Here’s a simplified breakdown of the case study in pointer format:

1. Deepal’s Background & Market Position

 Deepal (Shenlan in China) was founded by Changan Automobile Group in 2018, focusing only
on new energy vehicles (NEVs).

 Became an independent brand in 2023.

 Officially launched in July 2022 and sold 100,000 units in just 14 months—fastest for a
Chinese NEV brand.

2. EV Market Growth & Slowdown

 EV market saw rapid growth due to:

o Environmental awareness.

o Improved technology & driving experience.

o Tesla’s Model S (2012) revolutionized the industry.

 By 2024, demand growth slowed despite:

o Lower prices.

o Better quality.

 Many automakers reduced or delayed their NEV expansion plans.

3. Deepal’s Challenge

 Needs to prepare for slowing EV demand.

 Being a new player, Deepal must learn from major competitors like Tesla and BYD.

4. History of EVs (Rise & Fall)

 Early EVs (1890–1935):

o First EV appeared in 1890, reaching 14 mph.

o By 1900, EVs were 1/3 of all vehicles.

o They were easier to use than gasoline cars.

 Decline of EVs (Post-1912):

o Henry Ford’s Model T made gasoline cars much cheaper ($650 vs. $1,750 for EVs).

o Oil discoveries in Texas made gasoline more affordable.

o Gas stations grew, but electricity was expensive and limited to cities.

o By 1935, commercial EV production stopped.

 Temporary Comeback (1970s-1990s):

o Oil crisis in the 1970s renewed interest in EVs.

 o Governments started R&D programs for EVs.

o Progress was slow despite stricter emission laws.

 Tesla’s Impact (2012–Present):

o Model S launched in 2012, pushing the industry forward.

o China became the biggest EV market, with 35% of global EV exports by 2022.

5. Reasons for Slower EV Demand in 2024

A. High Prices & Battery Limitations

 EVs cost more than gasoline cars due to:

o Expensive lithium-ion batteries.

o Advanced onboard computer systems.

 Companies lose money per unit sold until sales reach high volume.

 Limited battery capacity causes "range anxiety" (fear of running out of charge).

 Lack of charging stations makes long trips difficult.

 Cold weather reduces battery efficiency.

 Tesla charging stations faced long wait times or malfunctions.

B. Infrastructure Challenges

 EV range is affected by battery energy density and extreme weather.

 Public charging station growth hasn’t kept up with EV sales.

 Home charging is hard for those without a private garage.

 Increased operating costs due to limited charging options.

C. Complex Technology & High Repair Costs

 EVs rely on advanced computer systems, leading to:

o Software failures.

o Safety concerns (Tesla recalled 2M cars in Dec 2023 due to autopilot issues).

 EV production is complex, increasing repair costs.

 Integrated casting technology means minor damage may require replacing the entire body.

 Sensors & cameras used for autonomous driving are expensive to fix.

 Battery failures, charging issues, and fire risks increase insurance costs.

D. Low Resale Value of EVs

 Used EVs lose value quickly (32% drop in 12 months vs. 3.6% for gasoline cars).

 Oversupply and fast-changing technology reduce used EV demand.

  Owners struggle to sell used EVs, discouraging them from upgrading to new models.

E. Competition from Hybrid Vehicles

 Hybrids offer the best of both worlds:

o Lower battery costs.

o No range anxiety.

 In the U.S., hybrid sales grew 5x faster than EVs in 2023.

 Hybrid market share:

o 9% of all cars (slightly higher than EVs at 8%).

 In China, EVs lead, but hybrid growth rate is still higher.

Conclusion

 EV demand growth has slowed due to:

o High costs.

o Charging infrastructure issues.

o Low resale value.

o Competition from hybrids.

 Deepal must navigate these challenges to succeed in a competitive market.

Here’s a structured breakdown of the Competitive Analysis of the EV Industry, covering all key
points:

1. EV Industry Competitive Landscape

 Price Reduction & Incentives: Intense competition led to price drops. Government tax
incentives further narrowed the price gap between EVs and ICE vehicles, improving
acceptance among price-sensitive consumers.

