For the first time, a smartphone manufacturer is selling a car under its own name. Xiaomi from China is already the third largest cell phone manufacturer in the world. His car goals are ambitious. Will it be the first tech company to achieve a breakthrough as a car manufacturer?
From now on, customers in China can no longer only buy smartphones and electrical appliances from Xiaomi, but also an electric car they developed themselves: the SU7. The sedan is produced together with the state-owned Chinese car manufacturer BAIC, and the batteries are supplied by BYD and CATL. Xiaomi boss Lei Jun wants nothing less than to become one of the five largest e-car manufacturers in the world in the next 10 to 20 years and thus overtake BMW and Mercedes. This will be difficult, but not impossible.
Xiaomi is a relatively late new player entering the already highly competitive Chinese car market. “Success now depends very much on the added value that Xiaomi can offer – at a competitive price,” says industry expert Stefan Bratzel in an interview with ntv.de. “Not many of the dozens of manufacturers in China will survive.” China is the largest market for electric cars in the world. BYD and Tesla are in a neck-and-neck race there, while German manufacturers are lagging behind.
Xiaomi scores points with the networking of cars and cell phones, i.e. an ecosystem for both areas. “It remains to be seen whether this added value is great enough,” explains Bratzel, who heads the Center of Automotive Management at the University of Applied Sciences in Bergisch Gladbach. As the third largest smartphone manufacturer in the world, Xiaomi already offers its own “universe” with its own software, similar to Apple’s, as car expert Beatrix Keim explains in an interview with ntv. The chic, white Xiaomi stores also remind Keim from the Duisburg CAR Institute of Apple. However, the Chinese have a broader portfolio than the Americans with their electrical and household appliances.
Advance of trust from customers
Customers trust Xiaomi, as Keim reports. In contrast to many e-car startups or spin-offs from Chinese state-owned companies, Xiaomi has always been active and firmly established in the digital sector – more precisely in the Internet of Things – after being founded in 2010. While other Chinese electric car manufacturers primarily offer cars in the middle and lower segments, Xiaomi attacks in the premium class. The company has Tesla in particular in its sights. Depending on the equipment, a Xiaomi should cost the equivalent of between 27,700 and 39,000 euros and have a range of up to 800 kilometers. Keim also sees opportunities for Xiaomi because of its vertical integration and the acquisition of an autonomous driving company.
Initially, Xiaomi’s cars will only be available for purchase in China. However, Keim can imagine that the jump to other markets will take place next year. Other tech companies such as Apple, Google, Baidu and Huawei have also tried their hand at being car manufacturers, but now play an important role more as suppliers. The cooperation between Sony and Honda has so far only been announced. “This shows that it is not easy to become a car manufacturer,” says Bratzel.
Apple’s car failed
Baidu and Huawei are involved here, but also in collaborations and not under their names. Apple has just buried its plans for a self-driving car. “Apple had high expectations for an autonomous, electric and connected car – and saw that added value compared to established manufacturers could not be realized so quickly,” sums up Bratzel. The high returns expected from iPhones cannot be achieved with cars either.
If Xiaomi wants to establish itself as a car manufacturer, it needs perseverance and high volumes, as Bratzel emphasizes. Tesla already has both. In one to two years there should be clarity about Xiaomi’s chances. If the leap to becoming a car manufacturer succeeds, it should also push into Europe.