Lei Jun has stated that Xiaomi's car is currently in the trial production stage and its pricing is "reasonably high." What information is worth noting?
Before the Xiaomi Automotive Technology Conference, Xiaomi founder Lei Jun publicly responded to netizens. On December 26th, Lei Jun stated that Xiaomi’s first car is named SU7 because “SU” stands for Speed Ultra. As for how to pronounce it, Xiaomi’s internal team also had a serious discussion, and in the end, everyone felt that it should be called “Su Qi” (苏七), which feels more friendly, like calling a friend’s name.Regarding benchmarking, Lei Jun mentioned that the Xiaomi SU7 does not have a precise benchmark vehicle. They hope to create a car that can fulfill everyone’s dreams. In terms of driving performance and mechanical qualities, they aim to compete with the Porsche Taycan Turbo. In terms of intelligence, they aim to be on par with the Tesla Model S. Additionally, they plan to incorporate the most advanced technology and a rich ecosystem.Furthermore, Lei Jun mentioned that the Xiaomi SU7 is currently in the trial production and climbing phase. The official launch will still require a few more months, and as for pricing, it has not been finalized yet. However, it is expected to be somewhat expensive, but Lei Jun stated that it will be “expensive for a reason” and will exceed everyone’s expectations in terms of the overall experience.Lei Jun： Xiaomi’s car is in the trial production and climbing phase, and the pricing will be “expensive for a reason.”
Understanding the Pricing and Strategy of Xiaomi’s Electric Vehicles
“Expensive for a reason” is quite normal. After all, the price of electric vehicles largely depends on the cost of batteries, and the price of batteries largely depends on the cost of lithium mining. Manufacturers' profits can be squeezed, but procurement and production costs can’t be reduced just because you want them to. So, from a practical standpoint, the disruptive pricing that people imagine may not happen.
Xiaomi has always sold phones with a relatively low gross profit, and sometimes they might even say they don’t make money, but Xiaomi has never claimed to be operating at a loss. Perhaps some niche limited editions or early production runs might incur a small loss, but mainstream products definitely need to have a certain profit margin to maintain the normal operation of the company. After running the company for so many years, Lei Jun is definitely clear about this.
The shockingly low prices of past Xiaomi products were in industries where profits were already unreasonably high. And now, the new energy vehicle market has started to become competitive, with everyone aggressively cutting prices. Trying to achieve disruptively low prices while ensuring no losses is a bit unrealistic.
Therefore, it’s not feasible to aim for low prices. It’s better to focus on making good products and justify a higher price for “Expensive for a reason.” This approach is also beneficial for the subsequent product line layout of Xiaomi.
Let’s look at a specific product. In addition to the unique label of ecological technology set by Xiaomi, the positioning of SU7 is a high-performance C-class vehicle. C-class vehicles are among the higher-end levels in sedans, usually with a wheelbase of around 3 meters, making the vehicle significantly larger than the entry-level compact cars. Coupled with high-performance configurations, if you look at it objectively, a price range of 250,000 to 350,000 RMB is quite normal.
As for the specific configurations of the car, before the technology conference, we can only guess and understand through posters and configurations exposed by the Ministry of Industry and Information Technology.
The integrated die-casting mentioned in the picture is probably a stable choice. After all, Xiaomi showcased their integrated die-casting equipment quite early. Also, the 73.6-degree lithium iron phosphate and 101-degree ternary have been confirmed by the Ministry’s information. According to the poster, the battery pack is likely to be a CTB or CTP design, which are currently mature solutions. Other guesses can refer to the pictures.
Of course, the configuration and selling price of the car are highly related, and the selling point of Xiaomi’s SU7 is likely to focus on technology and ecosystem.
In terms of ecosystem, with nearly a decade of cultivation, Xiaomi already has a well-established personal device ecosystem and is a global leader in smart device ecosystems. The upcoming car is the final piece of Xiaomi’s human-vehicle-home strategy. Once this piece is in place, Xiaomi’s entire ecosystem will be officially surrounded.
At this stage, the car will influence not just its own space and the roads it travels on, but will extend its influence to all the smart devices in the ecosystem. The car can intelligently discern your current needs and control various devices including personal devices like phones and various smart home devices, making your travel experience not just limited to the car’s interior space, but extending to all of your living spaces.
At that time, what you can do is limited only by your imagination. Of course, if you think your imagination is limited, I believe Xiaomi’s product managers and engineers will come up with many interesting ideas in their long brainstorming sessions, which will then be directly provided to everyone. With the support of Surge OS, these scenarios that exist in imagination can be realized.
In terms of technology, I guess the focus will be on intelligent driving. Last August, Xiaomi announced its self-developed intelligent driving technology. Although it was still on other cars, it was able to navigate complex roads without human control. Xiaomi itself comes from an internet and hardware background, so there are no high barriers to entry for researching autonomous driving technology. Plus, after another year of research and development, what kind of intelligent driving experience SU7 can bring us is also worth looking forward to.
