China's HiPhi takes on Audi, BMW and Mercedes with design-focused EVs

China’s biggest and most ambitious automakers were some of the most visible stars of the IAA Mobility auto show in Munich but HiPhi, a startup that is already shaking up the premium EV segment in its home market, took a very different approach.

HiPhi showed just one model, the Z four-door grand touring fastback, available in the test drive area, and the company did not have a stand of its own, even though sales are already under way in Germany and Norway.

That cautious stance is deliberate, said Mark Stanton, a former engineer at Jaguar Land Rover and Ford who is HiPhi’s chief technical officer and head of its Europe operations.

"We are dipping our toe in the water in Europe to see the reaction," he said. "So far it’s been incredibly positive," Stanton said in an interview at the show earlier this month.

HiPhi, the automotive brand of Human Horizons, whose founders include Stanton and former General Motors executives, has already taken the fight to Audi, BMW and Mercedes-Benz in China, where Stanton says it has a leading position among EVs selling for more than 500,000 renminbi (64,000 euros).

Two models have been launched so far, the X, a four- or six-seat large SUV with dual-action rear doors – a rear-hinged lower section with a gull wing upper body – from 109,000-123,000 euros; and the four- or five-seat Z, at 105,000-107,000 euros. The first deliveries have just started, Stanton said.

The X was launched in China in May 2021, and the Z in the middle of 2023. Stanton said HiPhi already has 20 to 25 percent of the premium EV market.

"In China we compete with Mercedes, BMW, Audi and Porsche because of our pricing," Stanton said. "Since we launched those cars we have outsold those brands, not every month, but most months."

HiPhi declined to give sales figures, but other media outlets have reported that HiPhi had sold about 10,000 cars through May of this year.

"Our sales are not huge, but we are playing in an area where the margins are much higher," Stanton said.

HiPhi’s cars, which have bold styling and an abundance of technology, especially in the interior and user experience, appeal to young, wealthy Chinese buyers who don’t want to be seen in a traditional German premium car, he said. 

"Their parents may have bought a Mercedes but they want a different, more modern interpretation of luxury," Stanton said. "We believe there’s a group of people like that in Europe."

HiPhi has opened its first stores in Oslo and in Germany, at the Munich airport, where prospective buyers can see the X, the Z and the Y, a midsize "LuxTech" SUV also with gullwing doors that is expected to sell for about 65,000 euros, with orders opening by the end of the year.

Sales in Europe will be direct to consumer, with a network of "third party" service providers, Stanton said. HiPhi hopes to expand to other major European markets, including the U.K., he said.

HiPhi’s rivals for the X and Z are models from German premiums including the Porsche Taycan; Audi E-Tron GT, Q8 E-Tron and Q8 E-Tron Sportback; BMW i7 and iX; and the Mercedes EQE and EQS sedans and SUVs. Other competitors include the Tesla Model S, and higher-priced models, some not yet on the market, from Chinese brands BYD, Nio and Zeekr.

In the luxury sedan segment, in which the HiPhi Z competes, the Taycan is the leader through August, with 12,115 sales, according to figures from Dataforce – about 6,000 units ahead of its nearest rival, the combustion-engine Mercedes S-Class. The EQS is third at 4,989 sales. 

Chinese brands have yet to make a significant impact on the premium and luxury segments, but sales are growing. Nio, for example, doubled its sales through August to 1,438 compared with the same period in 2022.

Stanton said HiPhi will set itself apart from the competition by offering a combination of futuristic design, a nontraditional interpretation of luxury – "it’s not wood and leather," he said – novel technologies and excellent handling and ride. "There’s not a single brand that stands out in all areas," he said. 

HiPhi is not focused on sales volume or market share in Europe, he said, explaining that the brand is introducing itself in a step-by-step approach, starting by offering press test drives, then social media outreach. A key exposure was at July’s Goodwood Festival of Speed, where a HiPhi Z took a run among other new launches and concept cars. "It showed that we weren’t scared to chuck the car up the hill," Stanton said.

As a startup, HiPhi is aiming to keep its capital expenditures low at this stage, he said. It leases a factory from a Dongfeng-Kia joint venture that has excess capacity; batteries come from CATL and motors from Bosch. It is now developing its own software, infotainment and ADAS systems, Stanton said, especially for the Y, but in the past relied more on suppliers.

"We’re not being too bold in our claims of what we’re going to do and when we’re going to do it," Stanton said. "We try to be nimble and quick on our feet. We don’t have a 10-year master plan because we know we wouldn’t follow it."