Xiaomi, the Chinese smartphone giant, has entered the highly competitive electric vehicle (EV) market with a surprisingly low price for its debut EV, challenging established players like Tesla in China.
Xiaomi’s CEO, Lei Jun, revealed during a lengthy launch event that the standard entry-level model of its four-door sporty sedan would be priced at 215,900 yuan ($29,871.19).
Lei emphasized that this price significantly undercuts the equivalent Tesla vehicle, stating, “It’s CNY30,000 cheaper than the Model 3,” which starts at CNY245,900 in China.
The response was swift, with Xiaomi announcing that it received 50,000 orders for its SU7 EV range within half an hour after the launch event.
This move marks Xiaomi’s transition into the EV sector after announcing plans in 2021 to invest $10 billion in developing its electric vehicle business over the next decade, heralded by Lei as his “last major start-up project.”
Xiaomi’s entry comes amidst aggressive price-cutting strategies by major players like BYD and Tesla to seize market share in China, the world’s largest auto market, amid a slowdown in the Chinese economy and weakening consumer demand.
Recent data showing a 12% drop in retail sales of electric and plug-in hybrid vehicles in China underscores the challenging areas. Against this backdrop, Xiaomi’s pricing strategy could offer a competitive advantage.
“The prices are lower than street and our expectations,” noted CCB International equity analyst Clint Su, predicting a positive impact on sales volumes.
The SU7 range will include more advanced pro and max versions retailing for CNY245,900 and CNY299,900, respectively, positioning Xiaomi’s cars to compete directly with Tesla’s Model 3, Porsche’s Taycan, and Geely Automobile’s Zeekr 007.
Lei highlighted that the max version could achieve speeds of 265 kilometers per hour, surpassing the top speed of the Porsche Taycan Turbo.
While targeting 39 Chinese cities by year-end, Xiaomi has not disclosed plans for international sales.
Analysts view initial orders for Xiaomi’s SU7 positively, with projections estimating shipments of 60,000 units by 2024.
However, the aggressive pricing strategy may exert short-term pressure on Xiaomi’s gross profit margin, according to analysts, despite the company’s confidence in both its core business and its commitment to the EV sector.