In summary, the press conference is tomorrow, and all answers will be revealed then.
Some people say that Xiaomi is late to the car-making game, but I think that being a latecomer has its advantages. The new energy vehicle industry is still in a chaotic phase, and the market is far from being dominated by only a few big players. By entering the market now, Xiaomi can avoid many pitfalls that its predecessors have encountered, plus an unprecedented ecosystem, there is still plenty of room for survival.
Based on historical experience, whether you are a first mover or a latecomer, seriously making a good product is key to success. The market doesn’t care how long you’ve been working on it; it only looks at whether your product has the strength to face fierce competition.
As for the outcome, let’s look forward to the press conference together.
Xiaomi’s Unique Approach to Eco-Friendly Car Manufacturing
As a tech giant with a massive user base in the AIoT (Artificial Intelligence of Things) space, Xiaomi’s entry into the automotive industry is unique. So far, only Xiaomi’s powerful OS, known as “Pengpai OS,” has proposed a holistic ecosystem for people, cars, and homes. It wouldn’t be an exaggeration to say that Xiaomi is venturing into ecosystem-driven car manufacturing. When it comes to pricing, I personally believe that Xiaomi’s cars will not come at a low cost.
High-Quality Features Catering to Both Home and Sports Needs
Firstly, Xiaomi’s car is expected to offer high-quality features that cater to both home and sports enthusiasts. In terms of configuration, it is highly likely that Xiaomi will adopt a five-link structure air suspension system. This suspension system can effectively balance the needs of sports and home use by adjusting the vehicle’s height according to road conditions. This maximizes passenger comfort and driver handling. The only drawback is that it can be a bit expensive. Such a suspension system is commonly found in cars priced above 300,000 CNY (Chinese Yuan). Now we can understand what Xiaomi’s CEO, Lei Jun, meant by “justifiably expensive.”
Avoiding the Pitfall of Setting a Low Initial Price
Secondly, as Xiaomi’s first car, setting a very low starting price could hinder its ability to raise prices in the future. Trying to cut costs too aggressively may result in a product that falls short of expectations. Clearly, Xiaomi won’t make this mistake. Unless Xiaomi decides not to make a profit, which contradicts its focus on both scale and profitability as a company. Based on the existing configuration, I believe the base model of Xiaomi’s car should start at around 250,000 CNY, while the top-of-the-line version should be priced around 350,000 CNY to be reasonable.
That’s all for now.
The Luxury Factor is Inevitable
Xiaomi, with its rich hardware product portfolio and software development expertise, is entering the automotive industry with strong support from its well-established supply chain. Moreover, this is Xiaomi’s first foray into the automotive market, and as such, it’s expected that they will position themselves in the mid to high-end segment, both in terms of materials and branding. This approach allows them more room for future product expansion.
At this point in time, hosting a tech event revolves around two major aspects:
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The Hardware of the Car: This pertains to the transparent Bill of Materials (BOM) cost.
A lot of information about these components has already been disclosed. For instance, there are two versions of the SU7, one with BYD’s lithium iron phosphate battery and another with CATL’s ternary lithium battery. It features a Huichuan electric motor with maximum power. These details have already been made public.
Even yesterday, Xiaomi’s teaser for the car revealed many new things, including specific details about the pedals and tires.
Based on the information already revealed, it can be inferred that the price range for this generation of SU7 will fall between 250,000 to 350,000 CNY, with high-quality materials being used extensively. Judging from the overall design and details like the accordion pedal, the SU7’s performance should be top-notch, offering an excellent driving experience.
But that’s not the focus.
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Xiaomi’s Technological Expertise: The real value lies in Xiaomi’s enormous technological capabilities and its position as a tech giant. With its background, Xiaomi can offer an intelligent driving experience and its “Hyper OS,” a comprehensive ecosystem for people, cars, and homes.
The former emphasizes attention to detail and is somewhat hard to predict, but the latter, the people-car-home scenario brought by Hyper OS, can be boldly anticipated.
As a long-time user of Hyper OS, I have already felt some changes recently. For instance, when I used to ask Xiao Ai to play music, it would often pick random playlists, sometimes requiring manual intervention. However, now, it seamlessly integrates data sources from various devices, be it the phone, TV, or speaker, and plays music based on my most-listened-to playlists. Almost every song aligns with my preferences, and I believe this experience will extend to the car.
Additionally, the seamless transfer of screen content and music between devices, combined with Hyper OS’s seamless integration, fundamentally transforms the in-car experience. It’s no longer limited to what the car can do but rather “what my phone can do.” Unfinished TV shows at home can continue to play in the car, family albums can be previewed directly in the car, and the car’s camera can be used for video calls with family members, offering a whole new level of enjoyment.
