EV Makers Jostle for Space in Chinese ‘Experience’ Stores to Lure Buyers

With electric vehicle (“EV”) makers, established automotive firms and battery companies compete to capture a piece of the young but swiftly growing EV market, China has emerged as the place to be. Chinese consumers are ditching their internal-combustion-engine (“ICE”) cars for electric vehicles at an unprecedented rate, turning mainland China into the largest EV market on the globe. To lure even more buyers, China-based companies such as NIO Inc. (NYSE: NIO) and Xpeng Motors, international brands such as Genesis and Mercedes, and market leader Tesla have all opened numerous “experience stores” in prime retail establishments.

Designed to market the benefits of environmentally friendly vehicles straight to the consumers, these branded experience stores offer everything from food, refreshments and libraries to test drives for potential buyers. According to Vivian Zhu, director of JLL’s Shanghai retail team, EV makers have pitched tents in more than 47 of the 93 shopping malls JLL tracks in Shanghai. Malls such as Chamtime Square and Shanghai Global Harbor have five different EV experience stores each, something that’s never happened before, Zhu says.

Data from Cushman & Wakefield shows that China is now home to more than 189 electric vehicle experience stores, with Shanghai hosting a large number of them. And these branded shops aren’t cheap; ranging from 200 to 1,000 square meters in size, they can cost EV makers more than $150,000 to set up. This shows just how lucrative the Chinese EV market is. In just 12 months, local EV makers such as Xpeng, NIO and WM have enjoyed a 400% boost in sales.

Zino Helmlinger, head of retail at CBRE Eastern China, says the Chinese market has seen a rebirth in demand for green vehicles, and as a result, EVs have been enjoying skyrocketing performances. Pure-electric vehicles, gas-electric hybrids and fuel-cell vehicles, collectively known as green vehicles, will make up one in five cars on Chinese roads by 2025, says a development plan for new-energy vehicles (“NEVs”) for 2021 to 2035 by the State Council. To help achieve this goal and increase EV adoption, the government has been offering subsidies and incentives such as free license plates, says Joey Chio, senior director and head of retail representation for China at Savills.

The subsidies and the experience shops appear to be working. According to JLL, NIO has opened 12 experience shops since 2018, Xpeng has opened 15 since last year, and Tesla runs 20 stores in Shanghai. Shaun Brodie, head of occupier research for greater China at Cushman & Wakefield, says providing such large, immersive spaces in a shopping center with a lot of foot traffic allows EV makers to attract, educate and convert ordinary customers to their brands.

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