Xiaomi: Competing with Tesla

Xiaomi, a prominent Chinese smartphone manufacturer, is poised to introduce its first electric vehicle (EV) and start accepting orders on Thursday.

In a recent statement, Lei Jun, the company's chief executive, said that the Speed Ultra 7 (SU7) would be available at a price point below 500,000 yuan ($69,186; £54,836).

The strategic decision will include the technology corporation challenging competitors like Tesla and BYD.

Xiaomi's foray into the electric vehicle industry coincides with a deceleration in worldwide sales growth, instigating a competitive pricing competition.

The company anticipates that the combined operating system of the SU7, together with its phones, laptops, and other devices, will be attractive to its current client base.

According to research company Counterpoint, Xiaomi is the third-largest global smartphone vendor, with a market share of around 12%.

The SU7, a highly anticipated vehicle from Xiaomi, has garnered attention and has been likened to Porsche's Taycan and Panamera sports car models.

The vehicle will be manufactured by a division of the state-owned auto company BAIC Group at a facility in Beijing that can produce up to 200,000 cars annually.

"Although reaching this point is already a significant accomplishment, the ultimate accomplishment would be to prove that there is a demand for Xiaomi as a brand of intelligent electric vehicles," said Bill Russo from Auto Mobility.

In light of the difficulties encountered by technological companies aspiring to produce electric vehicles, Apple, the manufacturer of iPhones, has recently renounced its intentions to develop an electric automobile.

Mr. Russo said that Xiaomi's foray into the automotive industry demonstrates its belief in the significance of its brand in China. However, Apple needed to see more opportunities in the electric vehicle sector outside China.

Xiaomi has announced its intention to invest $10 billion (£7.9 billion) into its automotive enterprise during the next decade.

"According to Abhishek Murali from research firm Rystad Energy, the Chinese electric vehicle (EV) market is highly developed and provides a secure environment for EV manufacturers."

"For instance, the battery supply chain is highly robust, and the country's charging infrastructure is expanding to accommodate the increasing number of electric vehicles."

The introduction of Xiaomi's first vehicle coincides with the escalating pricing competition within China's electric vehicle (EV) industry.

Tesla, led by the billionaire Elon Musk, has reduced the price of its vehicles in China by thousands of dollars in recent months in response to price cuts by local competitors such as BYD, the leading electric vehicle manufacturer globally.

Given the saturation of the world's largest automobile industry, Xiaomi stands out as one of the few potential newcomers who have obtained authorisation from authorities and are attempting to restrain an influx of new competitors.

BYD recently reported unprecedented yearly earnings while acknowledging a deceleration in growth towards the end of the previous year.

Nio, an electric vehicle manufacturer in Shanghai, has revised its projection for first-quarter deliveries downwards due to reduced consumer spending and the weakening of China's economic development.

Tesla, a prominent American electric vehicle manufacturer, is scheduled to release its delivery figures for the first quarter of 2024 next week.

Simultaneously, governments worldwide resist importing electric vehicles manufactured in other countries.

On Tuesday, the Chinese government commenced dispute resolution procedures against the United States at the World Trade Organisation to challenge "discriminatory subsidies" as outlined in the US Inflation Reduction Act.

In the present context, the European Union has initiated an inquiry into the potential impact of Chinese government subsidies on the competitive advantage of Chinese electric vehicle manufacturers vis-à-vis European counterparts.