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Cars have gradually transformed from durable consumer goods to consumer electronics.

Text丨Zhao Yu

Map by Huang Jianxin

Editor: Huang Junjie

Data support | Autohome Research Institute

2017 was the peak year for Chinese auto sales, and discussions have begun to emerge about technology companies disrupting the auto industry. A common comparison is that mobile phone manufacturers change models every year, with rapid iterations. However, auto brands change models every two to three years, and only change models every five to six years, with a life cycle that is too long and development that is too slow.

Earlier, classic models launched by leading automakers, such as the Beetle and Corolla, could even continue to sell well for decades, with cumulative sales reaching tens of millions over their life cycle.

When new energy vehicles became popular and the price war reached its 20th month, the rules of automobile product replacement were rewritten. The R&D cycle of a new model was shortened to 12-15 months, and some models were upgraded to twice a year.

We analyzed the data of 1,088 models in the past nine years provided by the Autohome Research Institute and found that for new energy vehicles released in 2022-2023, more than 80% of the models had monthly sales of no more than 5,000 units, and 40% of the models did not even reach 1,000 units. Some were directly discontinued and completed their life cycle in less than two years.

In 2023, 126 new models were released in the Chinese market (excluding facelifts), of which 44% had monthly sales of less than 1,000 units after their release, only 23 had monthly sales of more than 5,000 units, and 7 had monthly sales of more than 10,000 units.

In contrast, although the number of new models released in 2016 was 80% of that of last year, only 24% of the new cars had monthly sales of less than 1,000 units after their release, while 45 models had monthly sales of over 5,000 units and 22 models had monthly sales of over 10,000 units.

The success rate of new cars has decreased, and old cars that are still selling well are particularly valuable. Although Zeekr CEO An Conghui himself said, "In fact, we also recognize the current situation (the iteration speed is too fast)", Zeekr still updated Zeekr 001 twice this year to maintain sales. As a result, consumers saw "three generations of models sold in the same year", and old car owners went to Zeekr headquarters to hang banners.

Automobiles are consumer products with the most complex industrial chain and the highest average unit price. They are the largest expense for a considerable proportion of people in their lifetime, apart from buying a house. When the pace of automobile renewal changes from durable goods to consumer electronics, a series of impacts follow.

The number of new cars has been increasing year by year, but the number of good-selling cars is decreasing

According to data from the Autohome Research Institute, from 2016 to 2023, excluding imported cars, a total of 1,028 new models were released in the Chinese market. Starting from 2019, the number of newly released electric vehicles exceeded that of fuel vehicles each year, and this trend has continued ever since.

Among the new models released in 2016, the number of models with a monthly sales volume of more than 5,000 units accounted for about 43% of the total number of new models released that year. As time goes by, it becomes increasingly difficult for new models to achieve a monthly sales volume of more than 5,000 units. After 2019, only about 21% of new models have a monthly sales volume of more than 5,000 units, and only about 11% of new models have a monthly sales volume of more than 10,000 units.

If 100,000 yuan is taken as a price segment, there are only a few models in each price segment that have a long life cycle, high cumulative sales and can still maintain high vitality.

In the market below 100,000 yuan, the models with the best sales performance during the life cycle are mainly from BYD and GAC Aion, including models such as AION Y and Qin PLUS, which once accounted for a high proportion of online car-hailing purchases - more than 50% in the early days of sales, but now more are bought for home use. The new energy market in the market of 100,000 to 200,000 yuan is dominated by BYD, with models such as Song PLUS, Yuan PLUS, Han, and Haibao ranking at the forefront in sales.

The 200,000 to 300,000 yuan market belongs to Tesla Model 3 and Model Y, which were released in 2016 and 2019 respectively. They have not been upgraded in appearance so far, but have hardly been surpassed. Tesla, which has driven the electric vehicle revolution, has successfully established itself as a new energy brand. A survey report by automotive industry consulting firm Jie Lan Lu shows that although more people buy BYD than Tesla, 43.7% of new energy vehicle owners surveyed identify with the Tesla brand. An automotive industry insider believes that other car companies need to convince consumers to buy their products, "but Model Y does not need a reason because it is Tesla."

In the market above 300,000 yuan, apart from the BMW i3 whose sales rebounded due to a significant price cut, the three high-end models of Ideal L9, L7 and M9 are particularly prominent.

Previously, low-priced models of leading automakers were more likely to survive the cycle. Among fuel vehicles, the representative models are Volkswagen Lavida and Nissan Sylphy. Both of these cars have been sold in the Chinese market for more than 15 years. Although they have been impacted by the new energy wave, they still have monthly sales of more than 23,000 units after price cuts.

Among new energy vehicles, the representative models are Tesla Model Y and BYD Qin PLUS. Since their mass production in 2021, these two vehicles have entered the mature stage of their product life cycle, with current monthly sales of around 40,000 units.

