Xiaomi’s Hot Sale Explodes, What’s Their Secret?

In 2024, amidst the fiercely competitive electric vehicle (EV) industry, Xiaomi has emerged as a game-changer, complicating an already intricate market. Having achieved immense success in the smartphone sector, Xiaomi drew the industry’s attention when it announced its foray into automobile manufacturing three years ago. Skeptics and supporters alike cannot deny the explosive success of Xiaomi’s debut vehicle at the recent launch event — the SU7 model has been a hot seller.

With 10,000 units sold in 4 minutes and 50,000 in 27 minutes, Xiaomi has shattered existing sales records, highlighting the vehicle’s soaring popularity. But what exactly is driving Xiaomi’s automotive success? Amidst cutthroat competition, can Xiaomi maintain its lead with such fervent market enthusiasm?

Xiaomi’s Venture into Automaking Sets a New Record

Xiaomi’s entry into the new energy vehicle sector three years ago was met with continuous debate. Many thought that Lei Jun, Xiaomi’s CEO, was oversimplifying the complexities of car manufacturing, as the company aimed to achieve a technological breakthrough within the span of just three years — a monumental challenge considering the decades-old automotive industry. Despite Xiaomi’s triumphs in the smartphone realm, the car industry is a dramatically different path, and Xiaomi’s staff had no prior experience, meaning they had to start from scratch. From the outset, Xiaomi’s car-making venture was viewed with skepticism.

However, all doubts dissipated at Xiaomi’s new vehicle launch. With a starting price of 215,900 yuan and a range of free options available for a limited time, coupled with Lei Jun’s earnest presentation, the Xiaomi car became an overnight sensation. Within 24 hours of its market debut, a total of 88,898 pre-orders were placed. To put this into perspective, consider the AITO WENJIE M7—a joint venture by Huawei and SERES—announced late last year, which secured over 50,000 orders in 25 days. Meanwhile, the Xiaomi SU7 reached that milestone in just 27 minutes. Thanks to such incredible demand and rapid pre-order pace, netizens have even nicknamed Lei Jun ‘Lei the Thunder God.’ Xiaomi has indeed caused envy among its competitors, achieving a level of popularity that not even the ‘big players’ like Wey, NIO, and Tesla could easily rival.

Lei Jun is clearly a marketing genius, leveraging his extensive experience in the smartphone industry to lay a solid foundation for the Xiaomi car. In the fiercely competitive pure-electric market of 2024, with all the hardware and configurations of the Xiaomi SU7 known well in advance, Lei Jun masterfully used the price as a pivot to orchestrate a textbook marketing campaign. Through pre-launch teasers, an all-channel information strategy, distribution of F-codes, pre-launch offline presence, and the final price reveal, Xiaomi established a comprehensive marketing plan for the SU7.

Technology and Ecosystem: Xiaomi Car’s Unique Advantages

In the new era of car manufacturing, while marketing is important, it is not the key factor. Without unique advantages and selling points, even the most aggressive sales tactics are futile. For Xiaomi, its technological prowess in the smartphone industry and its distinctive intelligent ecosystem are the cornerstones of confidence in their automotive venture.

As a first-time car manufacturer, Xiaomi has always emphasized its technological approach. At last year’s tech conference, Lei Jun personally introduced a slew of state-of-the-art features and premium equipment available on the Xiaomi SU7. Notable inclusions were Xiaomi’s self-developed high-speed performance engines, such as the HyperEngine V8s, and the HyperEngine V6/V6s super electric motors, boasting performance comparable to V6 and even V8 internal combustion engines. For batteries, the standard model features a 73.6 kWh LFP battery with an official CLTC range of 700 km, and it can be charged for 350 km of range in just 15 minutes. Such specs are highly competitive in the current new energy vehicle industry.

Moreover, beyond the car’s inherent selling points, what’s particularly exciting is Xiaomi’s “Human-Car-Home” ecosystem, centered around the vehicle. Xiaomi Group’s recent announcement for the last quarter and the full year of 2023 revealed that Xiaomi phones have maintained a top-three global position for three consecutive years, with monthly active users reaching 641 million. Additionally, the number of IoT devices connected to its AIoT platform has grown to nearly 740 million. To accompany its new automotive division, Xiaomi has upgraded its strategy to “Human-Car-Home Full Ecology” and unveiled a new operating system, Xiaomi HyperOS. The strategy’s core is to link smart devices and cars, leveraging their strengths and the capability for multi-device interconnection to provide users with a convenient travel experience. With the addition of Xiaomi cars, the “Human-Car-Home Full Ecology” will begin to form a fully integrated loop.

