irreplaceable differentiated advantage.

3. Strategic Drift: 'Growing Larger, Losing Soul,' and Strategic Indecision

What was smart’s most distinctive label in history?

When the smart fortwo debuted in 1998, its core selling point was maneuverability in congested cities and unique industrial design. This label earned smart a loyal following in the gasoline era and supported its brand positioning as an 'affordable luxury urban vehicle.'

However, after electrification, smart chose a radically different path: full SUV-ification, with sizes growing larger.

The #1 exceeds 4.2 meters in length, the #3 adopts a coupe-SUV form, the #5 pushes further into mid-size SUV territory, and the #6 EHD attempts to cover more diversified usage scenarios.

From a product lineup perspective, smart seems to aim for a small-to-mid-size SUV matrix to meet broader user needs.

The rationale behind this strategic choice is understandable. The Chinese market has long favored SUVs, which command higher premiums and allow easier cost amortization through platform-based production. To compete in the 150,000–250,000 yuan range against mainstream brands, SUVs seem a safer bet.

But smart overlooked a crucial issue: by growing larger, it ceased to be the original smart.

The smart remembered by old users was a two-door, two-seat urban elf—easy to park, boldly individualistic. It has now transformed into an electric vehicle with mediocre space, increasingly homogenized styling, and dimensions approaching ordinary family SUVs.

New users evaluate smart by entirely different standards. They don’t see smart as a unique compact car brand but compare it alongside mainstream SUVs like the Tesla Model Y, Zeekr X, and BYD Song L. Compared on space, smart loses out; on range, it’s unremarkable; on autonomous driving, it lacks highlights; on cost-effectiveness, it holds no competitive edge.

This 'growth without soul' transformation caused severe brand perception disconnection. smart is neither the niche premium brand of the past nor capable of competing head-on with new forces in the mainstream market. Stuck in the middle, it has lost both old user loyalty and new user favor.

A deeper contradiction lies in the erosion of brand premium. Historically, smart’s premium came from two scarcities: the luxury sense brought by Mercedes design and the uniqueness of being a 'city microcar.' In the electric era, both scarcities are rapidly disappearing.

From the starting line, smart carries a heavier burden in this race.

(Image / smart’s official global WeChat account)

In the view of 'Frontier of Entrepreneurship,' smart’s issue isn’t about a single failed model, ineffective marketing, or a poorly executed price war. Its core problem is strategic drift: losing its brand soul in the pursuit of 'growth,' sacrificing differentiation in attempts to 'mainstream,' and exhausting strategic patience amid shareholder conflicts.

smart must urgently answer three fundamental questions: Who am I? For whom am I? Why am I worth buying? If it continues to waver on its current path, smart risks degenerating into a marginal asset in the electric portfolios of both parents.

And that once-agile urban elf, which thrilled countless hearts in congested cities, may become a regrettable footnote in China’s automotive consumption upgrade wave.",