The addition of Hyper Mind brings even more intricate possibilities. Previously, one could only imagine that a car entering a certain distance from home could automatically turn on/off relevant home appliances or create a comfortable environment upon arrival. However, with Hyper Mind, this experience could become even more refined, taking into account user preferences for temperature, humidity, and even brightness and volume when playing videos. All these factors could be learned and recorded by Hyper Mind and directly applied in the car, enhancing the smart home experience in a multitude of scenarios.
There are many more intelligent experiences that can be felt, and this is what sets Xiaomi’s car apart. While new entrants in the automotive industry are competing in the field of intelligent driving, Xiaomi is racing ahead with a holistic ecosystem for people, cars, and homes—a feat that no other manufacturer can boast.
This also explains why Xiaomi refers to the car as a “Mobile Intelligent Space.”
After all, no one else can walk this path like Xiaomi can.
These unique software developments and experiences are not just the reason for the car’s luxury, but they are also the driving force behind it.
Xiaomi’s Notion of “Expensive” and Pricing Strategy for SU7
Those who often watch Xiaomi’s product launches know that Lei Jun’s idea of “expensive” is different from what most people understand.
During the Xiaomi 14 launch event, Lei Jun’s definition of “expensive” started at 3,999 CNY.
What do people typically consider as an expensive smartphone? _____?
Xiaomi’s approach to pricing its cars, like the SU7, is similar. Lei Jun states that the pricing of Xiaomi cars is “justifiably expensive.” In this case, it means that the car’s features and specifications are ample, and the price slightly exceeds everyone’s expectations.
Can they achieve a starting price of 199,990 CNY?
Actually, it’s entirely possible.
But what’s the significance of selling it for 199,990 CNY? Is it just to match the pricing strategy Xiaomi used when launching their smartphones?
I find this pricing strategy not very convincing, especially for cars.
While a starting price of 199,990 CNY may appear competitive on the surface, actual car buyers might not be swayed by a vehicle that costs 199,990 CNY alone.
Furthermore, lower pricing often means further compression of features, which can affect the overall user experience and reputation. This is why Xiaomi refers to the SU7 as “justifiably expensive.”
Another consideration is that setting the initial price too low can lead to an overwhelming number of orders, putting undue pressure on production capacity.
Additionally, based on the early disclosures of Xiaomi SU7’s specifications and performance, it appears to target the 250,000 to 350,000 CNY market range. As for the final pricing, it may be revealed tomorrow.
As for Xiaomi car’s positioning and advantages, we discussed it yesterday. The primary advantage of Xiaomi car SU7 lies in its potential user base.
Many of these potential users might have previously considered becoming Tesla customers, but now they may be torn between Xiaomi SU7 and Tesla. Reasons for choosing Xiaomi could include the ecosystem, performance, Lei Jun’s influence, and more.
For more details about what to expect from the upcoming Xiaomi car technology launch event on December 28, you can read this article:
How do you view Xiaomi’s car technology launch event scheduled for December 28th? What are the most anticipated and noteworthy details? - Answer by Wang Zhikuitori on Zhihu (Chinese Q&A platform).
Xiaomi’s Pricing Strategy for SU7: “Justifiably Expensive”
Listening to Lei Jun, it’s true that SU7 is a bit expensive, and it’s making Xiaomi’s first car enthusiasts a bit nervous.
Lei Jun mentioned that it’s “justifiably expensive,” and that statement is undoubtedly correct. If you dissect and explain the battery cost, motor, electronic control, suspension, and other components, it would indeed add up to the price tag.
However, in the current market situation, discussing these cost breakdowns with consumers may not have a significant impact because many car manufacturers are selling at a loss, without factoring in production costs.
Yes, you read that right—selling at a loss because pricing based on production costs wouldn’t move vehicles in the current market conditions.
Such examples are plentiful in 2023.
2023 has become a battleground for prices. With more supply than demand, some manufacturers are willing to sell at a loss just to boost their sales volume, making it challenging to maintain the basic supply chain operations effectively.
Below is a list of price reductions by some top car manufacturers this year.
Take the Huawei-affiliated Wenshi Jie M7 as an example. Before the price cut, it was only selling a few hundred units per month. After the facelift, with added features and a substantial price reduction, sales volume increased significantly.
The same scenario applies to the Xiaopeng G9. It saw a price reduction of 40-50 thousand CNY before gaining traction.
The largest price cut came from SAIC’s Fei Fan R7, with a reduction of over 90 thousand CNY. Even with decent hardware specifications, Bach cockpit, and Huawei AR-HUD, the starting price was only 189,900 CNY. How do car companies make a profit?
Currently, only BYD and NIO are showing a positive profit margin in their financial reports.
Therefore, if Xiaomi continues to adhere to a cost-based pricing strategy, it might face challenges. It could end up like the Great Wall Euler PHEV 01, which reduced its price by 30,000 CNY within a month of release.