The period of occupation after the new energy transformation is over, and each segmented vehicle model will be hard to escape the price war

Whenever technological transformation drives market change, it will give newcomers room to grow, and the same is true for new energy vehicles. When Ideal ONE began mass production at the end of 2019, extended-range models were not favored by the outside world, and six-seat SUVs were almost non-existent. Many practitioners and investors believe that electrification is a major trend, and there is no reason to sell a new energy vehicle that burns oil. But two years later, Ideal ONE has become the first domestically produced model with a monthly sales of more than 10,000 units priced above 300,000 yuan.

With precise positioning, Ideal made profits, expanded production, opened stores, and developed new models in two and a half years. It was not until the third quarter of 2022, nearly three years after Ideal ONE began mass production, that it encountered the first competitor with sufficient strength, Wenjie M7.

Similarly, BYD Denza D9 was launched in May 2022. This new energy MPV, which looks like Toyota Alpha but is priced more than half cheaper, will soon be able to sell 10,000 units per month, leading to a trend for domestic MPVs.

It was not until the Buick GL8 plug-in hybrid version was launched in April this year that the Denza D9 encountered a threatening competitor. However, by then, the new brand Denza had accumulated nearly a year of experience and its sales were not greatly affected.

At one point, it looked like the Xpeng G6 would replicate similar success. In 2020, a few months after the Tesla Model Y went on sale in China, Xpeng began developing the Xpeng G6, a mid-size pure electric SUV that would directly challenge it.

Model Y is the best-selling electric car in the Chinese market. In June 2023, Xiaopeng G6 was released. He Xiaopeng, chairman of Xiaopeng Motors, said that this is a weapon for Xiaopeng to "raise its head" after the trough. "The goal is to become the sales champion of the 250,000-class electric SUV market in two months. At least a monthly sales of more than 10,000 is a successful product."

Compared with Model Y, G6 has more space, longer battery life, faster charging, and a 20% lower price. To achieve this, G6 adjusted the position of the front and rear pillars to provide more passenger space with the same body size, and adopted the rare 800V high-voltage platform at the time, with silicon carbide components to increase charging speed and battery life.

On the night of its launch, the sales performance of Xpeng G6 did meet expectations: pre-sale orders reached 35,000, and "sold out" was posted on the work group of Xpeng sales staff. By the fifth month, the monthly sales of Xpeng G6 reached 8,750 units. When sales were about to exceed 10,000, consumers left, and sales fell to less than 2,000 units within two months. In the first half of 2024, the average monthly sales of G6 were 2,560 units. A dealer who experienced the landslide recalled that consumers seemed to disappear all of a sudden.

The Xpeng G6 did not have enough time to gain a firm foothold in the medium-sized pure electric SUV category, because all car companies saw the opportunity to replace the Model Y. Within less than half a year after the Xpeng G6 was launched, other domestic competing models such as the Denza N7, Zhiji LS6, Jiyue 01, and Haobo HT were also launched one after another. As for models that are not directly competing with the Model Y, but are competing with the Xpeng G6, there are even more models, and the new energy SUVs with a price of just over 200,000 yuan soon became the most brutal battlefield.

The ongoing price war in the Chinese auto market also means that the Xpeng G6 will face fierce competition. When the Xpeng G6 is launched in 2023, Tesla will already be a mature automaker with annual sales of more than one million vehicles. There is a lower profit margin requirement for any mass-produced model, but many domestic automakers are still in the stage of giving up profits to boost sales, and most of them tend to set the lowest possible price.

Before the launch of the Xiaopeng G6, Huang Honglin, the head of G6 model marketing, received a message from a competitor, "No matter how much the G6 is priced, ours will definitely be 20,000 yuan cheaper."

Different brands pursue life cycle in different ways

After 2021, the success rate of BYD's new models has increased sharply, and some old models have also been reborn after being modified this year. The root cause is still technology. At the beginning of 2021, BYD's fourth-generation DM technology was mass-produced, increasing the pure electric range of plug-in hybrid models to more than 100 kilometers. Consumers basically do not need to burn oil for daily commuting, and the cost of daily car use has been greatly reduced. At the same time, BYD has adopted an aggressive pricing strategy to bring the price of new energy vehicles to the same level of fuel vehicles, and the comprehensive fuel consumption is only about half of the latter.

BYD's product series has fully covered almost all levels and price points in China's new energy passenger car market with a price of less than 200,000 yuan. Since last year, BYD has also launched annual facelifts of the "Champion Edition" and "Glory Edition", and enhanced the competitiveness of the Dynasty Series (Qin, Han, Tang, Yuan, etc.) and Ocean Series (Song, Seagull, Seal, Destroyer, etc.) by adding features and reducing prices.

Compared with BYD's low price advantage, the more expensive the models of Huawei's intelligent selection business are, the stronger they are. AITO Auto currently has 3 models on sale. The best performing one is the most expensive AITO M9, which starts at 470,000 yuan. After mass production at the beginning of this year, it quickly increased in volume, with an average sales volume of more than 16,000 units in the past four months, ranking first in this price range. AITO M7 had mediocre sales at the beginning of its release, until the model change in September last year to catch up with the release of Huawei's Mate 60 series of mobile phones, and sales rose rapidly. AITO M5's monthly sales briefly soared to nearly 10,000 units after its release, but then quickly fell back. AITO S7 has always had low sales.

