Mobility Disruptors Perception, Intention and Aspiration of Chinese Consumers

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Mobility Disruptors Perception, Intention and Aspiration of Chinese Consumers Electrification Connectivity Ride-sharing Automation Feb 2018 Based on

1 Mobility Disruptors Perception, Intention and Aspiration of Chinese Consumers Electrification Connectivity Ride-sharing Automation Feb 2018 Based on Key Findings of J.D. Power China Pulse Surveys on Mobility Disruptors 2018 J.D. Power Commercial Consulting (Shanghai) Co. Ltd. All Rights Reserved. 11

2 MOBILITY DISRUPTORS Electrification Connectivity Ride-sharing Automation Survey ONE Chinese Consumers Purchase Intention towards New Energy Vehicles Survey TWO Chinese Consumers Perception of Intelligent Connected Vehicles Survey THREE Chinese Consumers Satisfaction with Mobility Solutions Survey FOUR Chinese Consumers Attitude towards Autonomous Vehicles 2018 J.D. Power Commercial Consulting (Shanghai) Co. Ltd. All Rights Reserved. 2

Sample size: 2212 01 Chinese Consumers Purchase Intention Towards New-Energy Vehicles

4 Electrification Future Perspective on NEV Technologies Nearly 90% of Chinese customers agree that new energy vehicles will replace internal combustion engine vehicles in the future. Do you agree that "the new energy vehicles will replace IC engine vehicles in the future"? 86.4% 19.39% 67.00% 11.08% 2.53% Completely agree Partially agree Partially disagree Completely disagree 2018 J.D. Power Commercial Consulting (Shanghai) Co. Ltd. All Rights Reserved. 4

Electrification Purchase Intention Drops If No Incentives Are Offered 95.2 % of customers are very willing or slightly willing to choose an NEV for their next vehicle purchase.

5 Electrification Purchase Intention Drops If No Incentives Are Offered 95.2 % of customers are very willing or slightly willing to choose an NEV for their next vehicle purchase. However, if there were no subsidies, 29% of consumers indicate that they would not select an NEV and 41% would not select an NEV if there were no free license plates. Percentages of very unwilling and slightly unwilling to buy NEVs under three premises 4.8%29.1% 40.9% In general No free license plate No government subsidy 2018 J.D. Power Commercial Consulting (Shanghai) Co. Ltd. All Rights Reserved. 5

6 Electrification Major Concerns about NEVs Range anxiety, power performance and the distrust of new energy technologies are the main obstacles to the popularity of NEVs. What are your major concerns about purchasing a new energy vehicle? Have no concern and would like to purchase one Other Driving performance Insufficient/inconvenient after-sales services Driving safety High ownership costs Maturity of new energy technologies Power performance Reliability of product quality High prices Not convenient to use Limited driving range 0.86% 1.04% 12.70% 21.47% 19.44% 39.10% 46.61% 47.69% 42.77% 39.78% 34.99% 75.63% 2018 J.D. Power Commercial Consulting (Shanghai) Co. Ltd. All Rights Reserved. 6

7 Electrification Chinese Customers Prefer PHEV Concern about limited driving range, once again, makes a significant impact on the customers choice of battery electric cars. Which type of new energy vehicle are you willing to buy? 71.0% 24.8% 4.2% Plug-in hybrid electric vehicles Battery Electric Vehicles Other (e.g. Fuel cell battery electric vehicles) 2018 J.D. Power Commercial Consulting (Shanghai) Co. Ltd. All Rights Reserved. 7

8 Electrification High Expectations Are Driving Technology Advancement Consumers have high expectations for improving the range of electric cars and battery charging time. New energy vehicles with the following charging time ranges(under slow charge model), which are you willing to buy? New energy vehicles with the following driving ranges on one charge, which are you willing to buy? Replaceable battery / Battery changing (usually a few 11.62% More than 400KM 15.87% Less than 6 hour 29.25% Between 300KM to 400KM 22.56% Between 6 hours to 8 hours 27.85% Between 200KM to 300KM 38.29% Between 8 hours to 10 hours 22.42% Between 100KM to 200KM 20.89% More than 10 hours 8.86% Less than 100KM 2.40% 41% 38% < 6 HOURS > 300 KM 2018 J.D. Power Commercial Consulting (Shanghai) Co. Ltd. All Rights Reserved. 8

