Xiaomi's Electric Dream: From Smartphones to Sedans

Xiaomi's Electric Dream: From Smartphones to Sedans

By Staff Writer, 03 January 2024

On Thursday (28/12), Xiaomi (1810.HK), the renowned Chinese smartphone manufacturer, revealed its inaugural electric vehicle (EV), marking its ambitious entry into the automobile industry with aspirations to rank among the world's top five automakers.

The newly unveiled sedan, named the SU7 (with 'SU' denoting Speed Ultra), has generated significant anticipation. Xiaomi's CEO, Lei Jun, proudly highlighted the vehicle's cutting-edge "super electric motor" technology, boasting acceleration capabilities that could outpace both Tesla's (TSLA.O) and Porsche's electric vehicles.

However, Xiaomi's debut into the automotive scene occurs against the backdrop of China's immense auto market, which, despite its global dominance, faces challenges.

Issues such as overcapacity and diminishing demand have ignited intense price competition within the industry.

Yet, Lei Jun remains undeterred in his vision, declaring during the vehicle's launch, "Over the next 15 to 20 years, we aim to rank among the globe's top 5 automakers, elevating China's automobile sector."

He further expressed ambitions to craft a vehicle rivaling the quality and prestige of Porsche and Tesla.

A distinctive feature of the SU7 is its integration with Xiaomi's prevalent mobile ecosystem.

This integration promises drivers an effortless transition between the car and Xiaomi's vast array of mobile applications.

Bill Russo, CEO of Shanghai's Automobility advisory firm, commented on Xiaomi's existing consumer base, stating, "With Xiaomi's expansive smart device ecosystem, boasting hundreds of millions of 'Mi Fans,' the brand already enjoys significant consumer trust."

To realize its automotive ambitions, Xiaomi has committed a substantial $10 billion investment over the next decade.

Notably, it has secured approval in China's competitive EV market—a sector where authorities have shown reluctance due to existing supply surpluses.

Production for Xiaomi's EVs will occur in collaboration with a unit of the state-owned BAIC Group (1958.HK) at a Beijing facility designed to manufacture up to 200,000 vehicles annually.

However, Xiaomi faces formidable competition in the Chinese EV landscape.

According to third-quarter data from Zheshang Securities, BYD (002594.SZ) dominates with a 33% market share, while Tesla holds 9%, setting the stage for an intriguing market rivalry.

Yelin Mo and Casey Hall / Reuters

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