Beijing – Chinese smartphone company Xiaomi It believes it has identified a consumer niche that will pay for its next electric vehicle in a highly competitive market.
“We think it's a good starting point for us in the premium segment because we already have 20 million premium users in China based on the smartphone,” Xiaomi Group President Weibing Lu told CNBC ahead of the car's international unveiling at Mobile World Congress in Barcelona. , which launches on Monday.
“I think the initial purchases will be very engaging with smartphone users.”
He said the company looked at a range of price points, from entry-level to luxury, for the car it is spending $10 billion to develop.
Xiaomi unveiled its SU7 electric car in China in late December, but has not announced a specific price yet. Lu said the official release will come “very soon” and noted that domestic deliveries will begin in the second quarter.
The Beijing-based company is a market leader in the smartphone industry, ranking third in global shipments apple And Samsung, according to Canales. Data released by the technology market analysis company showed that Xiaomi captured about 13% of the global market and shipped 146.4 million phones in 2023.
In recent years, the company has also expanded to include televisions and home appliances, which can be controlled by smartphone and often feature a sleek white design. Most of Xiaomi's revenue comes from phones, with less than 30% coming from hardware and other consumer products.
Xiaomi is generally known for its affordable products. That has raised doubts about whether it can sell an electric car – touted as a rival to Porsche – in a market where even established electric car giants such as BYD They reduce prices.
In the future we think it is not so [that] We give instructions to the device but in reality [that] The device can understand your needs and meet your needs proactively
Weeping Lu
Xiaomi, President
Xiaomi's approach is based on ecosystem development, as well as the “optimization” strategy for smartphones launched in 2020 that has “since made very good progress,” Lu said.
In an earnings call in November, he noted that the company had compared its latest Xiaomi 14 phone with the iPhone 15 Pro, and claimed that the new device “surpassed” apple's, according to the FactSet text.
However, Huawei is also taking Apple's market share, with the popular Mate60 Pro starting at 6,499 yuan ($900), between the price range of the Xiaomi 14 Pro and iPhone 15 Pro.
Huawei saw smartphone shipments in the mainland rise 47% year-on-year in the fourth quarter, putting it ahead of Xiaomi, according to Canalys.
Building on its technical capabilities as a telecommunications and smartphone company, Huawei is quickly becoming a player in China's electric vehicle market.
The company launched the Aito vehicle brand in late 2021 and sells its HarmonyOS operating system and other software to several automakers. Huawei is also promoting some of these cars, including the high-priced Aito M9 SUV, by displaying them in its smartphone stores.
Apple has not yet officially entered the electric car market despite reports that it is working on it. In the fall, the Chinese startup New It released its Android smartphone.
Ecosystem development
Xiaomi launched a new operating system in the fall called HyperOS.
It claims the system includes an artificial intelligence component that can learn from user behavior to automatically adjust connected devices, such as home lighting.
“In the future, we believe this will not be the case [that] We give instructions to the device but in reality [that] “The device can understand your needs and meet your needs proactively,” Lu said.
The company calls the strategy “Human x Car x Home.”
HyperOS is only available on the Xiaomi 14 at the moment. The system is scheduled to be rolled out in the coming months for upcoming devices and cars, Lu said.
Spending billions of dollars on the ecosystem and vehicle is part of Xiaomi's efforts to survive in an industry that the company expects to become more competitive.
In 10 or 20 years, the electric vehicle market will likely be very similar to today's smartphone market, with the top five brands owning about 70% of the market, Lu said. “Without big money, we don't think we can be the ultimate player.”
After the first car, the next step for Xiaomi is to build its own factories and manufacture key components in-house, Lu said.
Xiaomi announced earlier this month the start of operation of its new smartphone factory in Beijing, with a production capacity of more than 10 million devices.
As for the SU7, Chinese government releases currently list a subsidiary of state-owned Baic Group as the manufacturer. Xiaomi told CNBC that it has no public information to share at this time.
Marketing of Xiaomi's “speakerphone” abroad
Like a growing number of Chinese companies, Xiaomi is looking abroad for future growth. Over the past six years, 40% to 50% of the company's revenue has come from outside mainland China, primarily from Europe and India.
Lu, who joined Xiaomi Group in 2019, is also the head of its international business department, and said he spends “a lot of time” in the overseas market.
“This will be a magnifier for Xiaomi's business,” he said, noting that the overseas consumer electronics market is about three times the size of the Chinese market.
As part of his trip to Barcelona to attend the MWC, Lu said he is visiting Paris, along with Africa and the Middle East.
He acknowledged that the political environment makes it difficult for Xiaomi to go global, but said the company can overcome these challenges by building internal capabilities and diversifying the business globally and by product.
As for the car, Lu declined to specify a time frame for its overseas launch, but said it usually takes two to three years.
