Chinese drivers are demanding smart cars — and that's what they're getting

China's EV companies are packing their vehicles with high-tech features to woo drivers who want "intelligent" vehicles.

• China's EV makers are packing their vehicles with high-tech extras in an attempt to woo customers.
• Auto execs and experts say Chinese customers want their cars to be more "intelligent."
• The likes of BYD and Xiaomi are doubling down on autonomous driving and smart features in response.

China's legion of EV companies are facing an increasingly brutal fight for customers — and many are packing their vehicles with high-tech features to woo drivers who increasingly want "intelligent" vehicles.

"The Chinese customer's expectation for an EV is very different compared to the rest of the world," said Nissan CEO Makoto Uchida, speaking at the Financial Times' Future of the Car summit this month.

He said Chinese customers expect EVs to be "intelligent," fitted with features like autonomous driving, smartphone integration, and plenty of screens, and that Nissan had been forced to adjust its approach and build vehicles "in China, for China" to compete against local carmakers.

Standing out in a crowded field

After languishing in the shadows of Western, Japanese, and Korean automakers for years, those local carmakers are now booming, thanks in part to the massive growth in demand for electric vehicles.

EVs are expected to account for about 45% of all car sales in China this year, according to the IEA, and local automakers now make up more than half of total car sales in the country, per Bloomberg data.

That boom has sparked a wave of competition and a brutal price war, with around 123 car companies battling for EV dominance last year.

To stand out in a crowded field, many Chinese automakers are adding increasingly high-tech and unusual features, from cars that can shake themselves free of snow to vehicles that transform into living rooms.

Paul Li, CEO of China-headquartered EV tech firm U Power, told Business Insider this was all part of a strategy to attract tech-savvy Chinese consumers, who have radically different expectations to US buyers.

"In China, the EV customer right now is totally different than any customers in the whole world," he said.

Li said that Chinese consumers expect "a high level of intelligence" from EVs and are willing to pay extra for features such as autonomous driving, smartphone integration, and even onboard drones.

"The innovation in the Chinese EV market is not only coming from competition, it is coming from innovation-driven customers. A sophisticated market makes sophisticated products," said Li.

"I very much doubt whether the same level of intelligence is needed for the global market," he added.

High-tech EVs prove popular

This demand for high-tech features has seen the gap between China's EV makers and its tech firms narrow as both try to capture a segment of China's booming electric car market.

Nio, a Chinese EV startup and Tesla competitor known for its network of battery-swapping stations, unveiled its own smartphone last September that allows owners to park their cars remotely.

Smartphone makers Huawei and Xiaomi, meanwhile, are both getting into the EV business, with the latter's SU7 model coming with five screens, smartphone and smart home integration, and Xiaomi's own autonomous driving system.

Unlike in the US, where the technology is still limited and mired in controversy, autonomous driving systems are fairly common in China, with the likes of Xpeng, Huawei, and Nio all offering the feature.

They may soon be joined by Tesla, which is edging closer to releasing its Full Self-Driving technology in China after striking a deal with Chinese tech giant Baidu.

Even BYD, which has experienced enormous success in selling its cheap EVs to Chinese consumers, is feeling the pressure to make its cars smarter.

The Warren Buffett-backed automaker announced in January it would invest 100 billion yuan ($13.8 billion) in AI-powered features for its vehicles, including improved voice recognition and automated parking.

"The first half [of the game] is about electrification, the second half is about intelligence," said BYD CEO Wang Chuanfu at the time.

Experts agree that for EV makers looking to sell their cars in China, smart car features are now essential.

"Young people in China no longer treat EVs as just vehicles, they want them to [function like] smartphones," Cao Hua, a partner at the Shanghai private equity firm Unity Asset Management, told the South China Morning Post last year.

"Making the cars autonomous and intelligent can draw more Chinese buyers," Hua added.