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Xiaomi Sparks Electric Car Price War in China

Daniel Kim Views  

Xiaomi’s electric vehicle SU7 priced at around $33,000
Price reduction for Nio’s luxury SUV after announcement
Xiaopeng lowered the price of P7i’s top model

Xiaomi’s electric vehicle, the SU7, was displayed at a Beijing exhibition hall on the 28th. Beijing/AFP Yonhap News

The Chinese electric vehicle market has plunged into a full-scale price war. Starting with Xiaomi, competing brands are reducing prices one after another.

On the 31st, Yonhap News reported, citing Chinese economic media Caixin, that Xiaomi has launched its first electric vehicle, the SU7, in two versions priced at 215,900 yuan (approximately $33,840) and 299,900 yuan (roughly $46,990).

Both prices were lower than market expectations. Lei Jun, CEO of Xiaomi, stated at the time of the new car announcement, “Xiaomi is the king of competition, big or small,” adding, “We knew from day one that this would be a battlefield of price.” He further noted, “Xiaomi spent 24 billion yuan (approximately $3.76 billion) on research and development (R&D) last year and has over 130 billion yuan (approximately $20.4 billion) prepared to face competition over the next five years.”

Xiaomi’s aggressive pricing strategy has spurred price reductions among other brands within China.

Following the announcement of the SU7, Nio reduced the price of its luxury SUV model, which exceeded 350,000 yuan, to 258,000 yuan (approximately $40,500) through a battery rental program. Xiaopeng, seemingly conscious of Xiaomi’s announcement, lowered the price of the top version of the P7i from 289,900 yuan to 249,900 yuan (approximately $39,200) four days before the SU7’s launch.

An industry insider explained, “In the short term, Xiaomi’s intelligent driving still needs to catch up with Xiaopeng, but in the current environment, cost-effectiveness might be more important than intelligent driving capabilities.”

Despite CEO Lei Jun’s confidence in having sufficient cash, analysts in the industry suggest that Xiaomi will be hesitant to overspend. One insider pointed out, “Xiaomi hopes to become one of the top performers with relatively low costs, not necessarily aiming to be number one. When they become one of the top performers, they can rely on the benefits of the brand and its users.”

Daniel Kim
content@viewusglobal.com

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