Understanding Gen Z: Key Insights for Designing Smart Electric Vehicles

The global automotive industry is undergoing an unprecedented structural transformation. On May 14, the China Electric Vehicle Hundred Persons Forum and Lisi Strategic Consulting jointly released the report titled “New Species, New Concepts, New Trends: Insights and Forecasts on New Energy Vehicle Consumption.” This report reveals the transformative logic of China’s automotive consumption market and its future evolution path.

Structural Differentiation in the Era of Existing Competition

According to Shi Jianhua, Deputy Secretary-General of the China Electric Vehicle Hundred Persons Forum, by the end of 2024, the number of passenger vehicles in China is expected to reach 350 million, with a car ownership rate exceeding 250 vehicles per 1,000 people. This marks the start of the existing competition era following the market’s widespread adoption. He noted that in 2023, the vehicle replacement ratio for the first time surpassed 50%, and this is expected to rise to 80% by 2030, with demand for upgrades becoming mainstream. Policy-driven initiatives play a crucial role in this existing market. The “Two New” policy, which includes doubling the subsidy for replacing old vehicles to between 15,000 and 20,000 yuan and strengthening local purchase subsidies, is expected to boost sales in the second half of the year by 10% year-on-year, with an estimated 6.8 million vehicles replaced throughout the year. In 2025, the continuation of a loose policy environment, combined with support from the monetary environment, is expected to maintain domestic market sales at 26 million vehicles, reflecting a year-on-year growth of about 3%.

The Rise of Generation Z Reshaping Consumption Logic

The “new and rational” Generation Z (those born after 1995) is becoming the backbone of automotive consumption. Data shows that Generation Z’s acceptance of new energy vehicles is significantly higher than that of previous generations: 70% believe that a range of 400 to 500 kilometers meets their daily needs, while 30% are willing to pay a premium of over 10,000 yuan for advanced driver assistance features, a 15 percentage point increase compared to non-Z generations. During their single years, Generation Z views cars as tools for personal enjoyment, with 80% of the first users of the Xiaomi SU7 being born in the 1990s. However, after starting a family, their focus quickly shifts towards the practicality of space, with attention to vehicle dimensions increasing by 3.5 percentage points. On the other hand, the report indicates that Generation Z’s preference for joint venture brand new energy models is only 5%, with 95% of the interest concentrated on expert brands such as Wenjie and Xiaomi.

Parallel Trends of “Downward Penetration” and “Upgrading” in the New Energy Market

The report also highlights that third-tier cities and below are becoming new engines for the growth of new energy vehicles. In 2024, the sales growth rate of new energy vehicles in these markets is expected to reach 63%, with their market share climbing to 40%. However, penetration rates remain 10 percentage points lower than those in first- and second-tier cities. The low density of charging stations, weak after-sales networks, and a market dominated by economical pure electric models create opportunities for plug-in hybrid and range-extended technologies. In these markets, the share of these technology routes is 46%, significantly higher than in first-tier cities. The report predicts that by 2025, sales of plug-in hybrid and range-extended models will exceed 8 million units, presenting a formidable alternative to pure electric vehicles. The penetration rate of Level 2 driver assistance features is expected to exceed 50% in the first half of 2024, with navigation assistance becoming a key area of competitive differentiation. Shi Jianhua stated that vehicles now also possess attributes of electronic consumer products, with the weight of intelligent features in consumer purchase decisions rising to 30%.

Breaking Out Under Global Competition

Chinese car manufacturers are shifting from being “market followers” to “technology definers.” Expanding globally has become a necessity. In 2024, China’s new energy vehicle exports are projected to grow by 68% year-on-year. However, He Songsong, a partner at Lisi Strategic Consulting’s China division, pointed out that relying on a “scattergun” trading model for international expansion is becoming unsustainable. He suggests that car manufacturers should focus on potential markets, build localized organizations and distribution systems, and tell localized stories rather than simply exporting cars abroad. Amid this century-long transformation, Chinese car manufacturers have seized the initiative, but the window of opportunity is narrowing. Continuous insights into consumer changes, focusing on category innovation, and building global power are essential to maintain a leading edge in the era of intelligence.