Xiaomi’s strong brand user base is something most car manufacturers cannot match, including Huawei, which has not manufactured cars itself and thus doesn’t engage users across smartphones and smart homes to the extent that Xiaomi does. Lei Jun even stated his ambition to adapt Xiaomi cars to cater to Apple users, demonstrating a “tech giant’s approach.” Xiaomi’s car merchandise is already on sale even though the SU7 has yet to be delivered – a sign of how the brand is building and treating its business model with a ‘car-home ecosystem’ mindset. Additionally, the Xiaomi SU7 is set to incorporate local deployment of the MiLM-1.3B voice interaction model. While intelligence is a strength of Xiaomi cars, in today’s increasingly competitive smart car market, Xiaomi has yet to fully distinguish its lead in intelligence and uniqueness – an area Xiaomi is likely to focus on moving forward.

The Road Ahead: Xiaomi’s Strategy to Break the Mold

Despite the roaring start, Xiaomi cannot afford to rest on its laurels; the EV market is intensely competitive, and rivals eyeing Xiaomi’s market share view the company as a thorn in their side. The tactical maneuvers competitors may undertake to challenge Xiaomi are likely to be highly targeted, and the company’s true test is just beginning.

Firstly, with many automakers pushing for rock-bottom prices, Xiaomi’s cost advantage is not as clear-cut as it might seem. In recent months, consumer anticipation around Xiaomi’s car pricing was mainly due to a disconnect between Xiaomi’s publicity and market trends. On January 21, 2024, Lei Jun said in an interview, “Xiaomi cars can match the performance of traditional combustion engine luxury vehicles worth two to three million yuan, so the prices of 99,900 yuan, 149,900 yuan, or 199,900 yuan are just jokes.” As such, Xiaomi positioned its car as a mid-to-high-end vehicle. However, since the Lunar New Year of 2024, the EV industry has been embroiled in a fierce price war. On March 1st, automakers such as Chery, Ciwei, and Lantu announced price cuts. BYD even launched several “Honor Edition” models with a slogan promoting the cost benefits of electric over petrol. In this context, competitors in the 200,000 yuan mid-to-large sedan category, much like Xiaomi’s vehicles, began slashing prices to survive. For instance, in late February 2024, Jidu Auto released a new model of the RODIUS, which with enhanced configurations, including standard LIDAR, the 8295 chipset, and 800V high-voltage system, was priced at only 269,900 yuan. When compared with older models such as the 2023 Tesla Model 3, Xiaomi cars indeed offer a cost-performance advantage. However, against 2024 models like the new RODIUS, Xiaomi’s price edge is not as distinct.

Secondly, with a surge in orders, whether Xiaomi can keep up with production is also questionable. Public data indicates Xiaomi’s car factory is built in two phases: the first has an annual capacity of 150,000 vehicles and was completed in June 2023, while the second phase is planned to start in 2024 and finish in 2025, culminating in a combined capacity of 300,000 vehicles. It is projected that by March 2024, Xiaomi’s monthly output will be approximately 4,000 vehicles, with production ramping up by the end of April and a two-shift production system commencing in June, aiming to manufacture about 70,000 vehicles that year. In short, Xiaomi’s sales ceiling for 2024 is roughly 70,000 vehicles, with expectations to hit 300,000 vehicles by 2025. Even though Xiaomi’s pre-orders have already surpassed 50,000 units, most consumers may have difficulty receiving their cars in the short term. With companies like NIO, Xpeng, and BYD reigniting price wars, it remains to be seen whether the “hard to deliver” Xiaomi cars can maintain their allure over time.

Lastly, for the long term, Lei Jun mentioned that the next decade will belong to intelligent new energy vehicles. As a tech company, intelligence should be Xiaomi’s forte; however, Lei Jun did not exceedingly emphasize on intelligent driving features during the release, prompting speculations about Xiaomi’s capabilities in smart driving. In an era where City NOA has become standard equipment for cars around the 200,000 yuan mark, smart driving capabilities are a significant factor influencing consumer purchase decisions. Xiaomi’s ability to excel in this area will be a testament to its success.

Clearly, Xiaomi’s path in car manufacturing is not all smooth sailing. The company must maintain competitive pricing and continuously improve brand value and product quality to cope with fierce market competition and industry changes. Xiaomi’s success will hinge on how well it balances these challenges. Regardless of the outcome, Xiaomi’s foray into the automotive industry is off to a promising start.

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