Sarah Wu
BEIJING (Reuters) – He has been called China’s answer to Steve Jobs for turning Xiaomi (OTC:) from a failed startup into an electronics giant known for its smartphones.
With the launch of a much-hyped and advanced electric car, Lei Jun, co-founder and CEO of Xiaomi, is challenging Elon Musk with a strategy that is taken from the Tesla (NASDAQ:) playbook.
Lei, 54, took the stage in Beijing on Thursday to unveil the Xiaomi SU7, a project three years in the making that has attracted much attention but which Lei warned investors would lose money.
During the two-hour event on Thursday – livestreamed by millions of Chinese – Lei mocked Apple (NASDAQ:) for abandoning its car project and said Xiaomi’s electric car was superior to Tesla’s Model 3.
Fans have dubbed the Xiaomi CEO “Thor” on social media, a play on his last name, which means “thunder” in Chinese. Some noted that his outfit—a gray jacket over a black T-shirt—looked like something Musk would wear.
Lei’s marketing strategy for his electric car has already become a household name in China, says Yale Zhang, managing director of Automotive Foresight.
“One person is an entire marketing team,” Zhang said. “With every word he says, the attention he gets online is of a different magnitude.”
Lei was born in central China and graduated from Wuhan University with a degree in computer science before becoming CEO of software company Kingsoft.
In 2010, he co-founded Xiaomi. By 2014, the tech startup was valued at $46 billion.
The Beijing-based company has grown with the popularity of its smartphones and home appliances, beloved by Chinese families for their affordability and sleek designs.
Xiaomi launched higher-end smartphones last year to compete with Apple’s iPhone, but Lei’s decision to sell an electric sports car that is stylistically reminiscent of a Porsche will test the Chinese company’s ability to move into a new, premium market.
In 2021, Lay announced that Xiaomi would build its own electric car, a venture he said would then be the “last major entrepreneurial project” of his life.
“What I’ve realized most during the three years of developing this car is that making cars is extremely difficult,” Lay said Thursday. “Even a giant like Apple has given up on it.”
BEIJING SUPPORT
The SU7—short for Speed Ultra 7—enters China’s crowded EV market with an attractive price tag: under $30,000 for the base model, which is cheaper than the Tesla Model 3 in China.
Xiaomi built a factory in Beijing capable of producing 200,000 cars a year before receiving regulatory approval to begin production in China. State-owned automaker BAIC Group announced in November that it would produce cars for Xiaomi – at the same Xiaomi plant.
Xiaomi, which plans to sell the SU7 only in China for now, did not immediately respond to a request for comment.
Lei said that without support from Beijing authorities, it would be “impossible” to complete the car in three years, according to a transcript released by auto blogger Chang Yang, who was among a group of Chinese reporters invited to interview Lei on Thursday. .
Musk also enlisted the support of the Shanghai government to open a Tesla plant there. Construction of the Tesla factory in Shanghai took less than a year after it began in 2019.
Analysts remain divided over whether Ley’s project will go beyond creating a stir and making money in the hypercompetitive electric vehicle market. “The risk is that they focus too much on the electric vehicle space and lose focus on the sectors and products that got them there,” said Tu Le, founder of consultancy Sino Auto Insights.
Ley said he initially planned to sell the upscale version of the SU7 for about $48,500, then lowered the price to about $41,500 as other automakers cut prices.
“Xiaomi has enough cash reserves to cope with any tough competition in the next five years. And if possible, Xiaomi will look for ways to accumulate more money,” Lei said.
Xiaomi said it received 50,000 orders in the first 27 minutes after the SU7 went on sale. On Friday it was reported that the figure had reached 88,898 in 24 hours.
($1 = 7.2277 yuan)