Xiaomi Corp (小米) is kicking off sales of its first electric vehicles (EVs) with aggressive pricing, betting the Chinese smartphone maker can succeed in a cutthroat market where Apple Inc faltered.
Co-founder Lei Jun (雷軍) presented his strategy in Beijing yesterday evening with the base EV model costing 215,900 yuan (US$29,900). The project has been a multiyear undertaking with a US$10 billion budget and lofty expectations.
Lei’s announcement of the SU7 range and this month’s release date triggered a surge in Xiaomi’s shares this month — even without the disclosure of pricing details. Investors cheered the diversification away from the stagnant smartphone business, but Xiaomi still has much to prove as it enters a wholly new product category.
Photo: Wu Hao, EPA-EFE
Like Apple in the US, Xiaomi saw the opportunity to expand into EVs at a time that cars were adding more electronics and connectivity — though Apple canceled its car project last month, while the Chinese firm is proceeding.
“I didn’t expect Apple to quit,” Lei said on stage in Beijing, before an audience of tens of millions across Chinese streaming platforms. After diving into the details of his cars’ design and engineering — from nine different color options to a laptop-friendly glove box and triple-layer UV protection in the windshield — the CEO returned to the topic of his smartphone-making rival. “Xiaomi will support Apple users just as well,” he said.
Turquoise-blue models of the new vehicles have been on display in Xiaomi stores across China this week, giving customers an early look. The CEOs of fellow Chinese automakers Xpeng Inc (小鵬), Nio Inc (蔚來) and Li Auto Inc (理想). and the chairs of BAIC Motor Corp (北京汽車) and Great Wall Motor Co (長城汽車) were in attendance and acknowledged as friends by Lei.
The global EV market, once a booming sector with vast subsidy-assisted opportunity, has turned into a highly competitive arena. Tesla Inc and BYD Co (比亞迪) dominate in China, the largest individual market, and are fighting a price war that’s putting pressure on smaller players.
Xiaomi hopes to draw away domestic consumers with its offering, which was conceived by a team led by former BMW AG designer Tianyuan Li (李田原) and had consulting help from Chris Bangle, formerly of BMW and Fiat SpA.
Beijing-based Xiaomi is looking for the next stage of its evolution, having grown into one of the world’s top three smartphone makers with a strategy of selling low-margin, high-spec devices online.
One example of a tech company making a successful EV foray comes from Huawei Technologies Co (華為), the Chinese telecommunications conglomerate, which is providing technology solutions to carmakers and displaying the Aito EVs in its stores.
To avoid delays in obtaining regulatory approval, Xiaomi partnered with state-owned Beijing Automotive Group Co (北汽集團) for the new vehicles. The cars are going on sale in 59 stores across 29 Chinese cities.
Initiated three years ago, Lei has called the EV endeavor his final entrepreneurial bet and has dedicated most of his attention to it in recent times. Xiaomi aspires to become a top global carmaker in 15 to 20 years, Lei said when he first unveiled the SU7 in December last year. President Lu Weibing (盧偉冰) has added that the company’s goal is to have one of China’s three best-selling luxury EV models.
The ambitious EV bet arrives at a time of slowing growth for China’s electric car purchases. Industry bodies project 25 percent growth in sales for this year, down from 36 percent last year and 96 percent in 2022.
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