China’s Mini Electric Cars And A New Era Of Mass Mobility
Wuling Hong Guang MINI EV is the most important electric car on earth that you haven’t heard of. Yet.
An electric car cruises down an open highway with a Pacific Coast-esque backdrop, gorgeously designed, futuristically functional and madly enjoyable: Tesla and its version of an electric mobility future has captured the world’s imagination.
And halfway around the world in China, an entirely different electric car has started a movement of its own, transforming the lives of a very different population. The car is called Wuling Hong Guang MINI EV, it is radically affordable and it looks like this:
(Watch this English-subtitled first drive video for more.)
Wuling Hong Guang MINI EV was launched in July 2020. It became China’s top selling EV model by September. And only seven months since its launch, in January 2021, MINI EV’s sales in China surpassed Tesla Model 3’s sales globally.
Yes, Wuling Hong Guang MINI EV is an electric car that has outsold Tesla Model 3.
English news outlets have covered the MINI EV’s rise, its low price, and its compact vehicle design. I would like to tell the story through a different lens: why it is winning hearts, minds and wallets in China.
Want A License Plate? Get An Electric Car.
This is probably not news to you: China is the world’s biggest electric vehicle market. Out of the 11 million electric cars on the road worldwide, five million are in China.
What you may not know is why Chinese people are taking out their wallets to buy electric cars. The answer may not be intuitive to you: to fast track a license plate.
The process of getting a car in China is purposefully difficult. If China had a vehicle ownership rate as high as America, there would be too many cars for the road to handle, and too much smog for the air to be breathable. A variety of policies are in place to reduce congestion and limit car ownership, the most notable of which is a license plate auction or lottery.
In Shanghai, a monthly license plate auction is held. If you want to drive your car on an expressway from 7am to 8pm on a workday, you need to bid for a license plate. The clearing price hovered over ¥90000 ($13,700) for most of 2020. No, that’s NOT a typo: an 18-by-6-inch aluminum sheet metal can cost more than a sedan! If you instead choose to buy an electric car, that’s ¥90000 saved.
Neighboring Hangzhou has a monthly license plate auction too. The city also gives out some of its license plates for free through a lottery that is open to all residents with driver licenses. Your odds are not great though: a less-than-one-percent chance of winning. For an electric car buyer, a license plate is issued with no wait and at no cost.
At least six cities in China restrict license plates through an auction or lottery. Electric cars are exempted from these restrictions and, unsurprisingly, they are sold better in these six cities than elsewhere.
When A Car Is Cheaper Than A License Plate...
Hong Guang MINI EV has a starting price of ¥28800 ($4,400), cheaper than any other electric car, and cheaper than getting a license plate in Shanghai, Hangzhou and Shenzhen. This makes the MINI EV so immediately and staggeringly enticing: If you are a first-time car buyer with a limited budget, you should consider the MINI EV; If you are on the fence about getting a second commuter car for the family, you should consider the MINI EV; You could be acting on impulse and buying an MINI EV.
There is an arbitrage opportunity as well. As electric cars become more mainstream over the next couple of decades, it is only natural that the incentives will begin to phase out. However, regardless of what powers the car, there will always be a scarcity of license plates in a congested Chinese city. Buying the MINI EV today is like getting a discounted early-access ticket to a license plate for your next electric car tomorrow.
A Not-To-Be-Missed Subplot: There Are Even Cheaper Electric Cars. The Catch? They Are Unlicensed.
I said that there are five million electric cars on the road in China. I am not exactly right.
I said that Wuling Hong Guang MINI EV is cheaper than any other electric car out there in China. I am not exactly right about that either.
There is a whole other category of tinier and cheaper electric cars in China. You don’t see them in the EV sales statistics, because they are technically not regulated.
These tiny electric cars don’t have much power and at maximum they can drive at 60-70km (37-43 miles) per hour. They are shorter, slimmer and lighter than a traditional car. Some may even come with three instead of four wheels. You don’t need a license to drive them. With little to no crash protection systems, these cars are not insured either.
Unsurprisingly, they are very very cheap: ¥6000-20000 ($900-3,000) for the car, with almost no ancillary costs. Half of Chinese people make less than ¥27540 ($4,200) a year, and these tiny low-speed electric cars are within their reach.
It’s no wonder that they are spreading like weeds. Actually, for the past five years, China has sold about a million of them every single year. It is estimated that at least five million low-speed electric cars are in use today. So, in China, for every licensed electric car driver, there is a unlicensed tiny low-speed electric car driver.
Well, that means we have five million unlicensed, uninsured cars squeezing through motor vehicle traffic everyday in China. We’ve got a major road hazard.
The Path To Formalize An Informal Economy...
There is a clear demand for tiny low-speed electric cars in China.
There is also a clear need to manage tiny low-speed electric cars in China.
With a production capacity this big, a distribution network this wide, and market demand this strong, an outright ban is unlikely. While it cannot be banned, it can be regulated, starting with requiring full vehicle registrations, driver licenses and insurance.
But before we get there, we need tiny electric cars that could protect the driver in a crash and that wouldn’t easily overheat the batteries and set them on fire; we need tiny electric cars that meet automotive safety standards.
Wuling Hong Guang MINI EV is the shining example that the regulators need. And nine months after MINI EV’s launch, China officially announced that it would put an end to unlicensed tiny electric cars: tiny low-speed electric cars will be categorized as an electric car, and regulated as such.
You can view the tighter regulation on tiny low-speed electric cars as an end to an industry—no doubt that some uncompetitive, low-end tiny car workshops will go out of business—but this is also the beginning of a new era.
A New Era of Mass Mobility…
I started by saying that Wuling Hong Guang MINI EV is the most important electric car on earth that you haven’t heard of yet. It’s quite a success story that the car sold more than 127,000 copies within the first six months of launch. But more than that, Hong Guang MINI EV is important because it is the first wildly successful electric car that isn’t just an electric version of a traditional car, because it has expanded access to mobility to people who couldn’t have otherwise afforded a car, and because it was able to do so affordably but not cheaply.
Being small, it’s not as big a burden to the road space. Being electric, it has a small environmental footprint. And being radically affordable, it is changing the lives of lower-income commuters, the elderly, women, and others who may otherwise lack car access.
Affordability has been a big theme among electric car buyers in China—In 2020, three out of the five top selling EV models in China have prices below ¥70000 ($10,700). Now, following Wuling’s success, Chinese automakers are rushing to the mass mobility market and launching their versions of the MINI EV. At least four new electric cars with prices ranging from ¥29800 ($4,500) to ¥45999 ($7,000) have been unveiled since the beginning of 2021. Xiaomi, the leading mass market smartphone maker, has also joined the EV race.
It’s an odd thing to say: electric cars can actually make car ownership more affordable.