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BEIJING (AP) — Xiaomi, a well-known maker of smart consumer electronics in China, is joining the country’s fast-growing but crowded market for electric cars.
The tech company will start taking orders for the sporty four-door sedan SU7 after a launch event with founder Lei Jun in Beijing on Thursday evening. Analysts believe it will be priced between 300,000 yuan ($40,000).
Government subsidies have helped make China the world’s largest market for electric vehicles, and many new manufacturers have been caught up in the fierce competition. Most of the industry’s sales have been domestic, but there are Chinese manufacturers push into foreign markets With low-cost models, that is posing a potential challenge to European, Japanese and American auto giants.
Lei isn’t afraid of that challenge, saying during the SU7 unveiling in December that Beijing-based Xiaomi aims to become one of the world’s top five automakers over the next 15 to 20 years.
“I believe that one day, Xiaomi EVs will be a familiar sight on roads around the world,” he was quoted as saying in a news release from the company.
Xiaomi, founded in 2010, is entering a crowded market that analysts expect to see decline in the coming years, with weaker startups falling by the wayside.
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The combined share of EVs and hybrids in China’s auto sales is likely to reach 42% to 45% this year, from 36% in 2023, according to Fitch Ratings. But the agency said in a December report that competition could put pressure on automakers’ short-term market share and profitability.
Known for its affordable smartphones, smart TVs and other devices, Xiaomi aims to take advantage of the technology by connecting its cars to your phones and home appliances to create what it calls a “human x car x home” ecosystem.
Tu Le, founder of Sino Auto Insights consultancy, said Xiaomi is already trying to close the loop by adding transportation to its product mix, integrating it into the personal and business lives of its customers.
“The ability to be a constant part of someone’s life is the holy grail for tech companies,” he said in an email response. “You probably don’t know anyone in Beijing who doesn’t own at least one Xiaomi product, whether it’s a mobile phone, computer, TV, (air) purifier, or tablet.”
As a newcomer to automaking, the company is making an educated guess about whether 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 might be able to correct any missteps and succeed.
“They’re a technology company, so that’s their advantage, but they need to reconcile drinking through a fire hose to learning how to be a technology 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 in its first two years due to high marketing and promotion costs.
Chinese automakers are trying expand abroad Face political adversity.
“China is determined to dominate the future of the auto market, including through the use of unfair practices,” President Joe Biden said when the US investigation was announced. “China’s policies could flood our market with its vehicles, posing a threat to our national security. I will not let this happen under my watch.”
The US Defense Department blacklisted Xiaomi in 2021 over alleged ties with China’s military, but removed it A few months later the company denied the link and sued the US government.
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