However, there are exceptions. When a company can provide unique product value to users, significantly outperforming competitors, and users are willing to pay a premium for that value, then a higher price can be acceptable to customers.
So, whether Xiaomi is worth that price remains to be seen. Let’s wait for the December 28th technical launch event to see what Xiaomi, a first-time carmaker, has up its sleeve.
Thank You for the Invitation / Introduction
Not “Just Landed,” But “In the Air”
I’m currently at an altitude of 11,280 meters, and this flight happens to have internet access, so I’ll write briefly.
SU7 Max’s Niche Market
As I mentioned many times in previous responses, SU7 Max belongs to the category of high-performance, long-range C-segment large electric sedans.
- In this niche market, there are actually very few options.
- Imported brands like Tesla Model S, Porsche Taycan Turbo, Audi RS e-tron GT.
- Domestic brands like Gaohe HiPhi Z, NIO ET7 100kWh, and other models.
Size comparison (including gasoline cars) and basic parameter comparison (all electric cars).
What Is Its Positioning? Which Car Is It Targeting?
This is also a question many people are asking, and Lei Jun’s answer is: Taycan Turbo’s driving quality combined with Model S’s intelligence.
These happen to be the two models I mentioned earlier.
“Justifiably Expensive”
Lei Jun mentioned that SU7 will be “justifiably expensive,” and I think you can see the rationale from the paragraphs above.
Model S is priced at 699,000 RMB, Taycan Turbo at 1,518,000 RMB. The average of these two is over 1.1 million RMB.
Even the lowest-priced ET7 in the table starts at 486,000 RMB (and known motor power, top speed, battery capacity, pure electric range, etc., are all inferior to SU7 Max).
- If SU7 Max can cut 100,000 RMB from this base price and set it at 380,000 RMB, I think it would be competitive enough.
- And if it can get closer to 350,000 RMB, that would be even better!
Exciting Technology
In my response from last night, I also expressed my anticipation for the December 28th technical launch event.
How do you view Xiaomi’s car technology launch event scheduled for December 28th? What information is most worth paying attention to and anticipating?
After the teaser image was released, netizens quickly provided detailed analysis.
[Image: Link to the image]
- For example, the accordion-style throttle pedal that allows the driver to have finer control over the throttle.
- For example, front double-wishbone suspension, possibly with air suspension.
- For example, an integrated die-cast front crash beam and Michelin PS EV tires.
- There’s also the distinctive “triangle” crash beam in the image, which seems to be integrally die-cast and likely improves crash performance.
In short, netizens have a lot of speculations now, but all of this will require Lei Jun to give us detailed explanations at the event the day after tomorrow!
Conclusion
The in-flight Wi-Fi is a bit slow, so I’ll stop here for now and add more after landing.
The Notion of “Justifiably Expensive”
The concept of “justifiably expensive” is actually quite familiar to tech-savvy users, and if we translate it into Xiaomi’s common expression, it would be “aiming for the high-end.”
“Value for money” is not just empty talk, but it doesn’t necessarily mean cheap.
In the context of smartphones, Xiaomi’s 14 series and Mix Fold 3 are examples of products with good value for money, but they are also flagship-level products with flagship-level prices.
For Xiaomi, which has had its fair share of losses in the low-price segment, starting from scratch in the automotive industry inevitably means avoiding the mistakes of the past. This aligns with Lei Jun’s statement of “mechanical benchmarking with Taycan Turbo and intelligent benchmarking with Model S,” clearly indicating a move towards the high-end market. Especially with such product capabilities, competitors might find it challenging.
As long as the product quality can truly reach the corresponding level, interested consumers will naturally accept a slightly higher price.
Of course, from a consumer’s perspective, I still hope that Lei Jun can persuade the executives to allow more people to enjoy the benefits of technology in their lives~
“Tech Giants and Eco-friendly Car Manufacturing”
I believe that the SU7, positioned as a mid-to-high-end model, won’t come cheap, with an estimated price range of 25-35W.
Over the past couple of days, Xiaomi’s discussions about entering the automotive industry have been trending on Weibo one after another, generating substantial buzz and excitement, akin to the fervor of an automotive festival!
In fact, my perspective on Xiaomi’s foray into the automotive industry is somewhat different. Here are my general thoughts:
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Xiaomi’s approach to automotive manufacturing is distinct from traditional automakers. The inclusion of items like refrigerators, televisions, accessories, and small ornaments within the car interior benefits from Xiaomi’s cost advantages as a late entrant. Additionally, Xiaomi’s strong supplier network (ecosystem) means that, under similar levels of in-car smart technology, the cost is likely to be lower than that of new players and traditional car companies.
