Anyone who has tried a Xiaomi smartphone knows that it is a worthy competitor to the iPhone. Now the question is: will Xiaomi present the same type of challenge to Tesla that he presented to Apple?
On Thursday, the Chinese giant launched its first electric vehicle, the SU7 sedan. Billionaire founder and CEO Lei Jun, a household name in China, said at the presentation in Beijing: “Many people ask me who the Xiaomi SU7 was built for. My answer is: Isn’t it time Tesla Model 3 users upgraded?
The competitor to another deep-pocketed rival in China comes at a difficult time for Elon Musk’s automaker. Last week, Bloomberg reported that Tesla had scaled back electric vehicle production at its Shanghai factory due to stiff competition and slow growth in China. Tesla’s market capitalization has fallen about 30% this year, prompting the company to abandon Musk’s no-advertising mantra. Tesla also faces competition from China’s Warren Buffett-backed BYD, which dethroned it a few months ago as the world’s top seller of electric vehicles.
Of course, Tesla has already proven itself as a leading EV manufacturer, while Xiaomi is new to the industry.
“In the three years I spent developing this car, my greatest realization is that producing cars is extremely difficult,” Lei said Thursday. “Even a giant like Apple has given up on it.”
In February, Lei responded to Apple’s decision to end its electric vehicle project, saying he was “shocked” by the decision. You have cited Apple co-founder Steve Jobs as your primary inspiration for becoming an entrepreneur.
Xiaomi, which also makes smart TVs and home appliances, enjoys similar popularity to Apple in China.
Big bet on electric vehicles
Lei said on Thursday that the SU7, initially available only in China, beats the Tesla Model 3 in 90% of specifications, while Xiaomi needs a few more years to catch up on the rest. You said the sedan had a minimum range of 700 kilometers (nearly 435 miles) versus 606 for the Model 3. The base model will sell for less than $30,000, cheaper than the Model 3 in China.
She admitted that for now her company will lose money on every vehicle it sells. In December, you said Xiaomi would spend 10 times the labor and investment that automakers usually commit to a new model. But, she added Thursday, “Xiaomi has enough cash reserves to face any tough competition over the next five years.”
Time will tell whether you made the right choice in entering the competitive electric vehicle market or whether you should have walked away like Apple did. Many electric vehicle startups, once valued in the billions, are now struggling.
“The risk is that they focus too much on the electric vehicle space and lose focus on the sectors and products that got them there,” Tu Le, founder of consultancy Sino Auto Insights, told Reuters.
But Xiaomi is at least off to a good start, with the company reporting receiving 120,000 firm orders for the SU7 in 36 hours, meaning this year’s production capacity is sold out.