Huawei is strong in R&D, and it ensures its leading position through its large technical team, product team and process management capabilities, but this model also means high costs. Products such as Wenjie and Zhijie are the result of cooperation between Huawei and external companies, and they need to share revenue. Only mid-to-high-end models can support such a huge investment. The sales of Wenjie M9 are ahead of Ideal L9 at the same price, but the sales of Wenjie M7 did not exceed Ideal's competing products in the same period (it was originally benchmarked against L8, and after the price reduction, it was benchmarked against L7 and L6).

Ideal is a representative of self-disruption, especially the L series. From the top-end L9 to the current L6, the appearance is similar, and the size and configuration are gradually reduced, which allows Ideal to launch four products in succession at a relatively low cost. Ideal L series models are released at a tight rhythm. L9 will be released in June 2022, L8 will be released 3 months later, L7 will be released 5 months later, and L6 will be released one year and two months later. Before the opponent can make a "substitute", Ideal's own "substitute" will come.

The market rhythm is changing, but the investment required to make a good car has not changed

In the era of fuel vehicles, automobiles had already achieved platform-based research and development a long time ago, with a high rate of commonality in parts. Automakers tended to release multiple models in succession. As long as one of the three models was successful, they could recover their costs and even make a profit.

In the era of electric vehicles, most models have not achieved platform-based R&D, which means that R&D costs are higher and competition is more intense, and the market tolerance is greatly reduced. This means that when a hot-selling model appears, car companies have a strong motivation to maintain the popularity and sales of the product through changes, price cuts, etc.

The increase in the frequency of electric vehicle model changes is mainly due to the accelerated iteration of hardware and software in cars. In the past, fuel vehicles rarely involved software updates. Hardware such as engines and gearboxes often cannot be changed once every 5 years. Nowadays, the hardware such as smart driving/cockpit chips, power batteries, and laser radars carried by electric vehicles often have obvious upgrades in one or two years, and software OTA upgrades are more frequent. Even the demand for software upgrades will force car companies to replace hardware.

Sometimes the reason why car companies want to quickly iterate a car model is not for the purpose of technological upgrading, but to give consumers a reason to buy a car as soon as possible.

Zeekr 001 is the first model launched by Zeekr and has been the sales pillar of Zeekr for a long time. In addition to 001, Zeekr has also launched five models including 009, X, and 007, but except for 007, the sales of other models are very limited, and even the sales of 007 are far from Zeekr's expectations.

After the release of the 2024 model, Zeekr 001 supported more than 70% of the company's sales, bringing in the cash necessary for the company's operations. When the intelligent driving hardware configurations of competing models such as Xiaomi SU7, NIO ET5T, and Zhiji L6 are significantly better, Zeekr needs to make up for the product shortcomings of 001 again. On August 13, Zeekr launched the 2025 Zeekr 001. The upgrades were mainly in the intelligent driving chip and self-developed intelligent driving software solution, which also resulted in "three generations under one roof".

Some upstream suppliers have found it difficult to adapt to the product iteration speed of Chinese automakers. On August 2, Amnon Shashua, president and CEO of Mobileye, a developer of autonomous driving solutions, said at an earnings conference that the Chinese auto industry is very unstable, which makes it difficult for Mobileye to accurately predict the shipment volume of intelligent driving solutions. "This high volatility is beyond our control."

A person from CATL once told us that in the past, when international leading OEMs like BMW and Volkswagen wanted to launch an electric vehicle, the testing time for the power battery alone would be as long as two years, but now many customers require delivery within one year. Similarly, the time requirement for Qualcomm's autonomous driving solution has also been shortened from two years to one year.

Now, the development cycle of a new model has been shortened from 48-60 months in the era of fuel vehicles to 12-15 months in the era of electric vehicles. The time for remodeling is even shorter. In 2023, a domestic new energy vehicle company remodeled its main SUV model in less than 5 months from project approval to new car launch.

However, successful products are often not developed in a short period of time. The Zeekr 001 uses Lynk & Co's design and the vast electric vehicle platform that Geely Group spent four years developing.

Currently, products with long life cycles are either the result of long-term accumulation of technology, such as BYD and Tesla investing in new technologies more than a decade before the industry turned around, and Huawei's engineering strength accumulated over decades; or they are the first to focus on providing unique products in a niche category, such as the ideal large and medium-sized family SUV, Denza D9, or NIO's insistence on making pure electric SUVs when no one believed that domestic cars could be sold for more than 300,000 yuan.

To date, Apple's executives in every department, including software, hardware, services, and chips, focus on the development of a new generation of iPhones every year, which ensures continued success. The R&D cycle of many cars is already shorter than that of the iPhone. However, the number of parts in a car is more than ten times that of a mobile phone, and the software and hardware are much more complex than mobile phones. It takes time to polish a good product, and it takes scale to integrate a vertical supply chain. It takes time and resources to build a software and hardware R&D, supply chain management, and market sales system. There is no shortcut in an industry that pursues efficiency to the extreme.