Caixin
Jul 16, 2019 08:28 PM
BUSINESS & TECH

Car Buyers Accuse Electric-Vehicle Maker of ‘Deception’ After Surprise Launch of New Models

Xpeng showcases its G3 model at an auto show in Shanghai on April 17. Photo: VCG
Xpeng showcases its G3 model at an auto show in Shanghai on April 17. Photo: VCG

They were the earliest adopters of the G3 — the first electric vehicle built by homegrown carmaker Xpeng Motors. Now, the surprise release of new models with a sticker price similar to the original has turned their faith to anger.

Last week hundreds of car owners protested outside the Alibaba-backed company’s Guangzhou headquarters, and at dealerships there and in Beijing, Shanghai, Hangzhou and Shenzhen.

Clutching signs and banners, they claimed to have been victims of “deliberate deception” saying company sales reps had encouraged them to buy the first model, the G3, warning them prices could soon rise.

What they were not told was that two revamped models with a similar price tag were due for release on July 10. They called for their cars to be refunded or replaced by the new versions, which cost less but can travel further on a single charge.

Analysts told Caixin the new cars were likely priced at the same level as the old models to boost their sales in a sluggish market. That same market turbulence made it very unlikely the company would acquiesce to their demands.

But the protesters told Caixin they felt betrayed by Xpeng sales reps, who they said had encouraged them to buy the original G3 as recently as last month, telling them the company might increase its prices after June 25 due to a government subsidy cut. Xpeng said on June 26 that it had postponed any such price change.

“The earliest among us had our cars delivered only three to four months ago,” said one customer outside a dealership in Beijing, who said they had waited a year for their car. “Some made their orders a few weeks ago and only just got them. Xpeng launched the new model such a short time later with barely any difference in pricing but didn’t inform us in advance, which feels like deliberate deception.”

Another Beijing protester, a woman in her 20s, told Caixin she no longer trusts the brand. She asked not to put her name to the comments out of fear of the company identifying her.

In an open letter Friday, Xpeng founder and President He Xiaopeng apologized, but put the dispute down to the rapid development of technology, saying their pricing strategy was based on a combination of costs, the market and user reception. He suggested consumers may have misunderstood the pricing plans. He also offered a 10,000 yuan ($1,454) subsidy to owners of the old model if they wanted to upgrade.

Protests nevertheless continued over the weekend. Xpeng said it had collected the owners’ requests, and “will take all necessary steps to address any misconduct issues” if evidence comes to light.

Analysts told Caixin the prospect of subsidy cuts had encouraged consumers to rush out and buy electric vehicles expecting prices to rise — concerns Xpeng salespeople may have helped to fan. They said the company failed to manage the expectations of consumers in the way traditional carmakers tend to, by flagging the release of a new model ahead of time.

This had damaged the brand, one analyst said. But he also said consumers ultimately had to take responsibility for their purchasing decisions.

Some car owners asked the company to replace their car batteries to improve their efficiency, He said this was not possible due to technical and safety restrictions. The original G3 uses batteries produced by BAK and Linkdata, while revamped ones use batteries made by CATL.

One sector analyst who asked not to be named told Caixin the development turnaround for electric vehicles is generally faster than traditional cars. He said research for Xpeng’s second model was likely to have taken place at the same time as its old model was in production, but production delays probably caused the surprisingly short interval between old G3s shipping and new ones being released.

Founded in 2015 in Guangzhou, Xpeng Motors launched its first car, the G3, in December. It began shipping in March. The 4-year-old company has locked in support from tech groups including Alibaba, Foxconn, and Xiaomi, and was valued at nearly $4 billion when it completed its latest funding round in August.

When the company said in mid-June that G3 production had passed the 10,000-mark, it joined the ranks of just a handful of China’s hundreds of EV startups, including NIO Inc. and WM Motor Technology Co. Ltd.

Contact reporter Isabelle Li (liyi@caixin.com)

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