9 Electrification Level of Trust in Automakers Consumers in China trust conventional automakers (93%) more than new market entrants (81%) to develop new-energy vehicle technologies. New entrants (e.g., Tesla, NIO) 62.97% 18.35% Probably would Definitely would Conventional automakers (e.g., GM, Ford, Toyota, VW) 66.23% 26.54% Customers trust new automakers less due to their low brand awareness, untested product quality and less advanced technologies; however, they have more faith in new players when it comes to innovation capabilities J.D. Power Commercial Consulting (Shanghai) Co. Ltd. All Rights Reserved. 9

10 Electrification Most Favored Brands by Markets Consumers in China prefer NEVs made by Chinese domestic brands, followed by European brands and Japanese brands % 25.59% 13.38% 1.31% 5.06% 0.50% Chinese brands European brands Japanese brands Korean brands U.S. brands Other 2018 J.D. Power Commercial Consulting (Shanghai) Co. Ltd. All Rights Reserved. 10

11 Electrification Battery Is a Big Concern The majority of consumers are concerned about dependability and high maintenance costs due to the constraints of current battery technology. Some have no idea about how to use the battery. I have no concern at all 0.50% Battery may be harmful to the environment Uncertainty about how to dispose of a worn-out battery Lack of clarity about the usage and maintenance of Used car price falls as battery performance reduces 26.90% 20.84% 22.24% 29.29% High battery replacement/ maintenance cost 58.59% Insufficient battery warranty services 40.96% Long charging time High charging frequency 60.22% 65.33% Vehicle breakdown caused by battery troubles 49.41% Mileage driven on one charge will decrease over time 68.31% 2018 J.D. Power Commercial Consulting (Shanghai) Co. Ltd. All Rights Reserved. 11

Electrification New Ways of Purchasing and Servicing 41% prefer online car shopping and 30% prefer to visit the branded service stores directly

45% 24% 17% 14% PURCHASE Offline shopping Online shopping and home delivery Online shopping and self pick-up All of above look good to me 53% 30% 5%

12 Electrification New Ways of Purchasing and Servicing 41% prefer online car shopping and 30% prefer to visit the branded service stores directly owned by the manufacturers for after-sales service and maintenance. 45% 24% 17% 14% PURCHASE Offline shopping Online shopping and home delivery Online shopping and self pick-up All of above look good to me 53% 30% 5% 12% Authorized dealerships Service stores directly owned by manufacturers Non-authorized dealerships All of above look good to me SERVICE AND MAINTENANCE 2018 J.D. Power Commercial Consulting (Shanghai) Co. Ltd. All Rights Reserved. 12

02 Chinese Consumers Perception Towards Intelligent Connected Vehicles Sample size: 1597

Connectivity Functions of Connected Vehicles Most Expected by Chinese Customers Road safety monitoring, remote control, vehicle health monitoring are the top three anticipated functions. 67.

14 Connectivity Functions of Connected Vehicles Most Expected by Chinese Customers Road safety monitoring, remote control, vehicle health monitoring are the top three anticipated functions. 67.9% Road safety monitoring 62.1% Remote control 59.5% Vehicle health monitoring 27.9% Interactive entertainment 55.0% Voice interaction Note: Other responses not shown 2018 J.D. Power Commercial Consulting (Shanghai) Co. Ltd. All Rights Reserved. 14

15 Connectivity Purchase Intention for Intelligent Connected Vehicles 91.5% of Chinese customers definitely would buy intelligent connected vehicles for their next car purchase, more than half would pay extra 20% to get a connected vehicle. 91.5% Definitely would Probably would not 8.5% 51.5% 39.5% 8.3% 1.1% extra 10% of full payment extra 20% of full payment extra 50% of full payment extra 100% of full payment 2018 J.D. Power Commercial Consulting (Shanghai) Co. Ltd. All Rights Reserved. 15

fun of driving caused by technologies. 60.3% 59.

16 Connectivity Wariness about Intelligent Connected Technologies on Vehicles While expecting more convenience and options provided by intelligent connected technologies, customers are wary of the decrease of active thinking ability and the fun of driving caused by technologies. 60.3% 59.0% Probably would gradually reduce active thinking ability when driving Probably would reduce the fun of driving 2018 J.D. Power Commercial Consulting (Shanghai) Co. Ltd. All Rights Reserved. 16

