Chinese smartphone company Xiaomi announced on Thursday (March 28) that it will sell its first electric vehicle SU7 at a price much lower than the Tesla Model 3, as the price war intensifies in the market extremely competitive electric car market in China.
Xiaomi will sell the SU7 at a lower price than the Tesla Model 3
Xiaomi CEO Lei Jun revealed that the standard version of the SU7 SUV will be sold in China for 215,900 yuan (about $30,408), admitting that this price would mean a loss for every unit sold.
The starting price of the Tesla Model 3 in China is 245,900 yuan.
Lei Jun argued that the standard version of the SU7 surpasses the Tesla Model 3 in more than 90% of its specifications, except for two aspects where Xiaomi would need three to five years to reach Tesla’s level.
He also noted that the SU7 has a minimum range of 700 kilometers, compared to the Model 3’s 606 kilometers.
Xiaomi reported that in the first 27 minutes of going on sale on Thursday, more than 50,000 orders for the SU7 were registered.
Deliveries are scheduled to begin by the end of April, Lei said.
He pointed out that Xiaomi’s car factory, where all the “key” steps are fully automated, can produce an SU7 every 76 seconds. However, it is not clear if the factory is fully operational.
Earlier this week, Xiaomi’s CEO said on social media that the SU7 will be the best sedan available “under 500,000 yuan” (about $69,328).
China’s electric car market is extremely competitive
The launch of the SU7 enters a highly competitive car market in China. Companies launch many new models and cut prices to survive.
The Chinese telecommunications giant Huawei has collaborated with traditional car manufacturers, notably launching the Aito brand. Its vehicles are often displayed in Huawei smartphone showrooms.
The Tesla Model 3 is the best-selling new electric sedan in China. It has a range of at least 600 kilometers and costs less than 500,000 yuan, according to industry website Autohome.
The price of BYD’s Han sedan starts at 169,800 yuan, the source said.
Nio’s ET5 price starts at 298,000 yuan. On the other hand, the Xpeng P7 price starts at 209,900 yuan, according to the data.
The 007 sedan from Geely-owned Zeekr starts at 209,900 yuan, according to Autohome.
Sales of new energy-powered vehicles, including battery-electric cars, have surged in China. They account for about a third of all new passenger cars sold, according to the China Automobile Association.
The accessories that the SU7 will have
Top leaders in the electric car startup industry, such as Nio, Xpeng and Li Auto, were among the guests present at the Xiaomi SU7 launch event.
Lei presented a wide range of accessories on Thursday. These include a car cooler, a custom windshield screen, and a smartphone holder. Some of them are available for free with the purchase of a car until the end of April, and others at a separate price.
The SU7 is compatible with Apple’s CarPlay and can integrate with the iPad, Lei said. He also unveiled driver assistance technology for highways and cities. It will be fully available in China in August.
Tesla Autopilot for driver assistance on highways is already available in China. But the company’s ‘Full Self Driving’ technology for city streets is yet to be launched in the country.
Even though Xiaomi expressed its desire to compete with Porsche at an automotive technology event in December, Lei admitted that the SU7 needs more time before it can compete at this more premium level.
He announced that the “Max” version of the SU7, designed to compete with Porsche’s Taycan, will sell for 299,900 yuan.
Device ecosystem
The SU7 is a key element of Xiaomi’s recently launched strategy called “Human x Car x Home”. It aims to develop an ecosystem of devices connected to its new operating system, HyperOS.
Currently, most of the company’s revenue comes from phone sales. About 30% of this comes from appliances and other consumer products.
Although Xiaomi is generally known for its affordable products, its president Lu Weibing told CNBC earlier this year that the company aims to adopt a premiumization strategy starting in 2020. There are about 20 million users in this price segment who may be interested in purchasing the SU7 model.
Lu also added that the SU7 will initially be available to consumers in China. He also said it would take at least two to three years for it to be released overseas.
The company presented the vehicle at the Mobile World Congress in Barcelona in late February. Its exterior and technology were unveiled in Beijing at the end of December.