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Xiaomi possesses a competitive edge in software development. The concept of the “smart cockpit” essentially represents a mobile space within the vehicle. With Xiaomi’s extensive device ecosystem and experience in IoT, along with the underlying foundation of Xiaomi’s MIUI, the company is poised to revolutionize the in-car ecosystem, making it a unique and powerful selling point.
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Why did Xiaomi choose to start with a sports car model for its automotive venture? Xiaomi has learned from the challenges it faced in the smartphone industry, particularly the difficulty of spanning a wide range of product categories from low to high-end. Therefore, it has opted to begin with a sports car model to establish its product and brand positioning. The “7” in SU7 may well represent a product tier, leaving room for future models like SU6, SU5, SU4, SU3, etc.
I view this recent tech showcase as more of an appetizer. Xiaomi likely believes that they can match or exceed their competitors' capabilities, so they’re showcasing their technological prowess and ongoing research achievements.
I’m inclined to believe that Xiaomi has a trump card hidden up its sleeve, which they’ll reveal when they officially launch their cars in the future.
“Xiaomi’s Trademark Style: Preparing for the Unexpected”
In keeping with Xiaomi’s established approach, this is an old smokescreen.
Before you make a purchase, they drop hints left and right, signaling that this time it might be a bit pricey.
However, when the actual product is released, there will undoubtedly be a price point that shatters your expectations.
This is what you call managing expectations.
So, in my opinion, you can safely ignore half of what Lei Jun says.
I believe that the base model, the most affordable version, will probably start at 199,900 RMB, to stay true to their origins, right?
No matter how you look at it, that price can’t be considered expensive.
However, the prices for other versions may not be as low, and that’s what we call “justifiably expensive.”
What will Xiaomi’s car really be like?
I think it’s still too early to say. Let’s wait until the product is actually released.
The automotive industry is a whole different ball game compared to the smartphone industry, which has become rather homogenized and unexciting.
Let’s hope Xiaomi can provide Mi Fans with a satisfactory answer.
Oh, and if Xiaomi follows its usual playbook, you need not worry about them losing money by selling cheap initially.
They might incur losses at the start, but they can extend the delivery timeline.
A year later, do you still think Xiaomi will be in the red at that price point?
“Comparing Xiaomi SU7 with the Porsche Taycan Turbo and Tesla Model S”
Lei Jun mentioned the Porsche Taycan Turbo, priced at 1.518 million RMB, and the Tesla Model S, priced at 698,900 RMB. Both are high-end luxury brands. When Lei Jun immediately brought up these two cars, he wanted to indirectly emphasize that the price of Xiaomi SU7 would indeed be quite high. Based on the two cars he compared it to, the estimated price would be above 300,000 RMB.
Let’s take a closer look at what Lei Jun compared:
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Driving Performance Comparable to Porsche Taycan Turbo:
Estimated Xiaomi car battery capacity is 100 kWh, likely using a ternary lithium battery pack. The Taycan Turbo accelerates from 0 to 100 km/h in 3.2 seconds, while the Tesla Model S does it in 2.1 seconds. It’s estimated that the Xiaomi car will achieve around 3 seconds for the 0-100 km/h acceleration. Based on this acceleration rate, it’s highly likely that the SU7 will feature a full 800V system (excluding the base model). A full 800V system offers significant improvements in range, charging efficiency, and acceleration performance, with an estimated range of over 800 kilometers. Of course, with this 0-100 km/h acceleration estimate, dual motors are also essential.
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Suspension Matching Porsche Taycan Turbo:
The suspension is expected to match that of the Taycan Turbo, featuring a front double-wishbone independent suspension and a rear multi-link independent suspension. Both front and rear brakes are ventilated disc brakes. The suspension should be adjustable in terms of softness and height. The rear axle will likely include a limited-slip differential.
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Smart Features Comparable to Tesla Model S:
It’s a bit surprising that Lei Jun mentioned intelligence here. Is the Model S known for its smart features? The Model S is more renowned for its performance rather than its so-called intelligence. Moreover, the Model S’s “smart cabin” is relatively average, or it wouldn’t be referred to as “unfinished” at times. Xiaomi’s “smart cabin” should be more appropriately compared to domestic brands like NIO, Xpeng, Huawei, etc., rather than the Model S. However, if they are referring to Tesla’s Full Self-Driving (FSD), it could be quite promising, indicating that Xiaomi might also introduce highly advanced Level 3 autonomous driving technology, similar to what Huawei has showcased.
I believe Xiaomi’s car will come standard with a refrigerator, a sofa, and full voice control throughout the vehicle, with displays for both front and rear seats. AR-HUD (Augmented Reality Head-Up Display) is also expected to be standard, with seamless integration with smart home devices.
Lastly, it’s important to mention the importance of retaining slow charging capability and external discharge functionality. Electric vehicles without slow charging capability and external discharge capabilities are somewhat limited. Without these features, it may deter a significant portion of potential buyers.