17 Connectivity Short-term Concerns about Intelligent Connected Vehicles Hacker attacks, distracted driving, high cost of maintenance and leak of personal information account for 92.5% of customers concerns in the near future. 28.5% Hacker attack 22.9% Distracted by invehicle infotainment systems 22.5% High cost of maintenance 19.3% Leak of personal information 7.5% High cost of surfing on the internet Note: Other responses not shown 2018 J.D. Power Commercial Consulting (Shanghai) Co. Ltd. All Rights Reserved. 17

18 Connectivity Long-term Concerns about Intelligent Connected Vehicles Human-AI relationships and information security are most commonly cited long-term concerns. 75.9% 67.0% 63.6% Driving skill deficiency Reaction capacity degradation Information Security 2018 J.D. Power Commercial Consulting (Shanghai) Co. Ltd. All Rights Reserved. 18

Sample Size: 1592 03 Chinese Consumers Satisfaction With Mobility Solutions October

20 Ride-sharing Overall Satisfaction with Mobility Solutions Chinese customers show a much higher level of satisfaction with mobility options today, compared with 3 years ago. Satisfied 85% Dissatisfied 15% 2018 J.D. Power Commercial Consulting (Shanghai) Co. Ltd. All Rights Reserved. 20

21 Ride-sharing Why Chinese Consumers Are More Satisfied The top three reasons are convenience and flexibility, good user experience of ride-hailing Apps and making a reservation in advance. Convenience and flexibility 82% Good user experience of ride-hailing Apps Make reservation in advance, reduce wait time Avoids the need to drive Relative low cost Meet personalized requirements Plenty of alternative cars Multiple service types Professional services 48% 44% 38% 35% 26% 23% 20% 15% Note: Other responses not shown 2018 J.D. Power Commercial Consulting (Shanghai) Co. Ltd. All Rights Reserved. 21

22 Ride-sharing Still There Are Some Concerns Chinese consumers are concerned about the safety of personal information and the inconvenience for special groups. Safety of personal information 57% Inconvenience for special groups (e.g., the children and elderly) 53% No guarantee for passengers life safety 38% High price 26% Monopoly 26% Other 2% 2018 J.D. Power Commercial Consulting (Shanghai) Co. Ltd. All Rights Reserved. 22

by ride-hailing App (e.g., Didi Chuxing) 3.

23 Ride-sharing Future Choice of Mobility Public transportation and ride-sharing/ride-hailing services are well received due to their features of eco-friendliness, low cost and flexibility 32.3% 32.2% 28.6% Own/ride a private car Car/ Bicycle sharing, public transportation Get a car by ride-hailing App (e.g., Didi Chuxing) 3.6% 2.3% 1% Rent a car from car rental company Hail a taxi on the street Other 2018 J.D. Power Commercial Consulting (Shanghai) Co. Ltd. All Rights Reserved. 23

24 Ride-sharing Willingness to Own a Car Nearly 70% of Chinese consumers are very willing or slightly willing to give up owning a car, if alternatives are available. Very unwilling 10.7% 11% Very willing 18.8% 18.8% 51% Slightly willing 50.8% Slightly unwilling 19% 19.7% 2018 J.D. Power Commercial Consulting (Shanghai) Co. Ltd. All Rights Reserved. 24

25 Ride-sharing NPS of Ride-hailing Services Despite high satisfaction with ride-hailing services, Chinese customers are reluctant to recommend them to their friends, relatives and colleagues. How likely would you recommend the ride-hailing apps to a friend, relative or colleague in the future? Negative Neutral Positive Reasons for Low NPS Concerns about life safety and increased fees are the main reasons. NPS=3% Negative 31% Positive 35% Neutral 34% Unsafe for children and the elderly. The price is higher than in the past when incentives are gradually phased out. Higher fees caused by monopoly J.D. Power Commercial Consulting (Shanghai) Co. Ltd. All Rights Reserved. 25

Sample Size: 1576 04 Chinese Consumers Attitude towards Autonomous Vehicles September

Automation Trust in Automated Technology Chinese consumers show a

Level of Trust with Fully Automated, Self-Driving Technology 9.

85% Probably would not 33.39% 3.55% Definitely Would not 35.

