Xiaomi is making waves in the electric vehicle (EV) market, as its first model, the SU7, garners significant attention with impressive production targets and consumer demand.
This year, the company plans to roll out 300,000 vehicles, with over 135,000 already delivered less than a year after the SU7 hit the market. Currently priced around $30,000, the car's design has drawn comparisons to Porsche, and it’s already accumulated a waitlist of nearly six months. The stock price of Xiaomi, listed on the Hong Kong stock exchange, has tripled within the past year, demonstrating the growing enthusiasm surrounding the brand.
CEO Lei Jun's ability to launch such a competitive EV has put him against giants like Tesla and Ford. Remarkably, Tesla took more than a decade to reach similar production levels, and Rivian, which has 15 years of experience, produced only one-sixth of what Xiaomi achieved last year.
At 55, Lei Jun is already seen as a tech legend, leveraging his experience and charisma to captivate millions through engaging presentations and social media outreach. His latest show featured the SU7's premium version, priced at $73,000, boasting extraordinary acceleration – 0 to 60 mph in under two seconds.
Despite having never lived outside China, Lei's admiration for American tech icons such as Steve Jobs is well documented. His presentation style echoes Jobs, as does his vision for affordable yet quality technology. He actively engages audiences through various platforms, including more than 20 TikTok-style videos this year, with themes ranging from product promotion to casual chats with fans.
China holds the crown as the world's largest EV market, with Xiaomi swiftly carving its niche. Firms like BYD – backed by Warren Buffett – have outshined traditional competitors, achieving greater sales than Honda. Meanwhile, American car manufacturers like Ford and General Motors are reassessing their electric ambitions due to rising battery costs and slow charging infrastructure expansion.
Ford's CEO, Jim Farley, voiced concerns about the increasing dominance of Chinese EV makers, labeling it a "matter of survival" for Western automakers.
Xiaomi’s current sales are nearly exclusive to the Chinese market, but other Chinese EV firms are broadening their international reach. Countries including the U.S., European Union, and Brazil are imposing tariffs to slow the influx of Chinese EVs. Despite this, the market presence of Chinese EVs is growing, as evidenced by BYD being the best-selling brand last year in Singapore, traditionally dominated by Japanese manufacturers like Toyota.
Farley, clearly intrigued by Xiaomi’s advances, has taken the plunge himself, purchasing the SU7 for testing purposes. According to him, "The car is fantastic. I don't want to return it," reflecting the model's appeal even among established industry heads.
The rise of Xiaomi highlights the unique advantages enjoyed by Chinese EV manufacturers, including tight control over the supply chain. This allows these companies to source most materials and components locally, optimizing production processes and reducing costs. Conversely, many Western automakers rely on global supply chains vulnerable to delays and price swings, complicate operational efficiency.
With government support and minimal pressure for short-term profits, Chinese EV firms are positioned favorably. Reports indicate authorities have expedited approvals for Xiaomi to enter the EV industry, enabling rapid facility construction. "China is the unparalleled automotive manufacturing center," observes automotive consultant Michael Dunne, noting its unmatched supply chain resources.
While electric vehicles emerge as new income avenues, Xiaomi's staple remains its smartphones, which contribute around 50% of revenue. Building Xiaomi on the Apple model, Lei Jun aimed to offer affordable alternatives like iPhones. Today, the brand stands as the third largest smartphone producer globally.
Initially skeptical about entering the auto sector due to risks and costs, Lei Jun's perspective shifted dramatically after the U.S. Department of Defense blacklisted Xiaomi for investment, prompting him to rethink long-term strategy encompassing diversification.
Following discussions with his board, Lei argued cars would soon play integral roles in the digital lives of consumers, stating emphatically, "This is the future, and Xiaomi must engage." This ambitious venture demands substantial investments – around $10 billion to compete effectively – to which the board consented, contingent upon Lei Jun leading the car initiative.
This marked the genesis of Xiaomi’s commitment to EVs, propelling the company beyond smartphones. Various locales across China are vying to host Xiaomi's automotive manufacturing, with authorities ready to offer land and tax incentives to secure the factory. Lei Jun reportedly tapped his network to gather insights directly from potential customers, personally testing many vehicles to understand their preferences.
His conclusion was clear: consumers desired affordable sports sedans with ranges exceeding 400 miles (640 km) and seamless integration with Xiaomi's broader tech ecosystem.
To fulfill this vision, Lei Jun leveraged established relationships within the tech industry, investing significantly in companies with EV technologies such as autonomous driving and battery systems. Interestingly, even rival founders from companies like Xpeng and NIO have shared expertise with him, believing Xiaomi’s entry enhances credibility for China’s entire EV industry.
Retaining competitive pricing, Xiaomi has shown willingness to forgo initial vehicle profits, banking instead on future revenues from vehicle software and services. Meanwhile, some suppliers voiced frustration over pricing pressures, yet many recognize partnerships with Xiaomi as valuable for accessing wider markets.
Utilizing its R&D prowess and smartphone profits, Xiaomi focuses on advanced production technologies to slash long-term costs. Enhancements like "hypercasting," inspired by Tesla, streamline the manufacturing process by casting complete vehicle frames from single pieces of aluminum, significantly speeding up production.
Robot-operated assembly lines allow for near-total automation without needing lights. Lei Jun’s active social media presence has supplanted traditional advertising, capitalizing on the buzz during the SU7's launch, which resulted in immediate consumer interest and extensive waiting lists.
Nevertheless, the SU7 has not escaped criticism, with some deeming its design misleadingly similar to Porsche’s offerings. Lei Jun has responded by asserting, "It's normal for car designs to look alike; the SU7 has unique features, like its headlight design,” even humorously remarking on other comparisons to brands like McLaren.
There is speculation about Lei Jun potentially launching even more expensive models after being seen driving luxury vehicles like the $400,000 Ferrari Purosangue. Despite Xiaomi's reputation for affordability, he aspires for the brand to transcend mere low-cost designation, acknowledging the diverse customer base, particularly emphasizing the significance of female buyers.
During a marathon livestream on New Year’s Eve, Lei unveiled Xiaomi’s production technologies, outlining his ambitions to penetrate premium markets, similar to Apple’s strategy with its products.
While fully acknowledging the vast gap between Xiaomi and top-tier vehicle manufacturers producing millions of units yearly, Lei Jun emphasized his determination to secure Xiaomi’s place at the global EV table, stating, "My priority is to have a seat at the banquet." With bold strategies, cutting-edge technology, and aspirations of premium branding, Xiaomi is shaping its mark on the global EV industry.