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    Xiaomi Enters China’s EV Race, Targets Tesla With Lower Pricing

    The smartphone and consumer electronic giant’s entry into an already crowded EV market is likely to increase competition and drive industry-wide efforts to reduce costs.

    Chinese consumer tech giant Xiaomi on Thursday launched its first electric vehicle, the SU 7, marking its entry into the world’s largest, and most competitive, auto market.

    The new model is available in three trims, with prices ranging from 215,900 to 299,900 yuan ($29,900 to $41,525). Designed to compete with Tesla’s Model 3, the SU 7 is priced about 30,000 yuan lower. The company announced on social media that pre-orders for the SU 7 exceeded 50,000 within 27 minutes of its unveiling, with cancellations and refunds available for seven days.

    Xiaomi claims the top trim of SU 7 can accelerate to 100 km/h (approximately 62 mph) in just 2.78 seconds and reach a maximum speed of 264 kph (about 164 mph). The cars also come with a variety of accessories, such as an in-car refrigerator, custom window shades, in-car pillows, and microphones.

    Amid growing consumer and media anticipation, Xiaomi CEO Lei Jun unveiled the SU 7 at a glitzy press conference in Beijing, attended by senior executives from other leading Chinese automakers, including XPeng, Nio, and Li Auto Inc.

    Experts told Sixth Tone that Xiaomi’s debut into the EV market is set to heighten competition, particularly among automakers like SAIC Volkswagen, XPeng, and ZEEKR, which offer vehicles in similar price brackets.

    Zhang Xiang, director of the Digital Automotive International Cooperation Research Center at the World Digital Economy Forum, emphasized that this increased competition would drive industry-wide efforts to reduce costs over the long term.

    “Automakers will also be propelled to streamline their supply chains — from batteries to chips — to achieve economies of scale and accelerate product innovation,” said Zhang.

    Over the past decade, Xiaomi has made a name for itself by offering high-performance products at low prices. Amid a downturn in the mobile market, the company seeks to replicate this success in the EV space with a similar approach.

    Outlining an ambitious target, Lei said he expected the company to rank among the top five global automakers within the next 15-20 years, despite entering the EV market only in 2021. To this end, Xiaomi has committed to investing 10 billion yuan over the next decade in a subsidiary dedicated to developing smart EVs.

    In the lead up to the official launch, Xiaomi displayed its new turquoise-blue models in stores across China, but the focus at Thursday’s event was the car’s pricing, a detail previously not disclosed. A related hashtag on microblogging platform Weibo following the event amassed over 560 million views.

    The pricing has drawn significant attention amid a year-long price war among China’s EV makers. Last month, multiple manufacturers claimed that EVs are now more affordable on average than traditional combustion vehicles, even without government subsidies.

    Zhang also noted Xiaomi’s aggressive pricing strategies. “The extremely low pricing for its first product is expected to help the company build its brand and attract more initial users despite the fierce competition,” he told Sixth Tone.

    At Thursday’s event, CEO Lei Jun even admitted that Xiaomi has positioned the model as a loss leader — selling a product at a price that is not profitable — to gain market entry.

    Beyond the pricing, Zhang underscored that Xiaomi’s EV strategy aligns with the company’s wider objective to create an interconnected ecosystem encompassing humans, vehicles, and homes.

    “Xiaomi’s advantage is in its rich software ecosystem and electronics connectivity, which can enhance the driving experience. However, the company still faces challenges in manufacturing and autonomous driving technologies compared with existing players in the market,” Zhang said.

    Additional reporting: Ding Xiaoyan; editor: Apurva. 

    (Header image: Onlookers view the new SU 7 at the Xiaomi Home in Dongguan, Guangdong province, March 28, 2024. VCG)