Chinese EV Mandate & Rebadged EVs — Case Study

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If you are an observer of the Chinese EV market, you might have noticed a number of large automakers making big commitments to EV production in China, and new models being quickly released into the Chinese market. Let’s look at the Chinese EV mandate to understand why and then use a case study of the SOL e20x to understand how this is being done?

Why?

China is the world’s largest car market, and foreign brands made up 62% of the market share in the first half of 2018 according to McKinsey. While many of these foreign-branded cars are in fact manufactured by joint ventures with Chinese auto manufacturers, it still means that the Chinese market is a big part of international automakers’ sales portfolio. Losing access to this market would be bad for shareholder returns and any CEO in such a situation.

Maarten Vinkhuyzen already took Occam’s razor to the issue of international automakers announcing many BEV platforms based on China’s New Energy Vehicle (NEV) mandate. The mandate is a modified version of the Californian Zero Emission Vehicle (ZEV) mandate and is now in effect. This Chinese NEV mandate means that auto manufacturers have to buy or earn NEV credits equal to 10% of their fossil fuel vehicles sales for 2019 (this year) and 12% in 2020. Credits are earned by selling NEVs, but it is not completely simple. Different credits are awarded for the different types of NEVs — 2 for a plug-in hybrid (PHEV) and 6 for a fully electric vehicle (BEV). If auto manufacturers do not change, they might find themselves fined or even locked out of the market. Although, that did not stop them from trying to delay this.

How?

Automakers have found numerous ways to comply with the NEV mandate. I will highlight one example as a perfect example of western automakers’ “interesting” strategy or choice.

My example is the Volkswagen/JAC joint venture. Volkswagen, which is well known in China, has partnered with JAC to produce a small electric SUV, the SOL e20x. Let’s compare the SOL e20x with the JAC iEV7S, which is another small electric SUV.

Pictures

Exterior (Front)

Exterior (Rear)

Interior (front)

Performance & Specs

JAC iEV7S

• Range:  300 km
• Top speed: 130 km
• Battery capacity:  40 kwh
• Dimensions: Length (mm): 4135, Width(mm): 1750, Height(mm): 1560, Wheelbase(mm): 2490
• Price: 207,100 RMB

SOL e20x

• Range:  300 km
• Top speed: 130 km
• Battery capacity: 39-41 kwh
• Dimensions: Length (mm): 4135, Width(mm): 1750, Height(mm): 1560, Wheelbase(mm): unknown
• Price: 207,800 RMB

Anyone getting a feeling of déjà vu?

In a presentation at the 2018 Beijing auto show, the announcer said, “The car (SOL e20X) will combine Volkswagen’s 30 year experience in China and JAC technology and progressive European design.” As we can see from the car information and pictures, they are most likely very similar at the structural and propulsion technology level. The main difference is the design, and even the design is constrained by the iEV7S base design. I might need to reassess my conclusions if I could test drive this vehicle, but probably not.

While not the worst “badge job” in the Chinese EV transition, it should be understood by the “western” audience that large international automakers are not yet fully investing into EV production but are making many stopgap measures to plug the gap between government policy requirements and their investment decisions, which is not new or unexpected.

Conclusion

The JAC iEV7S vs Volkswagen/SOL e20x comparison is just the tip of iceberg of international auto manufactures’ EV deployment strategy in China. In my next article, I will break down the near/medium-term measures that international auto manufacturers are taking in China, so that you can fully understand the market and see the emperor’s new clothes.

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All photos by Timothy Dixon (CC BY-SA license)