Chinese tech giant Xiaomi has entered the electric car market with the launch of its sporty high-tech sedan, the SU7. The company began accepting orders for the vehicle via an app, with prices ranging from 215,900 yuan to 299,900 yuan. Within the first 27 minutes of sales opening, Xiaomi received 50,000 orders, showcasing the demand for electric vehicles in China. The country’s government subsidies have made it the world’s largest market for electric cars, attracting a slew of new makers to the industry, posing competition to European, Japanese, and American auto companies.
Lei Jun, founder of Xiaomi, expressed ambitions for the company to become one of the world’s top five automakers in the next 15 to 20 years. Despite the challenges of entering the competitive auto industry, Jun is confident in Xiaomi’s ability to succeed. Fitch Ratings predicts that the combined share of electric vehicles and hybrids in China’s auto sales will continue to rise, which could potentially pressure automakers’ market share and profitability. Xiaomi aims to disrupt the market by offering a high-performance vehicle at a competitive price point, challenging established players like Tesla and Porsche.
Xiaomi’s strategy involves integrating its cars with its existing technology ecosystem, allowing for seamless connectivity between cars, phones, and home appliances. Lei Jun showcased the SU7 as a smart vehicle with advanced features, such as the ability to communicate with delivery persons from the car. By capitalizing on its customer base that is already familiar with Xiaomi’s products, the company aims to become an integral part of consumers’ lives. However, as a newcomer to the auto industry, Xiaomi faces the challenge of adapting and evolving to ensure the success of its electric car division.
CreditSights anticipates that Xiaomi’s EV division may initially face losses due to high marketing costs, projecting sales of 60,000 vehicles in the first year. The company’s focus on technology could be an advantage, but it will need to balance its tech expertise with the complexities of building cars. Chinese automakers expanding abroad are scrutinized for potentially receiving unfair subsidies, with investigations underway in the European Union and the United States. President Joe Biden expressed concerns over China’s dominance in the auto market, highlighting risks to national security posed by Chinese-made vehicles flooding the market.
In response to U.S. accusations of discriminatory subsidies for electric vehicles, China filed a complaint with the World Trade Organization. The ongoing tension between the two countries regarding electric vehicles and technology underscores the geopolitical challenges faced by Chinese automakers seeking global expansion. Xiaomi, which was previously blacklisted by the U.S. over alleged military ties, has since been removed from the list after denying the allegations. As the company navigates the complexities of the auto industry and international politics, its success in the electric car market remains to be seen.
