Hong Kong – Xiaomi Corp. saw a significant surge in its stock prices following the announcement of its entry into the electric vehicle market. The Beijing-based electronics giant, well-known for its smartphones, revealed plans to release its SU7 series of electric vehicles for sale in 29 cities starting on March 28. This move marks Xiaomi’s ambitious venture into a highly competitive EV market dominated by industry leaders such as Tesla Inc. and BYD Co.
With the EV sector in China becoming increasingly intense, Xiaomi’s decision to enter the market represents a bold move as competitors engage in a fierce battle for market share and profitability. While companies like Tesla and BYD are embroiled in pricing wars, others in the industry are facing challenges with thinning profit margins and sluggish growth. Notably, Apple Inc. recently abandoned its own EV project due to difficulties in adapting its technology-focused approach to the complexities of manufacturing automobiles.
Led by billionaire co-founder Lei Jun, Xiaomi’s foray into car manufacturing poses a daunting challenge, even more so than establishing a successful smartphone business. Lei, who initiated the EV project three years ago, views this endeavor as his final entrepreneurial gamble. Unlike Xiaomi’s conventional focus on high-quality, low-cost smartphones, the company has emphasized that its electric vehicles will not be positioned as budget-friendly options.
Collaborating with state-owned Beijing Automotive Group Co. to expedite the manufacturing process without the need for additional permits, Xiaomi is set to release its SU7 vehicles amidst a competitive landscape following the discontinuation of government reimbursements for EV buyers. The SU7 series, which stands for Speed Ultra, boasts impressive acceleration capabilities, with Xiaomi claiming the vehicles can go from 0 to 100kmh in just 2.78 seconds.
Analysts predict that Xiaomi’s entry into the EV market could potentially boost the company’s sales by up to 4% this year, serving as a long-term growth driver. However, success in this challenging market will hinge on factors such as pricing strategy and competition from established players like BYD, Nio, and Li Auto. Amidst a shifting industry landscape, Xiaomi’s latest venture into electric vehicles underscores the dynamic nature of the global automotive market.