“Witness the Gathering of Big Names and the Brilliance of Stars”
Take a look at the first lineup, see which cars are using it.
What’s called “reasonably expensive” is just like Xiaomi smartphones, they stack up the specifications to the maximum and sell it to you for 6,000 RMB, that’s what we call reasonably expensive.
Xiaomi’s Positioning: “Benchmarking Porsche in Driving and Equalling Tesla in Intelligence”
It is said that the regular version will cost around 200,000 RMB, and the high-end version will cost 350,000 RMB.
We will have to see the specific details later, and then everyone will naturally know whether the pricing is justified.
The new energy vehicle industry is currently booming, with new cars emerging continuously. It is not easy to position the vehicle as expensive, and it indeed requires delivering real value.
This is also a warm-up for Xiaomi’s car technology conference on the 28th, building expectations for Xiaomi’s car.
The interesting thing is that Xiaomi’s first car, the SU7, has already earned money even before it started selling, as two media outlets had to pay a fine of 6 million RMB due to the leak of real-life photos.
The SU7 comes in three versions: SU7, SU7 Pro, and SU7 Max, with two battery options, 101 kWh and 73.6 kWh.
The CLTC range for the 101 kWh version is 800 km and 750 km, while for the 73.6 kWh version, it’s 668 km and 628 km.
They use batteries from BYD and CATL.
Xiaomi’s ultimate goal is to become one of the top five players in the industry, so they should be prepared for a long-term commitment to the automotive industry.
Currently, it seems that Xiaomi provides the intelligent driving technology, while BAIC (Beijing Automotive Industry Group) provides the vehicle manufacturing technology. Xiaomi’s factory is self-built, and it “borrows” production qualifications from BAIC Group. Xiaomi is still applying for independent qualifications, perhaps because they couldn’t wait for their own qualifications to come through, so they borrowed from BAIC.
Xiaomi’s core is intelligent driving, similar to Huawei’s approach to the automotive industry, focusing on making money from software. Lei Jun previously mentioned that Xiaomi’s autonomous driving would use fully self-developed algorithms to vigorously develop autonomous driving technology.
In 2021, Xiaomi acquired the autonomous driving company Deepmotion Technology. Deepmotion Technology has a wide layout in high-precision positioning, high-precision maps, and 3D scene reconstruction.
Last year, Xiaomi invested 3.3 billion RMB in the field of autonomous driving research and development. Currently, Xiaomi has applied for over a thousand patents, with nearly 600 patents authorized. These patents cover various areas related to automotive hardware and software, such as motors, vehicle control, batteries, vehicle structure, and autonomous driving.
It seems that the competition in the smart car industry is becoming more intense. Traditional internal combustion engine car manufacturers not only need to face electrification transformation but also need to focus on intelligent driving. The kings of the past automotive industry may face a great decline.
Lei Jun’s ultimate goal for Xiaomi’s car is an annual output of over 10 million vehicles, ranking among the top five in the automotive industry worldwide.
Their 2024 goal is to sell 100,000 vehicles, with a cumulative delivery of 900,000 vehicles over the following three years. This goal is extremely ambitious.
Xiaomi’s car will be produced at Xiaomi’s factory in the Beijing Economic and Technological Development Zone. Phase one covers an area of approximately 720,000 square meters with an annual capacity of 150,000 vehicles and is expected to be completed in June 2023. Phase two is planned to commence in 2024 and be completed in 2025. The new car is expected to be launched in the first half of next year.
Xiaomi’s entry into the automotive industry through intelligent driving is a smart move.
They aim to profit from software and use a system plus ecosystem approach to gain future profits from the automotive market. Compared to traditional automakers, they have an advantage in technology. Many leading technology companies are also expected to enter this competition.
Currently, the most promising company is Huawei.
The automotive industry now seems to have become an entirely new industry. Electrification and intelligence are transforming the entire automotive industry. Leading new energy vehicle companies have no major problems because they have advantages in electrification and manufacturing, and they can invest in and cooperate on autonomous driving research and development.
Traditional automotive companies need to make efforts in both intelligent and electrified areas, which can create significant pressure. Technology companies invest heavily in entering the automotive industry, and the uncertainty of whether they can recover their investment is considerable.
In conclusion, the cars produced must be easy to drive, have high requirements for vehicle manufacturing technology, and have a high barrier to entry, which is higher than everyone’s imagination. Additionally, intelligent driving must be safe, entertaining, and make people feel the intelligence of the vehicle. These are the technological barriers. Combining these factors will create the cars that consumers will most likely love in the future. Many of the factories that technology companies currently partner with may not have such strong vehicle manufacturing technology and may not control costs very well. Even if the experience is excellent on the technology side, the vehicle itself is essential. Technology companies need to empower contract factories, find ways to improve their vehicle manufacturing capabilities, and control costs effectively. Therefore, those who have core battery technology and high vehicle manufacturing capabilities and low costs are the most promising.
