Cheap Chinese cars? Luxury vehicles are more likely from China

[Devolz]

The first Chinese automakers to enter the United States will not target the bottom end of the market with econocars, one China expert predicted Thursday.

Instead, they will sell small batches of Tesla-style electric vehicles to well-heeled enthusiasts, predicts Michael Dunne, president of the Hong Kong-based consulting firm Dunne Automotive.

“Aren’t Chinese companies supposed to be low-cost competitors that will come in with $10,000 cars?” Dunne asked during a presentation to the Automotive Press Association in Detroit. “No, they’re coming in with premium electric vehicles.”

In recent years, mass-market automakers such as BYD Auto Co., Guangzhou Automobile Group and Great Wall Motor Co. have announced plans to enter the U.S. light-vehicle market.

But they subsequently put their plans on hold, while others -- such as Wanxiang Group, Faraday Future and Lucid Motors -- are moving ahead with U.S. production plans.

Wanxiang, a chassis component supplier with a network of U.S. factories, may be farthest along. In 2014, the company acquired the assets of bankrupt Fisker Automotive and renamed it Karma. The company will launch its first model, the $130,000 Revero plug-in hybrid, later this year.

Last month, Faraday Future unveiled a production version of its FF 91 electric crossover at the CES show in Las Vegas. The company is taking deposits, but in November it suspended construction of an assembly plant in Nevada.

According to Dunne, other companies worth watching are China’s trio of Internet technology providers: Alibaba, Baidu and Tencent. All three companies have opened technical centers in Silicon Valley to develop self-driving vehicles.

And they are stocking their r&d operations with high-priced talent lured away from Western competitors.

Baidu, a search engine company, has announced plans for mass deployment of self-driving cars in 2021. Alibaba, an e-commerce provider, is developing an infotainment system to compete with Apple CarPlay and Android Auto.

Tencent, a provider of online gaming, mobile phone services and media, is a financial backer of NextEV, which unveiled its first model -- the Nio EP9 electric sports car -- in London last November.

The tech firms are moving quickly to establish a niche, Dunne said. Among traditional Chinese automakers, Zhejiang Geely Holding Group may be best positioned to succeed in the United States.

Last year, the company unveiled a new brand, Lynk & CO, and announced plans to introduce it in Europe and the U.S. in 2019.

Geely, which acquired Volvo Car Co. in 2010, is jointly developing new platforms with its Swedish partner. The California market may prove attractive for Lynk, Dunne said.

In general, these Chinese companies intend to compete in the U.S. on performance, quality and styling - not price, Dunne said.

“I don’t see the Chinese coming in with extremely competitive pricing and taking market share away,” Dunne said. “They’ll come, but it will be gradual.”