27 Automation Trust in Automated Technology Chinese consumers show a much higher level of trust in fully automated technology. Level of Trust with Fully Automated, Self-Driving Technology 9.77% Definitely would 10.50% 67.83% Probably would 20.92% 18.85% Probably would not 33.39% 3.55% Definitely Would not 35.19% 2018 J.D. Power Commercial Consulting (Shanghai) Co. Ltd. All Rights Reserved. 27

28 Automation Concerns about Self-Driving American and Chinese share the same, highest concern -- technology failure. US China Giving up the fun of driving Ability for driver to do other things while vehicle is driving I do not see any concerns 60% 50% 40% 30% 20% 10% 0% Possible technology failures/ errors Legal liabilities if an accident occurred More driver stress from vehicle self-driving Possibility of vehicles being hacked Learning how to operate an autonomous vehicle Note: Other responses not shown 2018 J.D. Power Commercial Consulting (Shanghai) Co. Ltd. All Rights Reserved. 28

29 Automation Perceived Benefits of Self-Driving Chinese consumers appreciate less driving stress, more flexibility and less congestion, while US consumers appreciate fewer accidents. Ability for driver to do other things while vehicle is driving I do not see any benefits 50% 40% 30% 20% 10% US Fewer accidents China Less driver stress from vehicle self-driving 0% Lower insurance premiums Improved fuel economy Less traffic congestion Note: Other responses not shown 2018 J.D. Power Commercial Consulting (Shanghai) Co. Ltd. All Rights Reserved. 29

30 Automation Preferred Activities in a Self-Driving Vehicle Flexibility of doing other things in a self-driving vehicle is more important for Chinese consumers. China US Reading, videos, internet, games 19% 61% Talking or texting 17% 59% Watching the road 41% 59% Sleeping 11% 25% Working 11% 23% I would not ride in a self-driving vehicle 5% 31% Note: Other responses not shown 2018 J.D. Power Commercial Consulting (Shanghai) Co. Ltd. All Rights Reserved. 30

31 Automation Trust in Automated Technology Providers Chinese consumers trust conventional US auto companies more than others Level of Trust with the Companies for Self-driving Automation Technology Probably would Definitely would US Auto company (e.g. GM, Ford, Chrysler) 72% 16% US tech company (e.g. Google) 60% 22% US Auto new company (e.g. Tesla) 60% 19% China tech company (e.g. Baidu, Alibaba) China Auto company (e.g. Beijing Hyundai, Shanghai GM) New Energy China Auto company (e.g. NIO) 55% 57% 57% 16% 12% 9% 2018 J.D. Power Commercial Consulting (Shanghai) Co. Ltd. All Rights Reserved. 31

32 Automation Future Perspective for Automated Technology Chinese consumers think the US will be more advanced in automated technology in future, with the younger population believing that even more so. Do you think there will be more advancement in China or in US in self-driving automation technology in next 5 years? 45% Pre-70s 31% 28% 41% 20% Post-70s 38% 21% 41% Post-80s 49% 19% 32% China US Post-90s 48% 20% 33% US China Equal 2018 J.D. Power Commercial Consulting (Shanghai) Co. Ltd. All Rights Reserved. 32

33 Automation Selected Comments from Chinese Consumers Chinese consumers are expecting this new technology, but they are concerned about safety and relevant regulations. If safety is assured, Chinese consumers are more likely to trust the technology. The day of self-driving popularization is highly anticipated that we can enjoy a new driving experience from technology Autonomous driving can avoid all kinds of traffic violations and should be strongly advocated I'm very willing to try it if safety is ensured It will bring us more convenience Positive It will make a dramatic breakthrough in 2 or 3 years, and be safe for daily life and work Negative China has more cars, more people and more traffic jams, therefore automated technology has yet to be tested. Before the relevant laws are issued, it s completely unpromising To identify self-driving accident liability and claim, the relevant laws and regulations need to be improved and followed. Still worry about safety The autonomous vehicle can control itself, but it can't control other vehicles. If other drivers get drunk, the safety seems to be less secure 2018 J.D. Power Commercial Consulting (Shanghai) Co. Ltd. All Rights Reserved. 33

34 Thanks J.D. Power is a global leader in consumer insights, advisory services and data and analytics. Those capabilities enable J.D. Power to help its clients drive customer satisfaction, growth and profitability. For more information, please visit china.jdpower.com or stay connected with us on J.D. Power WeChat and Weibo. Contact Us: (8621) (Shanghai) / (8610) (Beijing) china.marketing@jdpa.com 2018 J.D. Power Commercial Consulting (Shanghai) Co. Ltd. All Rights Reserved. 34

New-Energy Vehicles: Unfolding in China J.D. Power China Mobility Disruptors Survey Series. March 2018

New-Energy Vehicles: Unfolding in China J.D. Power China Mobility Disruptors Survey Series March 2018 1 OVERVIEW Propelled by growing public concerns about the environment and incentive policies, the enthusiasm