Xiaomi’s First Car: From Specifications to Price Consideration
When Xiaomi’s patent drawings were leaked earlier, some related information also surfaced. There are three models: SU7, SU7 PRO, SUPMAX, with body dimensions of 4997X1963X1455 and a wheelbase of 3000 mm. It’s definitely a mid-to-large-sized sedan, and with these dimensions, it’s unlikely to be cheap.
The entry-level version is 400V, equipped with lithium iron phosphate batteries, a single motor, and rear-wheel drive. Even for the base version, it’s likely to be around 200,000 RMB. The high-end version is 800V, with CATL’s 100-degree ternary batteries, a top speed of 210 km/h, dual motors, and laser radar. The high-end version is expected to be around 300,000 RMB.
Is a 200,000 RMB car cheap? Can it make friends? Personally, I don’t think it’s cheap. Cars in the 100,000 to 150,000 RMB range are considered economically practical. Clearly, Xiaomi’s first car won’t fit into that category.
Xiaomi’s foray into the automobile industry is a process from scratch. Lei Jun mentioned that they invested over 10 billion RMB in the first car, which is quite normal. A significant portion of this money goes to the factory. Inside the factory, there are four major workshops, each with various production lines, and each production line has various robots and fixtures, all of which require a substantial amount of money.
Actually, the research and development (R&D) costs are not that high. Typically, the cost of developing a new car is between 1.5 and 2 billion RMB.
Now, Xiaomi’s first car hasn’t been officially released yet, and even when it’s released, it’s likely that delivery will be delayed. Xiaomi’s assembly line is being set up for the first time, and the car is newly developed. There will be all sorts of problems, many of which are inexplicable. Especially the production line issues require experienced engineers to solve them effectively.
Even for domestic large manufacturers, including joint-venture brands, various problems arise during the production phase when they launch a new car.
Xiaomi’s first car is destined to face challenges. It’s a process from scratch, and this is something that must be experienced.
I say Xiaomi’s first car won’t be cheap because the prices of many components cannot be negotiated down. If you are a domestic giant with a very stable supply chain, you can get a low price from your suppliers, and suppliers understand your situation.
However, Xiaomi is different. Xiaomi’s first car is an unknown quantity; there is a lot of uncertainty about whether it will succeed. In the current new energy vehicle market, no one dares to guarantee 100% success. Xiaomi is also a newcomer with no car manufacturing experience, and the probability of failure is quite high. Suppliers are well aware of the situation.
This means that Xiaomi doesn’t have much advantage in the supply chain. Suppliers also need to make a profit and support a large number of employees.
Furthermore, Xiaomi’s car will outsource a lot of components to suppliers, meaning Xiaomi provides the requirements, and suppliers do the design. This leads to higher costs.
Why can BYD, Geely, and Changan make cheap cars? Because they have cost advantages, but Xiaomi doesn’t.
Xiaomi can only increase the car’s price to share the cost of those components. So, as Lei Jun said, Xiaomi’s car won’t be cheap.
But Xiaomi’s competitive edge is still cost-effectiveness. Without cost-effectiveness, is it still Xiaomi? This is a contradiction.
However, one thing favoring Xiaomi is that the current trend in new energy vehicles is shifting towards intelligent cabins and smart driving. I’m not worried about Xiaomi’s capability in the intelligent cabin. Xiaomi can certainly do it. If Xiaomi can also bring intelligent driving to the top tier, then Xiaomi’s car has a high chance of success.
Xiaomi’s Car Pricing Strategy: A Delicate Balancing Act
It’s entirely reasonable that Xiaomi can’t follow its original path of emphasizing affordability, just like it did with smartphones; that would be a dead-end road.
The domestic mid-to-low-end market for new energy vehicles is already oversaturated. Especially in the price range below 150,000 RMB, there are absolute kings like BYD, not to mention contenders like Lantu, Zéro Run, NIO, and many others, all eyeing the market.
This isn’t just about product competitiveness; the unwritten rules of the industry, including internet trolls, are quite fierce, and those in the know understand it well.
Moreover, targeting the mid-to-low-end market means you’ll need to focus on high sales volume. After all, cars are different from smartphones; the latter can achieve profitability through software, membership mechanisms, and other means, while the former’s main profit comes from the product itself.
If Xiaomi goes for the mid-to-low-end market and can’t achieve high sales volume at the outset, it will instantly become a heavy burden for Xiaomi Group, making it difficult to escape the pressure.
So, at this point, it’s wise for Xiaomi to learn from models like NIO and Xpeng, coming out initially with a price point around 300,000 RMB (although Xiaomi might aim for 249,900 RMB). This way, they can set consumer expectations right from the start.
