Customers of Xpeng were enraged in July of this year. The Chinese electric vehicle manufacturer had recently introduced an improved version of its G3 small SUV, which had a battery that provided the car with significantly greater range than its predecessor.
Leaving aside the improvements, Xpeng owners who purchased the previous version of the G3 were upset when the new model became available for preorder barely 3 months after their automobiles were delivered. They were particularly concerned that the introduction of the new version would affect the value of their automobiles to decline more rapidly.
According to a story from the time on chinaautonews.com, Xpeng’s founder and Chairperson He Xiaopeng apologized and pledged a 10,000 yuan ($1,455) rebate to G3 owners who purchased a new Xpeng car within three years of purchasing their G3. The offer failed to calm the owners, who held protests outside business premises in Beijing and Guangzhou, in southern China, two days after the offer was made.
The previous version of the G3 was later purchased back by Xpeng in an effort to appease its customers. It was one of the numerous automakers, including the Guangzhou-based business, that offered to purchase back older models of their vehicles at various points throughout the past decade to relieve the minds of customers concerned about depreciation. Buyers of automobiles have excellent right to be cautious. The resale value of most used electric vehicles is significantly lower than that of comparable gas-guzzlers of the same age and condition.
Following their first year on the road, new electric vehicles sold for 100,000 yuan or even less in China retain an average of 67.8 percent of their value, whereas cars powered by the aged internal combustion engine (ICE) retain an average of 74.3 percent of their value after 3 years on the road, as per a survey conducted by GeekNEV, a media group specializing in new energy vehicles (NEVs).
In China, electric vehicles (EVs) do not keep their value and also their conventional counterparts, owing to the unexpected manner their batteries degrade and the fact that the country’s early subsidy policy encouraged carmakers to overprice models at a time when they were probably not worth it. As a result of this circumstance, some corporations have experimented with pricey and unsustainable repurchase initiatives.
Now, the impending termination of all government incentives is causing Chinese EV manufacturers to suffer more than just a loss of revenue. It is becoming increasingly difficult for them to compete on an equal playing field with their normally powered competitors, as clients’ awareness of depreciation threatens to undercut both the attractiveness of electric vehicles and the prices that corporations can demand them.