Smartphone maker Xiaomi takes on Tesla with first electric car
Semafor Signals
Supported by
Insights from Insightful New Research Institute, Teslarati, and The South China Morning Post
The News
Smartphone giant Xiaomi on Thursday unveiled its first electric vehicle, becoming the latest Chinese firm to enter a highly saturated EV market where automakers are struggling to generate sales.
The sporty, tech-heavy SU7 — which is drawing comparisons to Porsche’s Taycan and Panamera models for its styling — is also seeking to compete with electric car giant Tesla. The Xiaomi car has more than 100 kilometers of extra range on battery charge than Tesla’s Model 3, and costs $4,000 less, starting at around $29,900.
Deliveries of the vehicle are expected to begin in April, Reuters reported. But many are questioning whether Xiaomi — a late entrant to the electric vehicle market — will be able to keep up with dozens of other EV companies that are struggling to stay afloat amid fierce competition and weaker consumer demand.
SIGNALS
Xiaomi pitched its smartphone as a cheap version of the iPhone, but same tactics may not work for cars
Xiaomi CEO Lei Jun has a reputation for being a “gold medal salesman,” according to tech analytics blog Insightful New Research Institute, and he’s relying on many of the same marketing strategies that worked for selling smartphones to shift cars. When Xiaomi unveiled its first smartphone in 2011, Lei openly compared its design to Apple’s iPhone while touting its more competitive price; now, Lei is embracing the SU7’s comparison to Porsche’s Taycan EV, the Institute reported, while pricing the car substantially lower. Lei and other Xiaomi executives famously said that their cheap smartphones were made for people known in Mandarin as diǎosī — “losers” — who cannot afford iPhones. But the comments may have come back to haunt them: Chinese social media users are already criticizing the SU7 as cheap and glitzy, adding that potential EV customers in China are unlikely to be “diǎosī” and can probably afford to spend more on models from other companies, the Institute reported.
Tesla challenged in China by cheaper competitors but retains a name advantage
One question about Xiaomi’s entry into the Chinese EV market is what impact it will have on Tesla sales in the country. Tesla CEO Elon Musk’s lobbying in China helped create an optimal business environment for the American company, but his deals with Beijing also helped spur the Chinese EV boom that is now chipping away at Tesla’s competitive edge, The New York Times reported. Domestic manufacturers competing in China’s ultra-saturated market are now engaged in a price war to entice new customers. But Tesla retains the advantage of its name and reputation: even as domestic EV-makers offer lower-priced vehicles, newer entrants are competing with an established brand known for “quality EVs that are supported by a strong charging infrastructure,” according to Teslarati, a news site focusing on Musk’s business empire. It may explain why Tesla’s Model Y is one of the only EVs to get a price hike recently: “the current electric vehicle market is so competitive that only Tesla dares to raise prices,” Xiaomi CEO Lei posted on social media network Weibo.
United States and China spar over subsidies for green technology
The race between the United States and China to command the lucrative global market for green technology such as electric cars has led to an intensifying series of trade disputes, as both countries blame the other for trying to stifle competition. U.S. Treasury Secretary Janet Yellen on Wednesday criticized Chinese firms for “flooding the market with cheap goods” — caused by Beijing’s policy of subsidizing clean technology such as solar panels and electric vehicles — and said she would bring up the problem of overcapacity during high-level talks in Beijing next month. The day before, China filed a complaint with the World Trade Organization over U.S. subsidies for electric vehicles, which must undergo final assembly in North America to qualify, calling the policy “discriminatory”. China believes its products can help the United States’ commitment to a green energy transition more quickly “as long as the U.S. government shares some of those subsidies that currently only apply to a mere handful of vehicles,” according to EV news site Electrek.
