Xiaomi releases electric car $4K cheaper than Tesla’s Model 3 as price wars heat up
Chinese consumer electronics company Xiaomi revealed Thurs., Dec. 28, 2023, its long-awaited electric car, but declined to share its price or specific release date.
CNBC | Evelyn Cheng
BEIJING — Chinese smartphone company Xiaomi said Thursday it will sell its first car for far less than Tesla’s Model 3, as price wars heat up in China’s fiercely competitive electric car market.
Xiaomi CEO Lei Jun said the standard version of the SU7 will sell for 215,900 yuan ($30,408) in the country — a price he acknowledged would mean the company was selling each car at a loss.
Tesla’s Model 3 starts at 245,900 yuan in China.
Lei claimed the standard version of the SU7 beat the Model 3 on more than 90% of its specifications, except on two aspects that he said it might take Xiaomi at least three to five years to catch up with Tesla on. He also said the SU7 had a minimum driving range of 700 kilometers (nearly 435 miles) versus the Model 3’s 606 kilometers. The company said orders had exceeded 50,000 cars in the 27 minutes since sales started at 10 p.m. Beijing time Thursday.
Deliveries are set to start by the end of April, Lei said. Lei also claimed that Xiaomi’s car factory, for which all “key” steps are fully automated, can produce an SU7 every 76 seconds. It was not immediately clear whether the factory was fully operational.
Earlier this week, the Xiaomi CEO said on social media the SU7 would be the best sedan “under 500,000 yuan” ($69,328).
The car is entering a fiercely competitive market in China, where companies are launching a slew of new models and cutting prices in order to survive. Chinese telecommunications giant Huawei has partnered with traditional automakers, most notably launching the Aito brand whose vehicles are often on display in Huawei smartphone showrooms.
Tesla‘s Model 3 is the best-selling new energy sedan in China that has a driving range of at least 600 kilometers (372 miles) and costs less than 500,000 yuan, according to data from industry website Autohome.
BYD‘s Han sedan starts at 169,800 yuan, according to Autohome.
Nio‘s ET5 starts at 298,000 yuan, while Xpeng‘s P7 starts at 209,900 yuan, the data showed. Geely-owned Zeekr’s 007 sedan starts at 209,900 yuan, according to Autohome.
Sales of new energy vehicles, which include battery-only powered cars, have surged in China to account for about one-third of new passenger cars sold, according to the China Passenger Car Association.
Accessories
The heads of competing electric car startups Nio, Xpeng and Li Auto were among the featured guests at the Xiaomi SU7 launch event.
Lei on Thursday showed off a range of accessories such as an in-car refrigerator, a custom front-window shade, and a smartphone holder, some available for free with a car purchase before the end of April, and others for a separate price.
The SU7 supports Apple’s Car Play and can integrate with the iPad, Lei said. He also revealed driver-assist tech for highways and cities, set to be fully available in China in August.
Tesla’s Autopilot for driver assist on highways is available in China, but the company’s “Full Self Driving” for city streets has yet to be released in the country.
Despite saying Xiaomi wanted to compete with Porsche at a car tech event in December, Lei acknowledged that the SU7 had longer to go before it might be able to compete at this more premium level. He announced that the “Max” version of the SU7, aimed as a competitor with Porsche’s Taycan, would sell for 299,900 yuan.
Ecosystem of devices
The SU7 is part of Xiaomi’s recently launched “Human x Car x Home” strategy that seeks to build an ecosystem of devices connected to its new HyperOS operating system. Most of the company’s revenue is from phones, with just under 30% coming from appliances and other consumer products.
Although Xiaomi is generally known for more affordable products, its President Lu Weibing told CNBC earlier this year the company has been pursuing a premiumization strategy since 2020 — and that there are about 20 million users in that price segment who might buy the SU7.
Lu told CNBC that the SU7 will first be sold to consumers in China, and that it would take at least two to three years for any overseas launch.
The company showed off the car at Mobile World Congress in Barcelona in late February, following a reveal of the vehicle’s exterior and tech in Beijing in late December.
China’s artificial intelligence device market is already booming, and in the advanced technology race against the U.S., the country’s expertise in hardware could give it an edge.
“The advantage comes from the fundamental root that China is a nation of manufacturing,” Dr. Kai-Fu Lee, CEO of 01.AI and chairman of Sinovation Ventures, told CNBC. “Today, the competition is on the software, the models, the agents, the applications. But soon it will move to devices.”
