Xiaomi enters challenging Chinese auto market with $29,870 electric car
Technology
Xiaomi enters challenging Chinese auto market with $29,870 electric car
BEIJING (Reuters) - Xiaomi kicked off sales of its electric car on Thursday, with the Chinese smartphone company pricing its SU7 at 215,900 to 299,900 yuan ($29,870-$41,493) as it enters a fiercely competitive domestic market.
CEO Lei Jun told the launch event that the shift from electronics to car manufacturing had not been easy, noting that U.S. rival Apple had given up on such an idea.
"In the three years of developing this car, my biggest realization is that making cars is extremely difficult. Even a giant like Apple gave up on it," Lei said to a packed audience at the event.
"So today, every person who is still persevering in making cars is a hero of our time,” said Lei.
The company's standard SU7 EV model will be priced at 215,900 yuan, while the Pro and Max versions will cost 245,900 yuan and 299,900 yuan respectively, Lei said. Deliveries for the Standard and Max models will commence in late April, and the Pro models will follow by the end of May.
All SU7 models will only be sold for now in China, the world's biggest auto market.
Comparing Xiaomi's SU7 to Tesla and Porsche EV models, Lei highlighted its advantages, including its minimum range of 700km which surpasses the Tesla Model 3's 567km.
The launch fulfils an ambition of Xiaomi founder Lei, who announced the company's foray into EVs in 2021, pledging to invest $10 billion in its auto business which would be "the last major entrepreneurship project" of his life.
The New York Auto Show opens to the public Friday, and it comes as the industry faces a tough decision.
The company formed a manufacturing partnership with state-owned automaker BAIC Group and showcased the SU7 - short for Speed Ultra 7 - sedan, in December.
Analysts have been split on whether Xiaomi's car project will succeed.
Some say it is a natural extension for the company, whose rice cookers, air purifiers and other electronics are ubiquitous in Chinese homes.
In China's digitally oriented car market, "there are no better companies at knowing how to monetise screens than mobile device companies", said Bill Russo, CEO of Shanghai-based advisory firm Automobility.
But, in a departure from the company's image as an affordable brand, the Xiaomi's SU7 sedan price tag means that it is entering a crowded, more premium segment, competing with more established EV makers like Tesla and Geely's Zeekr for market share amid a brutal price war.
For instance, Tesla's Model 3 has a starting price of 245,900 yuan, while Zeekr's 001 and 007 models have starting prices of 269,000 yuan and 209,900 yuan respectively.
"Can (Chinese consumers) take that leap psychologically from mass-market, cool, inexpensive consumer products and home products to premium EV?" said Tu Le, founder of consultancy Sino Auto Insights.
DEEP POCKETS
The SU7 goes on sale as China's auto market battles challenges on several fronts.
"The current market environment is quite challenging for newcomers with the top 10 players continuously expanding their market share," said Gavekal Dragonomics analyst Ernan Cui.
"If Xiaomi can't sell at scale in a short time, it's facing the risk of being a profit dragger for the company for longer."
Working in Xiaomi's favour, however, is revenue generated from other business units, said Le of Sino Auto Insights.
"The risk is that they focus too much on the EV space and lose focus on the sectors and products that got them there," he said.
Xiaomi has deep pockets compared to other EV players, a Bernstein analysis of 12 companies in January showed. It ranked Xiaomi third, behind Huawei and SAIC but ahead of nine automakers including BYD and Xpeng in terms of cash and cash equivalents.
Moreover, analysts say Xiaomi's smartphone expertise gives it an edge over traditional automakers when it comes to smart cockpits - a feature Chinese consumers prize.
The SU7 uses the company's self-developed Hyper OS as the operating system that connects EV users to its other devices, including smartphones.
