Chinese EV startups are spending more on research than Tesla is

cnbc.com:

BEIJING – U.S.-listed Chinese electric car companies are spending more on research as a ratio to sales than Tesla, according to CNBC analysis of the four automakers' first-quarter earnings.

It's a strategy for survival in China's cutthroat auto market, the largest in the world. New energy vehicles, which include both battery and hybrid-powered cars, have grown rapidly to more than 40% of sales.

Many Chinese automakers already spend as much as or more than their global peers on R&D as a percent of revenue, a significant increase from many years ago, Paul Gong, autos analyst at UBS, told CNBC. «In certain cases, even in terms of absolute dollars, it has bypassed.»

Of the four U.S.-listed Chinese electric car companies, Nio ranked first, spending nearly 29% of revenue in the first three months of the year on research and development. That's far higher than Tesla's ratio of 5.4% in the first quarter and 4.2% in the second. Elon Musk's company is known for having a relatively low ratio.

It's less clear whether that higher spending can translate into long-term competitiveness.

Nio has operated at a loss for years and only seen deliveries for its premium-priced cars pick up in the last several months. In addition to car launches, the company has in recent years held events to promote its battery services and other tech, including one on car «quality» in late June.

«Everyone is talking about involution right now,» Feng Shen, chairman of Nio's quality management committee said in Mandarin at the event, translated by CNBC. He was referring to a popular term in China to describe fierce competition, especially in the electric car industry.

«What companies should [compete] on is quality,» Shen said, adding that «if you can't do a