Meta has sold millions of its smart glasses since introducing the specs in 2023, and the Chinese have caught on, with more than 70 Chinese companies creating competing products in the space.
Eyewear from companies such as Inmo and Rokid are sold worldwide. Xiaomi and Alibaba‘s are found only in China and are embedded with the tech giants’ own AI.
Alibaba’s DingTalk, a messaging platform for the workplace, this year released a credit card-sized AI gizmo meant for note-taking on the job.
The DingTalk A1 can record, transcribe, summarize and analyze speech from as far as 8 meters (26 feet) away, about the length of a large boardroom.
The device is similar to the Plaud Note, which is available in the U.S.
The device experimentation in China spans from the practical to the unconventional.
Chinese startup Le Le Gaoshang Education Technology released a “Native Language Star” brand translating gadget aimed at Chinese parents with limited English to teach English to their own children.
The contraption, which is looped around the back of a user’s neck like a travel neck pillow and comes down toward the chest, has a sort of muzzle unit that goes over the mouth and mutes the user’s own voice.
The unit is embedded with Tencent and iFlyTek AI and is billed as a way to turn an English-speaking Chinese parent into a “laowai,” or foreigner. It retails for $420.
Having so many hardware touchpoints helps with adoption and with getting people used to the technology. It’s also a boost for companies to gather a war chest of data compared to other countries, analysts say.
“When you still hear people outside of China talking about what the future of the AI device might be, the market is full of AI devices here already,” tech consultant Tom van Dillen of Greenkern said at his office in Beijing. “This creates this feedback loop again to make the AI even better.”
Yet an edge in hardware is far from a guarantee to win the AI race, especially if China’s AI lacks appeal with global customers due to privacy or other issues, or if it falls well behind its counterparts in the U.S. or elsewhere.
“You really have to be that Apple iPhone to reap the most of the reward,” Lee cautioned, referencing late entrepreneur Steve Jobs’ invention that is often seen as one of the most transformative consumer products ever. “I think the China advantage for building the Apple iPhone for the AI age is that the capabilities are there — engineers and entrepreneurs, and so on. But it will still be a race.”
Technology
Trump greenlights Nvidia H200 AI chip sales to China if U.S. gets 25% cut, says Xi responded positively
President Donald Trump on Monday said Nvidia will be allowed to ship its H200 artificial intelligence chips to “approved customers” in China and elsewhere, on the condition that the U.S. gets a 25% cut.
Chinese President Xi Jinping “responded positively” to the proposal, Trump wrote in a Truth Social post.
The policy “will support American Jobs, strengthen U.S. Manufacturing, and benefit American Taxpayers,” Trump wrote.
“The Department of Commerce is finalizing the details, and the same approach will apply to AMD, Intel, and other GREAT American Companies,” he added in the post.
Both Nvidia and chip rival AMD, short for Advanced Micro Devices, agreed in August to share 15% of the revenue from China chip sales with the U.S. government. But around that same time, China reportedly warned companies against using the H20 AI chip that Nvidia designed especially for the country.
The H200 is a higher-grade chip than the H20, but not the company’s top-of-the-line product.
Nvidia shares climbed earlier Monday on news that the Commerce Department was set to approve the China sales, but later pared those gains. The stock rose about 2% after hours.
Nvidia (NVDA) and Advanced Micro Devices (AMD) stock prices
“We applaud President Trump’s decision to allow America’s chip industry to compete to support high paying jobs and manufacturing in America,” a spokesman from Nvidia told CNBC in a statement.
“Offering H200 to approved commercial customers, vetted by the Department of Commerce, strikes a thoughtful balance that is great for America,” the spokesman said.
Semiconductors, which are key components in nearly every category of electronics, are at the center of the AI race between the U.S. and China.
They have also played a role in the tumultuous trade relationship between the two economic superpowers.
When Beijing imposed export controls on rare-earth minerals, which are used in the production of some high-end chips, the Trump administration threatened to massively increase tariffs on U.S. imports from China.
After meeting in South Korea in late October, Trump and Xi struck a tentative trade truce in which China committed to end “retaliation” against U.S. chipmakers, according to the White House.
Trump said after that meeting that he discussed the export of Nvidia chips with Xi.
— CNBC’s Kristina Partsinevelos and Kif Leswing contributed to this report.
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