This way, even if they can’t achieve large-scale production in the early stages, as long as consumers who buy the car feel it’s “worth the money” and the positive word-of-mouth spreads, Xiaomi can survive the most painful stages of development.
During the phase of building reputation, it might even be worthwhile to follow NIO’s path of selling cars at a loss.
Money? Money won’t be a problem here, unlike the scenario where going for the mid-to-low-end market and failing to gain traction can lead to a brand’s downfall, negative impacts on capital markets, and public backlash. In this case, money won’t be an issue, as long as the market response is positive. Investment institutions will participate, and as a unique player in the Beijing area’s new energy scene, plenty of undisclosed funds will flow in.
Of course, if Xiaomi ultimately decides to stick with the “start with a high price initially, and then make friends at 149,900 RMB” approach and continue to target the mid-to-low-end market… well, then there may be real concerns about its future prospects.
Lei Jun’s Classic Tactic: Setting High Expectations with Premium Price Hints
Lei Jun is sticking to his classic approach, starting by hinting at a high price to raise expectations.
During the presentation, Lei Jun surprised everyone by announcing a heartwarming price of 139,900 RMB for the entire range of executive sleepwear.
He’s done it again.
Interpreting Xiaomi’s Pricing Strategy for SU7
The last time some auto enthusiasts and influencers in the automotive industry speculated about the price of 300,000 RMB, my initial reaction was that it was an intentional smoke screen, and Xiaomi would likely settle for a more friendly 19,990 RMB.
However, upon further consideration, I realized that vehicles in the 19,990 RMB price range are already not considered cheap for most Chinese consumers. If Xiaomi were to create a car that most consumers couldn’t afford to buy but could only admire from afar, it wouldn’t be in line with Xiaomi’s ethos.
Based on the leaked interior photos we’ve seen so far, Xiaomi doesn’t seem to be going for a luxurious and extravagant design. Therefore, I estimate that the starting price might actually fall to 14,990 RMB, or at the very least, 15,990 RMB or 16,990 RMB. The base model likely uses a Fudi battery and a single motor configuration, which, from a cost perspective, could be profitable at 14,990 RMB.
When Lei Jun mentioned that it’s “a bit expensive,” he might have been referring to the high-end variants. This strategy is reminiscent of Xiaomi’s previous approach, such as with the Xiaomi 10 Ultra, which was priced above 6,000 RMB, a bit steep for Xiaomi at the time. However, they continued to offer more affordable high-value options, like the regular Xiaomi 10 at 3,000 RMB, which remained accessible to consumers.
Moreover, in this year’s Xiaomi 14th Anniversary event, Lei Jun also mentioned that the products were “expensive,” but the Xiaomi 14 series did not see a price increase, despite being advertised as the “last time.”
In conclusion, while the cost of SU7 might indeed be substantial, Lei Jun’s reference to “expensive” is likely more about making consumers feel that it’s a valuable proposition, rather than simply selling them something expensive. Let’s wait and see, and we can analyze the details when it’s officially unveiled.
Based on “Reasonably Expensive,” Xiaomi SU7’s MSRP is Likely to be Over 250,000 RMB, Possibly Approaching 300,000 RMB.
The actual transaction price of a car is generally lower than the MSRP, but the MSRP can reflect the product’s positioning.
The MSRP for common compact (mid-sized) electric cars is as follows (dealer quotes in parentheses):
Most Affordable Category:
- Leapmotor C01 145,800-208,800 RMB
- Qicharging A07 155,900-179,900 RMB (141,900-165,900 RMB)
- Neta N01S 159,800-341,800 RMB
Affordable Category:
- Hycan Alpha S 189,800-329,800 RMB (184,800-324,800 RMB)
- Fayfan F7 189,900-309,900 RMB
Moderately Affordable Category:
- XPeng Han EV 209,800-299,800 RMB (199,800-279,800 RMB)
- Hozon Gemini GT 219,900-339,900 RMB
- Xiaopeng Xinyuan ES 225,800-339,800 RMB
Neither Cheap nor Expensive Category:
- Zhi Jie S7 249,800-349,800 RMB
Moderately Expensive Category:
- Xpeng P7 300,000-769,000 RMB (269,000-769,000 RMB)
- Aiways U12 300,800-400,800 RMB
- Neta Liangjian 322,900-385,900 RMB
- Zhi Ji L7 338,800-578,800 RMB
Relatively Expensive Category:
- NIO ET7 428,000-506,000 RMB
- Mercedes-Benz EQE 478,000-534,300 RMB (378,000-434,300 RMB)
Most Expensive Category:
- Hozon HiPhi Z 510,000-630,000 RMB
- Tesla Model S 698,900-828,900 RMB
- Porsche Taycan 898,000-1,838,000 RMB
So, “reasonably expensive” should at least be more expensive than the “neither cheap nor expensive” Zhi Jie S7, which means at least over 250,000 RMB.
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