 Market Education & Infrastructure: Automakers invested in marketing, innovation, charging

infrastructure, and flexible buying options to attract mainstream buyers.

 Profitability Challenges:

o Only a few EV manufacturers were profitable.

o US automakers lost ~$6,000 per $50,000 EV sold.

o In China, only BYD was consistently profitable; Li Auto turned profitable in 2023.
  China’s EV Market:

o Largest EV market globally.

o Over 200 manufacturers; expected to consolidate to fewer than five major players by
2030.

o Fierce competition driving differentiation in products and expansion into supply

chains.

2. Deepal Automobile (Changan’s EV Brand)

Company Background

 Changan Automobile Group (one of China’s "Big Four" automakers) started in 1862 as a
military supplier.

 Entered passenger cars in the early 2000s via joint ventures with Ford, Suzuki, and Mazda.

 Early hybrid models (2010) had major drawbacks—limited range, safety issues, and poor
efficiency—hindering Changan’s EV success.

Changan’s EV Strategy Shift (2017-Present)

 2017 Transformation: Shifted focus to smart, low-carbon mobility technology.

 EPAI Platform (USD 300M Investment, Completed in 5 Years):

o Supports Pure Electric (BEV), Extended Range (REEV), and Hydrogen Fuel Cell
(FCEV) vehicles.

o Pure electric rear-wheel drive for performance appeal to younger buyers.

 Deepal & Avatr Brands (Launched 2022)

o Deepal’s models built on EPAI platform.

o Mass-market focus (100,000–200,000 yuan or USD 15,000–30,000 range).

o REEV Strategy: Solving charging, cold weather, and range concerns.

o 2023 REEV Sales:

 REEVs = 80% of Deepal’s total sales.

 16% market share in China’s REEV segment, second to Li Auto.

3. EV Technology Choices

 PHEV (Plug-in Hybrid EV):

o Functions as both an EV and ICE.

o Three modes: Electric, Hybrid, and ICE.

o ICE takes over when battery depletes.

  REEV (Range-Extended EV):

o Larger battery than PHEV.

o ICE does not directly power the car but recharges the battery when needed.

o Benefits: Cost efficiency, reliability, and high-power RWD.

o Drawbacks: Higher energy consumption at high speeds & larger space requirement.

o Deepal SL03 is China’s only range-extended mid-size sedan.

 Hydrogen Fuel Cell EV (FCEV):

o Pros: Long range, fast refueling, eco-friendly.

o Cons: High hydrogen production costs, expensive fuel cells, and lack of refueling
infrastructure.

o Mainly used in commercial (B2B) sector in China.

4. EV Supply Chain & Competitive Dynamics

Industry Shift to Ecosystem Model

 EV industry now integrates energy, AI, and connectivity, reshaping supply chain power
dynamics.

OEM-Supplier Relationship Trends

 Full-stack Control (Tesla Model):

o Tesla fully controls core tech but outsources production.

 Hybrid Model (BYD):

o In-house battery R&D, but partners for software development.

o Joint ventures for ADAS & AI-driven automated driving systems.

 Tech Giants’ Influence:

o Companies like Huawei are dominating software & smart cockpit tech, reducing
automakers’ control over tech stacks.

Deepal’s Approach to Supply Chain

 Balanced “In-house R&D + Supplier Cooperation”:

o Develops electric drives, electronic control, and EE architectures.

o Partnered with CATL (Battery JV) & Star Power Semiconductor (Chip JV).

 Huawei Partnership ("HI Model"):

o Huawei supplies tech, but Deepal retains control over implementation.

5. Deepal’s Strengths & Weaknesses

Strengths

1. Strong Changan Support:

o Financial backing & expertise in manufacturing, R&D, and cost reduction.

2. Advanced Technology (EPAI Platform):

o Offers BEV, REEV, and FCEV options.

3. Supply Chain Efficiency:

o Strategic JVs to reduce dependence on external suppliers.

4. Strategic Location (Chongqing):

o Key hub for China’s Belt & Road Initiative.

o Strong export potential to ASEAN, Gulf, and EU markets.

Weaknesses

1. Brand Recognition Issues:

o Low brand awareness globally.

o Changan’s low-end brand image affects Deepal’s market positioning.

