Chinese smartphone company Xiaomi believes it has found a consumer niche (a specific segment) that will pay for its upcoming electric vehicles in a highly competitive market.
We think this is a good starting point for us to enter the high-end market, as we already have 20 million high-end users in China using this smartphone. Lu Weibing, president of Xiaomi Group, told CNBC at the Mobile World Congress in Barcelona on Monday.
I think the initial purchase will overlap very much with smartphone users. ”
He said the company considered a range of points from entry-level to luxury-level and spent $10 billion to develop the car.
Xiaomi launched its Su7 electric car in China at the end of December last year, but has not yet announced the specifics**. Lu said the official launch would arrive "soon" and said domestic deliveries would begin as early as the second quarter.
The Beijing-based company is the market leader in the smartphone industry, ranking third in global shipments, behind Apple and Samsung, according to technology market analyst firm Canalys. According to Canalys, Xiaomi has a global market share of about 13%, with mobile phone shipments of 146.4 billion units.
In recent years, the company has also expanded into televisions and home appliances, which are controlled by smartphones and often come in sleek white designs. Most of Xiaomi's revenue comes from mobile phones, with less than 30% coming from home appliances and other consumer products.
Xiaomi is generally known for its more affordable products. This has raised questions about whether it can sell EVs in a market where established EV giants such as BYD are also cutting prices.
Lu said Xiaomi's approach is based on the development of the ecosystem, as well as the "premiumization" strategy of smartphones launched in 2020, which has "made very good progress" since then.
Factset's records show that during last November's earnings conference, he noted that the company compared the most Xiaomi 14 phone to the iPhone 15 Pro and claimed that the new device was "surpassing" Apple.
However, Huawei is also eating into Apple's market share, with its popular Mate60 Pro starting at 6,499 yuan ($900), which sits between the Xiaomi 14 Pro and the iPhone 15 Pro.
Huawei's smartphone shipments in Chinese mainland surged 47 percent year-on-year in the fourth quarter of last year, surpassing Xiaomi, according to Canalys data.
Huawei has quickly become a player in China's electric vehicle market thanks to its technological capabilities as a telecom and smartphone company.
The company launched the AITO car brand in late 2021 and sells its HarmonyOS operating system and other software to several automakers. Huawei also showcased some of these cars in its smartphone store, including the M9 SUV.
Despite reports that Apple has been working on electric vehicles, it has yet to officially enter the electric vehicle market. This fall, the Chinese start-up Nio released its own Android smartphone.
*Ecosystem Development*
Xiaomi launched a new operating system called surging HyperOS last fall.
The company claims that the system includes an artificial intelligence component that learns from user behavior to automatically adjust connected devices, such as home lighting.
In the future, we don't think it's us giving instructions to the device, but the device will be able to understand your needs and proactively meet your needs. Lu Weibing said.
The company calls this strategy "people x cars x homes".
Lu Weibing said that the surging HyperOS is currently only available on Xiaomi 14 phones. But the system will be rolled out to home appliances and upcoming cars in the coming months.
Investing billions of dollars in ecosystems and cars is all part of Xiaomi's efforts to survive in an industry that will become more competitive.
In 10 or 20 years, the EV market could be very similar to today's smartphone market, with the top five brands accounting for about 70 percent of the market, Mr. Lu said. "Without huge sums of money, we don't think we can be the last players. ”
After the first car, Xiaomi's next step is to set up its own factory and manufacture key components in-house, Lu said.
Earlier this month, Xiaomi announced that its new smartphone factory in Beijing had begun operations with a capacity of more than 10 million units.
For the SU7 sedan, the announcement now lists a subsidiary of the state-owned BAIC Group as a manufacturer. Xiaomi told CNBC that there is no public information to share at this time.
*The overseas market is Xiaomi's "megaphone"*
Like a growing number of Chinese companies, Xiaomi is looking for future growth in overseas markets. Over the past six years, 40 to 50 percent of the company's revenue has come from outside Chinese mainland, mainly Europe and India.
Mr. Lu, who joined Xiaomi in 2019 and is also president of its international business unit, said he had spent "a lot of time" in overseas markets.
This will be the megaphone of Xiaomi's business. He said, noting that the overseas consumer electronics market is about three times the size of China.
As part of the MWC tour in Barcelona, Lu Weibing said he will visit Paris, as well as Africa and the Middle East.
He acknowledges that the current foreign political environment has made it more difficult for Xiaomi to go global, but he said the company can overcome these challenges by strengthening its internal capabilities and diversifying its global business and by-products.
As for the car, Mr. Lu declined to disclose a specific timeline for its overseas launch, but said it usually takes two to three years.