(Yicai) Sept. 22 -- Chinese automakers are racing to launch bigger new energy vehicles, chasing higher margins and growing consumer demand despite mounting pressure on urban roads and parking spaces.

A total of 83 models more than five meters long were launched in the first eight months of this year, with more than 10 others hitting the market this month, bringing the first three quarters’ total to nearly 100, according to a report by Cui Dongshu, head of the China Passenger Car Association.

In China, large models mean cars that are typically about five meters long, with a wheelbase of around three meters and a width of about two meters. However, their growing presence is straining roads and parking facilities, while greater material and energy use can push up ownership costs.

Still, the segment is rising against the tide. China’s passenger-car retail sales fell 17 percent from a year earlier in the first quarter, while sales of large-sized vehicles jumped nearly 30 percent over the same period, according to previously released industry data.

Higher Margins Drive Bigger Cars

Amid a wave of new launches, large vehicles have emerged as a clear focus.

“More than 100 new models have been launched this year, but carmakers seem obsessed with building large vehicles,” a researcher at a traditional auto group told Yicai. The firm has also rolled out several large models to keep pace with the market and avoid falling behind rivals.

Growing demand has given carmakers another reason to go bigger: larger vehicles can command higher prices.

“Nearly all the new vehicles launched in August were large models,” Cui from the CPCA said. Consumers’ acceptance of large SUVs is behind the upsizing trend, resulting in higher premiums and stronger sales for bigger vehicles, he added.

He Zhiqi, executive vice president of electric vehicle giant BYD, told Yicai that such dimensions were previously seen only in luxury vehicles costing hundreds of thousands of Chinese yuan or even more than CNY1 million (USD140,600), whereas smaller models now struggle to command attractive prices.

William Li, chairman and chief executive of EV maker Nio, said bigger vehicles have more room for higher gross margins, while current tax policies do not restrict EV dimensions, making them a reasonable commercial choice.

Longer bodies also give vehicles a more imposing and substantial appearance, closely matching automakers’ premium positioning and making large vehicles an important tool for building high-end brand images, Cui noted.

Fuel-consumption rules also do not effectively constrain EV energy use, Cui said, while advances in electric powertrains have made it easier for automakers to develop larger vehicles.

BYD’s EVP He said the popularity of large vehicles is the result of consumption upgrading and predicted that vehicles with wheelbases shorter than 2.8 meters may disappear in a few years.

Bigger Cars Test Urban Infrastructure

But bigger vehicles come with trade-offs. They can slow traffic and increase collision risks on narrow streets, while their size can make parking difficult and cause them to spill into adjacent spaces.

Technology is helping address some of those constraints. Xiaopeng He, chairman and CEO of EV brand Xpeng, told Yicai that Chinese consumers previously shunned big vehicles because they were expensive, difficult to drive, and poorly suited to narrow roads and parking spaces. Advances in autonomous driving and intelligent chassis technologies are now making large vehicles easier to drive and maneuver in tight spaces, he said.

Yet their size carries other costs. Large vehicles require more raw materials to manufacture and consume more energy during use, potentially increasing consumers’ purchase and operating costs.

“Vehicle dimensions need to balance market demand and the adaptability of urban infrastructure; bigger is not always better,” Cui said.

Editors: Tang Shihua, Emmi Laine