2. Less Focused Product Strategy:

o Unlike Tesla/Li Auto, which focus on a few high-margin models, Deepal’s broader
lineup could increase costs.

3. Location Disadvantages:

o Chongqing has fewer smart connectivity resources compared to Beijing, Shanghai,

etc.

6. Future Opportunities in the EV Ecosystem

 New Business Models Beyond Car Sales:

o Inspired by Apple’s ecosystem model (hardware + software + services).

o EVs moving towards subscription-based software & value-added services.

 Current Ecosystem Initiatives

o Tesla & Nio offer ADAS subscriptions.

o Nio has a lifestyle mall in its app.

o Tesla, BYD, Xpeng, and Li Auto entered insurance to gain extra revenues.

 Challenges in Monetization
 o Limited software ecosystem.

o Consumer resistance to paywalled car features.

o Currently, ecosystem-based revenues only 10-12% of total revenue for Tesla & Nio.

 Long-Term Goal

o Creating highly interactive human-vehicle experiences rather than just software

add-ons.

7. Challenges Faced by Deepal

 2023 Financial Performance

o Revenue: 26 billion yuan (USD 4B).

o Loss: 3.7 billion yuan (USD 580M).

 Key Challenge: Profitability—Deepal must scale sales, improve efficiency, and develop high-
margin software services.

Conclusion: Key Takeaways

1. Highly Competitive Market: EV industry facing price wars, high R&D costs, and profitability
struggles.

2. China’s EV Market Oversaturation: Over 200 brands—likely to consolidate by 2030.

3. Deepal’s Differentiation Strategy: REEV & FCEV focus, balancing in-house R&D with supplier
collaboration.

4. Opportunities in Software & Services: Expanding revenue sources beyond car sales is key to
profitability.

5. Challenges Ahead:

o Brand awareness & cost efficiency issues.

o Must improve margins through high-end product expansion & software

monetization.

Would you like further analysis or recommendations for Deepal’s strategy?

2. Role of Complementors in the NEV Industry

Complementors play a crucial role in shaping the New Energy Vehicle (NEV) industry, influencing
both customer adoption and industry growth. Their contributions include:

1. Charging Infrastructure Providers – Companies like State Grid, Tesla, and NIO (with its
battery swap stations) are essential for range confidence and convenience, influencing
consumer willingness to adopt NEVs.
 2. Battery Manufacturers – Suppliers like CATL and BYD drive efficiency, cost, and sustainability
improvements, impacting NEV affordability and performance.

3. Software and Connectivity Providers – AI, autonomous driving tech, and vehicle operating
systems (e.g., Huawei’s HarmonyOS) enhance NEV value and user experience.

4. Renewable Energy Suppliers – Green energy sources for charging contribute to the
sustainability appeal of NEVs.

5. Ride-Hailing and Car-Sharing Services – Companies like Didi promote mass adoption by
making NEVs accessible to non-owners.

Thus, complementors enhance the overall ecosystem, accelerate adoption, and create value for
NEV manufacturers and consumers.

3. Does Deepal Have a Competitive Advantage in the Chinese NEV Industry?

Deepal, backed by Changan Auto, competes in China’s competitive NEV space against BYD, Tesla,
NIO, XPeng, and Li Auto. Evaluating its competitive advantage:

1. Cost & Scale (Moderate Advantage) – As part of Changan Auto, Deepal benefits from supply
chain efficiencies, but BYD dominates cost leadership with in-house battery production.

2. Technology & Innovation (Weak Advantage) – While Deepal integrates smart features, it
lags behind NIO (battery swapping) and Tesla (FSD capabilities) in tech differentiation.

3. Brand Positioning (Limited Advantage) – Deepal is a newer entrant with less brand
recognition than BYD or Tesla, reducing consumer trust.

4. Government Support (Moderate Advantage) – Changan has strong government ties, but
subsidies favor all domestic NEVs, limiting Deepal’s unique edge.

5. Sales & Distribution (Moderate Advantage) – Backed by Changan’s network, but BYD and
Tesla have stronger direct-to-consumer strategies.

