Xiaomi triumphs where Apple fell: its electric car looks to Porsche

The Chinese threat to the automobile industry has just increased in intensity. To the competition that manufacturers such as BYD or MG had already injected into the market against traditional European and American motor companies, a technology company from the Asian giant, Xiaomi, has now been added. The company, known above all for its competitively priced mobile phones, has just presented an electric vehicle, the SU7, with features reminiscent of an electric Porsche but with a price lower than that of a Tesla. The vehicle offers an acceleration capacity from zero to 100 kilometers per hour in 2.78 seconds, close to that achieved by the Porsche Taycan Turbo GT with Weissach package presented in March in Leipzig (Germany), the fastest electric to date with 2.2 seconds.

The difference, as also happens in the Chinese firm's mobile phones, is the price: the German company sells its supercar for 248,685 euros, while Xiaomi has launched the SU7 on the market for a price that ranges between 215,900 and 299,900 yuan (between 27,770 and 38,575 euros at the current exchange rate), depending on the equipment. Although we have to wait for the vehicle to arrive in Europe, something that will likely take a few years to happen, the car is also cheaper than the price at which Tesla sells its Model 3 in Spain, about 39,990 euros (in China it is sold for 245,900 yuan, Reuters reports).

In this way, the Chinese technology company strongly enters a new market for it and in which it has so far received strong support from customers. In just 24 hours since its launch last week, the SU7 had 90,000 orders, according to Xiaomi, which made it soar 8.97% on the Hong Kong Stock Exchange on Tuesday. The company, which has put 10 billion dollars (about 9.3 billion euros, at the current exchange rate) on the table for this project, has managed to give birth to its creature in a field where the American giant Apple ran aground.

“In the three years that I have been developing this car, what I have realized most is that manufacturing vehicles is extremely difficult. Even a giant like Apple has given up,” admitted Xiaomi co-founder and CEO Lei Jun at the launch of the SU7. It should be noted that the bitten apple company's project was different: it aspired to create a 100% autonomous and electric luxury vehicle with a price that would be around $100,000, according to projections from the Cupertino-based company. After 10 years of research and work to carry out this vehicle, Apple sent an internal statement in February to end this dream in which 2,000 people were employed, according to information provided by Bloomberg.

The American company will divert these efforts to the development of generative artificial intelligence, a technology that other large corporations such as Microsoft have placed a stronger bet on, which took its place as the largest listed company in the world in January. Apple, in addition to not being sure of being able to carry out the project, also seriously doubted that it was a business that would give it the margins to which it is accustomed.

Meanwhile, Xiaomi is betting heavily on the automobile and does not set limits. “If we work hard over the next 15 to 20 years, we will become one of the world's top five car manufacturers and strive to boost the Chinese auto industry as a whole,” Lei Jun said in December, in a statement reported by Reuters. .

More manufacturers, few sales

Xiaomi's arrival in the automotive industry comes at a time when the growth of electric vehicle sales is suffering from stagnation around the world. So much so that Tesla reported in the presentation of its annual results that it expects “sales volume growth in 2024 to be noticeably lower than in 2023.” On Tuesday, the company indicated that its deliveries fell 8.5% between January and March of this year compared to the same period of the previous year.

Sales of electric vehicles as a whole, although they are growing at the beginning of the year in Europe, are doing so at a much lower rate than in other times, with an increase of 17.4% until February, according to data from Acea, the employers' association. European car manufacturers. The slowdown is notable especially in Germany, where sales of pure electric cars even fell by 1.3% between both months due to the elimination of purchase aid by the Government. In another large market like China, sales of electric vehicles will rise by 25% this year, according to estimates collected by Bloomberg, compared to the 36% increase in the previous year and 96% in 2022.

This slowdown in market growth occurs at the same time as many new players join in that want to compete with traditional manufacturers such as Volkswagen, Ford, General Motors or Stellantis, which are allocating billions to switch from producing combustion cars to electric ones. . Manufacturers such as BYD or SAIC Motor (owner of the British brand MG) have already begun their expansion outside of China and are taking market share.

Meanwhile, given the low prospects, European giants such as Renault and Volkswagen have decided to reverse their plans to take their electric car divisions public, as well as those of software (Ampere), in the case of the French company, and batteries (PowerCo), in the case of the German company. Both companies are studying, in turn, the joint production of a 20,000-euro electric vehicle, in an alliance with which to face strong competition from Chinese brands that the European Commission is investigating for having allegedly received illegal subsidies. from Beijing. This, plus lower energy and labor costs, would allow Asian firms to offer cheaper electric vehicles than European ones.

“In recent years, the great world economic powers have sought to generate valuable economies of scale and have not hesitated to subsidize their development, as well as the production of batteries, and they have done so directly with companies or indirectly with the consumer to facilitate its adoption,” explains Clément Inbona, fund manager at La Financière de l'Échiquier, a French fund manager. “In the face of these market distortions, China, the United States and Europe are multiplying mutual accusations of dumping. We have the latest example to date with Janet Yellen, US Treasury Secretary, who recently expressed her concern about “the global repercussions of excess capacity” observed in China. However, on paper, the United States is not safe from reproach regarding subsidies and proof of this is its Inflation Reduction Act (IRA). [un programa dotado con 400.000 millones de dólares para atraer proyectos verdes]”, completes the expert.

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