Just four years after it was
founded, China’s Xiaomi became the
third largest phone maker in the world. Critics called it
an Apple copycat. Lei Jun is known as the
Steve Jobs of China, and he earned that nickname
because in the early days, he would do pretty much
everything that Steve Jobs would do, including the way
he dresses. He knew, though,
that he couldn’t match Apple’s brand and products
at that time, so he went for the mass
market. But now Xiaomi is making
EVs, something Apple abandoned
after investing billions. They just gave up. Meanwhile, Xiaomi did the
same thing a couple of years ago, and, uh,
they’re thriving. And Xiaomi is using the same
playbook and cars that helped it succeed in phones. Take cues from the leading
brands. So far, it’s worked. It’s What’s beating brands? Brands that have been around
for ten years that have multiple products. It’s
beating sales on a monthly basis. They’re a force to be
reckoned with. There are challenges,
though. Fallout from a tragic crash, a subsequent government
crackdown on self-driving technology, and China’s
brutally competitive EV market. There’s a lot of EV startups
in China. Most of them are not
anywhere close to being profitable. Cnbc looks at how a mid-tier
phone company showed up late to China’s EV race,
and quickly became one of its buzziest brands. A few quick stats show just
how fast Xiaomi has elbowed its way into China’s crowded
EV landscape. The SU7 was released on
March 28th, 2024. By December,
it was outselling the rival Tesla model three in China. Within a year of its
release, the car had already sold
200,000 units. The SU7 also sold more
quickly over time. It took 229 days to deliver
the first 100,000 units, and just 119 for the second. This is despite the fact
that the product is a four door sedan. China is like the United
States. They are a crossover and SUV
market. So sedans aren’t even that
popular in China. In May 2025, Xiaomi launched
the much anticipated YU7 crossover with just those
two products. The company plans to more
than double sales in 2025 over the prior year. Xiaomi only sells
domestically, but its reputation is
spreading far outside China. Though Chinese automakers
with a few notable exceptions like Polestar and
Volvo, can’t sell vehicles in the
US, at least a couple American
automakers acquired SU7 seconds, something they
sometimes do to investigate competitors cars. Rivian’s using it to
benchmark its own products and Ford. We flew one from Shanghai to
Chicago, and I’ve been driving it for
six months now, and I don’t want to give it
up. I think that Jim was being
the only way he can be very honest, brutally honest. I also think that was a
motivating tool to his his folks in Dearborn and his
small team in, in Southern California,
that there are significant challenges that Ford needs
to overcome in order to build great products like
the SU7 . At the very least,
the smart EV business hasn’t sent investors scattering. Xiaomi shares hit an all
time high in March 2025. That same month,
the company raised another $5.5 billion in a stock sale
to grow the EV business. So what’s special about this
car? There are, after all,
more than 140 Chinese EV brands to choose from. One trait is high
performance at a low price. There’s four versions. The base model and longer
range Pro come with about 300 horsepower. The mid-tier all wheel drive
Max has nearly 700. And then there’s the ultra,
a roughly 1500 horsepower prototype of that top trim
version. Outperformed cars from
Porsche, Tesla, and romance. That’s on the Nurburgring,
a famous German racetrack. Prices range from $30,000 to
the Ultra’s starting 73 K, the base can charge to about
215 miles of range in 15 minutes, and it goes up from
there. The driving dynamics,
the response on acceleration is out of this world. And for a first try,
really impressed. One of the cars the SU7 beat
on the Nurburgring was the Porsche Taycan,
to which many have compared the SU7 , sometimes in ways
that doesn’t flatter Xiaomi. In the early days,
when he launched his phones, he benchmarked against the
Apple iPhone. And so we’re seeing the same
marketing pattern. He benchmarked against the
the Porsche, right. He’s saying that our
performance is as good as a Porsche. But,
you know, this is a car that you can actually afford. That Xiaomi is a tech
company, provides multiple
advantages. Traditional car companies
very product focused, right. This is how fast it
goes. This is how many miles per
gallon it gets. Technology companies are
laser focused on the customer. On the first day the SU7 was
available, Xiaomi had a catalog of
accessories customers could buy. One of the most impressive
things that I saw from Xiaomi outside of driving
the vehicle was that, you know what we’re
wondering? We’re anticipating that some
customers might want this or might want that,
and they gave it to them on day one. Xiaomi is one of the few
Chinese companies in the EV space. That has another way
to make money so that they could continue to pursue
their EV and not necessarily rely only on the EV as their
sole product. The S7’s biggest selling
point might be Xiaomi itself and the strategy of its CEO, Lei Jun. It’s human Times
car times Home strategy seeks to connect users to
devices wherever they are phones, appliances and now
cars. The idea behind Xiaomi is to
have a connected lifestyle. So in that way,
