Sell cars below cost to conquer the market. An economic practice that is illegal in many states of the world but which the Chinese of Xiaomi shamelessly admit to doing without any problems. Yes, because in announcing with great emphasis that the sales of the first electric car of the Chinese smartphone manufacturer were 3-5 times higher than expected, CEO Lei Jun during a two-hour live streaming on Douyin, the Chinese equivalent of TikTok , officially stated that “we have deep pockets and expect to lose money on the SU7.”
All said in front of over 34 million viewers connected on Douyin. And analysts predict that losses on the SU7 could be substantial: Based on an expected volume of 60,000 units this year, it is estimated that the SU7 could generate a net loss of 580 million euros, or an average of 7,800 euros per car.
But Xiaomi moves forward. And after launching its car, which takes stylistic cues (so to speak…) from Porsche, at the end of last month it entered the crowded Chinese electric vehicle market with an assault price: under 30,000 dollars for the basic model , so $4,000 less than Tesla's base Model 3 model. The purpose is clear because selling below cost is only prohibited in two situations. The first is when its purpose is only to get rid of the competition; the second is when there is a tendency to liquidate the company's assets to remove them from creditors in the event of bankruptcy. In the first case we are talking about internal dumping and an act of unfair competition; in the second case, however, the crime of fraudulent bankruptcy may occur. In all other cases, it is legal to sell one or more products below cost. But Xiaomi definitely falls into the first case.
The point is this: how do you compete with a manufacturer that – admittedly – sells cars below cost? Impossible, of course. Especially if the manufacturer in question has “big pockets”, as he himself says. That is, unlimited economic resources.
#Xiaomi #admits #sell #cars #cost #FormulaPassion.it