Conclusion: No Sustainable Competitive Advantage Yet

 Deepal lacks a clear differentiation or cost advantage against bigger players like BYD and
Tesla.

 Survival depends on niche positioning, tech development, and strategic partnerships (e.g.,
battery alliances).

 If Deepal focuses on a specific market segment (affordable or premium NEVs) and leverages
Changan’s scale, it could develop a competitive edge.
 SWOT Matrix Analysis for Deepal in the NEV Industry

Category Factors

- Backed by Changan Auto, ensuring strong financial and supply chain support.

- Existing manufacturing capabilities allow for cost efficiencies.

Strengths (S)
- Access to government subsidies and policies favoring domestic NEV players.

- Expanding sales and service network through Changan’s established presence.

- Lack of strong brand recognition compared to BYD, Tesla, and NIO.

- Limited technological differentiation in battery tech and autonomous driving.

Weaknesses (W)
- Higher dependency on suppliers for key components like batteries.

- Relatively lower consumer trust and perception in the premium segment.

- Rapid NEV market growth in China and globally due to electrification trends.

- Partnerships with tech and battery firms (e.g., CATL, Huawei) to enhance
Opportunities innovation.
(O) - Export opportunities as demand for Chinese NEVs rises in Europe, Southeast
Asia, and Latin America.

- Evolving consumer preferences for smart and connected vehicles.

- Intense competition from BYD, Tesla, NIO, XPeng, and Li Auto.

- Government policy changes affecting subsidies and tax benefits.

Threats (T) - Technological disruptions, such as solid-state batteries, could impact Deepal’s
competitive edge.

- Price wars among NEV players leading to margin pressures.

Strategic Options for Deepal (Based on SWOT Matrix)

1. Strength-Opportunity (SO) Strategy – Leverage Strengths to Capture Opportunities

✅ Expand into International Markets – Utilize Changan’s supply chain to enter high-demand NEV
markets (e.g., Southeast Asia, Middle East, Latin America).
✅ Strengthen Tech Partnerships – Collaborate with Huawei (autonomous driving, software) and
CATL (battery efficiency) to enhance product differentiation.
✅ Leverage Government Support – Utilize Chinese government’s push for EV exports and
sustainability incentives to improve cost efficiencies.

2. Weakness-Opportunity (WO) Strategy – Overcome Weaknesses to Capture Opportunities

✅ Invest in Brand Development – Increase marketing efforts to establish Deepal as a premium, high-
tech brand.
✅ Develop Proprietary Technology – Focus on in-house battery R&D to reduce dependency on
suppliers and cut costs.
✅ Target Mass Market – Offer affordable, high-value NEVs with long-range capabilities to compete
against BYD in lower price segments.

3. Strength-Threat (ST) Strategy – Use Strengths to Counteract Threats

✅ Leverage Changan’s Distribution & Cost Efficiency – To compete in a price-sensitive market

without sacrificing margins.
✅ Differentiate Through After-Sales & Services – Introduce better warranty, service packages, and
battery-swapping options to enhance customer loyalty.
✅ Secure Long-Term Battery Supply Agreements – Prevent cost volatility by partnering with leading
battery makers (e.g., CATL, BYD).

4. Weakness-Threat (WT) Strategy – Minimize Weaknesses & Defend Against Threats

✅ Focus on a Niche Market – Instead of directly competing with BYD and Tesla, specialize in a specific
segment like family SUVs or affordable urban EVs.
✅ Improve Operational Efficiency – Reduce costs by optimizing production and sourcing, making
Deepal more competitive in pricing.
✅ Adapt Business Model to Market Conditions – Offer subscription-based battery leasing to lower
upfront costs for consumers and improve affordability.

Final Recommendation: A Balanced Growth Strategy

🔹 Short-Term (1-2 years): Strengthen brand, invest in partnerships, improve battery efficiency, and
optimize supply chain.
🔹 Medium-Term (3-5 years): Expand internationally, develop proprietary battery tech, and increase
product differentiation.
🔹 Long-Term (5+ years): Compete in global markets, achieve economies of scale, and enhance smart
vehicle capabilities.

Would you like a deeper focus on any specific strategy? 🚗💡