Tesla’s Chinese competitors continue to multiply in 2023. This new car will have a difficult task to find a place in the crowded Chinese market.
Competition will be tough for Xiaomi
In March 2021, Xiaomi unveiled an electric vehicle development plan. A year later, the company announced an investment of 10 billion yuan (1.4 billion euros) over 10 years. In October last year, the company’s founder and CEO, Lei Jun, said he plans to ship more than 10 million vehicles a year. A very ambitious goal: today, the largest Chinese brand, BYD, sells 1.8 million models worldwide every year.
The car must be sold at a price between 35,000 and 40,000 euros. In comparison, the Tesla Model 3 is sold in the Chinese market for 31,000 euros. As for the autonomy of the Xiaomi car, it will benefit from BYD lithium batteries, which are considered the best in China. The future automaker also plans to include Lidar sensors, Xiaomi already has a company specializing in this area, which should soon apply for an IPO in the US. The car will receive Orin chips from Nvidia, which will allow you to install entertainment and driver assistance software. Its power may be used by Xiaomi in the future for autonomous driving.
According to Shanghai-based independent analyst Gao Shen, who was contacted by SCMP, “Xiaomi’s first model will not be considered a success unless it outperforms the Model 3 in terms of performance and price.” According to him, the market hopes that the new Xiaomi car will significantly reduce the shares of Elon Musk’s company, which now stands at 12%.
Like other big Chinese tech companies like Baidu or Huawei, Xiaomi is looking to expand its lines of business. Electric vehicles are considered among the most profitable by 2030. By the beginning of the next decade, three out of five new cars in China are predicted to be electric.
These estimates cause a real stir in this market. Today, there are more than 200 manufacturers who do not hesitate to spend billions of RMB on research and development to make a name for themselves. However, China’s three main EV manufacturers, Nio, Xpeng and Li Auto, have yet to turn a profit since their launch in the 2010s.
For this year, experts predict sales of electric vehicles will grow by 30% compared to 2022 and will reach 8.4 million units in China. Growth is well below sales growth between 2022 and 2021, with the market jumping 114%. This slowdown may be due to two main concerns: fear of an economic recession in China and the future removal of government environmental bonuses for hybrid and electric models.