Achi news desk-
BEIJING –
Xiaomi, a well-known Chinese manufacturer of smart consumer electronics, is entering the country’s booming but crowded market for electric cars.
The tech company will start taking orders for the SU7, a sporty four-door sedan, following a launch event with founder Lei Jun in Beijing on Thursday evening. Analysts think it will be priced in the 300,000 yuan (US$40,000) range.
Government subsidies have helped make China the world’s largest market for electric vehicles, and a host of new manufacturers are locked in fierce competition. Most of the industry’s sales have been domestic, but Chinese makers are pushing into overseas markets with lower-priced models, posing a potential challenge to European, Japanese and American car giants.
Lei isn’t shy about that challenge, saying at an unveiling of the SU7 in December that Beijing-based Xiaomi aims to become one of the world’s top five automakers in the next 15 to 20 years.
“I believe Xiaomi EVs will one day be a familiar sight on roads around the world,” he was quoted as saying in a company news release.
Xiaomi, founded in 2010, is entering a crowded market that analysts expect will be shaken up in the coming years, with weaker startups falling by the wayside.
The combined share of EVs and hybrids in China’s car sales is likely to reach 42% to 45% this year, up from 36% in 2023, according to Fitch Ratings. But the agency said in a December report that the competition could put pressure on short-term market share and profitability for automakers.
Known for its affordable smartphones, smart TVs and other devices, Xiaomi aims to capitalize on that technology by connecting its cars to its phones and home appliances in what it calls the “Human x Car x Home”.
Tu Le, founder of consultancy Sino Auto Insights, said Xiaomi is trying to close the loop by adding transportation to a product mix that is already integrated into the personal and professional lives of its customers.
“The ability to be a continuous, seamless part of someone’s life is the holy grail for tech companies,” he said in an emailed response. “You probably don’t know anyone in Beijing who doesn’t have at least one Xiaomi product, whether it’s a mobile phone, computer, TV, (air) purifier, or tablet.”
As a newcomer to making cars, the company is making an educated guess that it can design and develop a car that will sell, he said. Given the sluggish Chinese economy and the ongoing EV price war, he predicted it would take a year or two to see if Xiaomi can adapt to correct any misconceptions and succeed.
“They’re a tech company, so that’s their advantage but they need to balance that with drinking through a firehose to learn how to be a tech company that builds cars,” Le said.
CreditSights, a financial research firm, said it expects Xiaomi’s EV division to sell 60,000 vehicles in its first year and lose money for its first two years due to high marketing and promotional costs.
Chinese automakers seeking to expand overseas face political headwinds.
The EU is investigating Chinese subsidies to determine whether they give China-made EVs an unfair market advantage abroad. The US announced an investigation last month into Chinese-made connected cars that could collect sensitive information about their drivers.
“China is determined to dominate the future of the car market, including through the use of unfair practices,” said President Joe Biden when the US investigation was announced. “China’s policies could flood our market with its vehicles, posing risks to our national security. I’m not going to let that happen on my watch.”
China pushed back this week, filing a World Trade Organization complaint that claims the U.S. crackdown on electric vehicles discriminates against Chinese products.
The US Department of Defense blacklisted Xiaomi in 2021 over alleged ties to China’s military, but it was removed a few months later after the company denied the ties and sued the US government.
