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Xiaomi’s Ambitious Electric Vehicle Venture

Xiaomi places a substantial wager on its latest venture into electric vehicles, setting its sights on capturing the attention of 20 million discerning users seeking premium experiences.

Xiaomi's Electric Car: Tapping into the Premium Market with Confidence

BEIJING – Xiaomi, the Chinese tech giant renowned for its smartphones, is confident it has pinpointed a lucrative consumer niche willing to invest in its forthcoming electric vehicle amidst a highly competitive market.

“We believe this marks a promising entry point for us into the premium segment, leveraging our existing base of 20 million premium smartphone users in China,” stated Weibing Lu, President of Xiaomi Group, in an exclusive interview with CNBC ahead of the car’s global debut at the Mobile World Congress in Barcelona, commencing Monday.

Lu emphasized the anticipated alignment between initial buyers of the electric car and Xiaomi smartphone users, citing significant overlap.

The company, committing $10 billion to the car’s development, explored various price ranges from entry-level to luxury.

Xiaomi unveiled its SU7 electric car in China at the end of December without disclosing a specific price. Lu assured that an official announcement regarding pricing would be made “very soon,” hinting at domestic deliveries starting as early as the second quarter.

Xiaomi's Diversification: From Smartphones to Electric Cars

Based in Beijing, this company has solidified its position as a frontrunner in the smartphone arena, securing the third spot globally in shipments, trailing only behind industry giants Apple and Samsung, as reported by Canalys. Insights from this tech market analysis firm indicate that Xiaomi grasped approximately 13% of the global market share, dispatching 146.4 million phones in 2023.

Diversifying its portfolio, the company has ventured into the realms of smart TVs and home appliances, characterized by their smartphone integration and elegant, minimalist design aesthetics. While smartphones remain the primary revenue driver, accounting for nearly 70% of the company’s earnings, approximately 30% is derived from the sales of appliances and other consumer products.

Although Xiaomi has built its reputation on offering competitively priced products, there are lingering uncertainties regarding its ability to penetrate the electric car market, especially amidst fierce competition from established players. Despite positioning its electric car as a competitor to luxury brands like Porsche, the company faces challenges in a market where even industry stalwarts like BYD are resorting to price reductions.

Xiaomi's Ecosystem Strategy and Competitive Landscape in the Smartphone Market

Lu emphasized that Xiaomi’s strategy revolves around ecosystem development, coupled with a smartphone “premiumization” initiative initiated in 2020, which has shown significant advancement.

During an earnings call in November, he highlighted that the company had benchmarked its latest Xiaomi 14 phone against the iPhone 15 Pro, asserting that the new device was outperforming Apple’s offering, as per a FactSet transcript.

However, competition from Huawei, with its popular Mate60 Pro priced between Xiaomi 14 Pro and iPhone 15 Pro, has also impacted Apple’s market share. Huawei witnessed a remarkable 47% year-on-year surge in smartphone shipments in mainland China in the fourth quarter, surpassing Xiaomi, according to Canalys.

Leveraging its expertise in telecommunications and smartphones, Huawei swiftly entered China’s electric car market. The company introduced the Aito vehicle brand in late 2021 and supplies its HarmonyOS operating system and other software to various automakers. Additionally, Huawei showcases some of these cars, including the upscale Aito M9 SUV, in its smartphone stores.

While reports suggest Apple’s potential venture into the electric car market, it has not made a formal entry yet. Meanwhile, in the autumn, Chinese startup Nio unveiled its own Android smartphone.


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