you see Xiaomi’s name on rice cookers,
on power strips, on your cell phone,
on a whole bunch of other stuff. And it’s actually
quite a different strategy from a lot of other tech
companies. The pioneering Apple
ecosystem is famous, but Apple is much pickier
about what categories it goes into. The tech giant
abandoned Titan, its $10 billion effort to
build an autonomous EV. The move surprised two lay
who used to work for them. I’ve never seen Apple flail
like that on a decision. But I also know that they
are control freaks, that they want to control
every aspect of design, engineering, and
manufacturing. And they couldn’t do that. Auto industry. Net margins
are generally in the mid single to low double digits
range. Apples are closer to 25%. At the end of the day. Xiaomi succeeded where Apple
has not yet. Do I think Apple is still
eyeing the transportation market? Yes, I do,
but now Apple can look at Xiaomi as a success story
and learn from them, which is kind of ironic. Xiaomi is a Chinese company, and China is the biggest EV
market in the world that has its benefits. They’ve got a full supply
chain that does everything from processing raw
materials to producing batteries and motors and
electronics and everything else. And Xiaomi has been
able to leverage that supply chain that has grown up over
the last 15 years for electrified vehicles and put
it to good use. Some say the fact that a
sedan has been able to perform this well in a
crossover market means the YU7 could be a runaway
success. These Chinese EV brands in
the so-called Tesla killers have all kind of lost
individual battles with the Model Y. Model Y has been one of the
best selling vehicles in China in 2025. Though Tesla has been
fighting hard to maintain its share in the country,
it started a price war a few years ago, and this year
it’s offering aggressive financing on the model Y. Overall, Tesla sales in
China are down. I say all this to lead up to
the YU7, which ultimately could be
that one Tesla killer. That said, Xiaomi sales did
fall in April 2025 from a record set the month before. That follows a crash that
left three dead in China. The incident revealed the
perils of imitating American tech companies. The things that Tesla has
done a lot that others, particularly in China,
have copied, is doing public beta testing
of software, particularly for automated
driving systems, and that is now banned. Good for safety. But with these new
regulations, it’s going to put a damper
on the ability of companies like Xiaomi to really appear
to be out there on the leading edge of deploying
new technologies in their vehicles. It’s going to slow
down some of that pace of updates, at least from a
software perspective. Xiaomi has also made some
moves since then that have left many questioning the
company’s prospects for success. Lee Joon did not
attend this year’s Shanghai Auto Show, where Xiaomi was
expected to unveil its YU7 SUV. The company told CNBC
he was unable to attend due to a scheduling conflict. It did not comment on the
accident, referring CNBC to previous
statements. In the aftermath of the
crash, CEO Lei Jun said on social
media, our team immediately set up
a special task force, rushed to the scene on the
30th and cooperated with the police on the 31st to
retrieve and submit the vehicle data. We have now compare and
contrast that to last year, where the SU7 was the
runaway hit in late June was getting chased all over the
Beijing auto show. How much damage this has
done remains to be seen. Xiaomi is not a startup,
it’s an established brand. It had partnered with
Chinese automaker Baic to make its vehicles. Now it has its own
manufacturing license in China. The cars are highly
desired despite the recent sales drop, but its history
of offering products in every conceivable category
might be more of a liability than an asset. And you could argue that
it’s a good thing because it shows that they they really
want to push this idea of a lifestyle. And I think that
the EV is just an outgrowth of that idea. But then the
downside of that is that it could raise questions as to
exactly what your brand is all about. In addition to the sheer
number of products, Xiaomi is neither a premium
brand nor a category leader. You know the smartphone
market. They’re somewhere in the
middle. You know, sometimes they do
well, and then sometimes they
don’t do so well. And then it’s the same with,
um, the EV market. They’re they’re launching
and they’re in the middle of the pack. Ev space is so,
so fiercely competitive. And Xiaomi’s biggest
challenge is going to be how do they break out? How do
they make sure that they could get ahead in the pack? Well, the company is
profitable overall. The EV segment isn’t making
money. Gross profit margins for the
smart EV business and other new initiatives were 18.5%
in 2024. But when all costs and
expenditures were factored in, the segment lost $850
million. That loss, however,
is 7.1% narrower than the prior year. We’ll probably see some
consolidation of some of the many more than 100
automakers in China. Whether or not Xiaomi can
get through this and grow to a scale where they can
become profitable. We’ll see. They certainly
have. I think they have the right
pieces in their portfolio as far as the technologies
they’re using. And if they can prove to
consumers, prove to the public that
their vehicles are safe, they may well do fine.