The Evolution of Xiaomi and Its Venture into EVs

Overview

Xiaomi has been a pioneering force in the smartphone industry, setting new standards for Chinese tech companies. However, as the market matured, Xiaomi shifted its strategy and announced a bold move to enter the electric vehicle (EV) market in March 2021. This document traces Xiaomi's rise, strategic shifts, challenges, and its ambitious entry into the EV landscape.

Lei Jun and Kingsoft

• Lei Jun: Cofounder, CEO, and Chairman of Xiaomi.
• Early career at Kingsoft, a leading software company in China.
• Met Qiu Bojun, Kingsoft's legendary founder known for developing China's first widely used word processor, WPS.
• Rose to be Kingsoft's CEO, resigned in 2007 for health reasons.
• Founded Xiaomi in 2010 with seven cofounders.

Xiaomi's Beginnings in Smartphones

• Launched MIUI, a custom Android interface, in 2010.
• Released the Mi 1 in 2011, a high-spec, low-priced smartphone.
• Revolutionized the market with online sales and viral marketing.
• Quickly grew to challenge both low-tier and leading brands like Samsung.

Challenges and Stalling Growth

• In 2014, valued at $45 billion but growth stalled in 2015.
• Competition from Oppo, Vivo, Huawei, and Apple intensified.
• Supply chain issues and clashes with suppliers like Samsung.

Strategic Shifts

Offline Retail Expansion

• Transitioned to offline sales with Mi Home stores.
• Aggressive expansion faced mismanagement issues.

Upscale Market Position

• Spun off Redmi to focus on higher-end products.
• Launched Mi 10 series in 2020, shifting to a mid-to-high-end market.

Ecosystem Development

• Created an ecosystem of smart products, like fitness bands and air purifiers, to drive store traffic.
• Invested in partner startups for innovative products.

Entry into the EV Market

• Aroused by US government sanctions, Xiaomi considered diversifying beyond smartphones.
• Formed a research group in 2021, leading to the decision to enter the EV market.
• Positioned the EV industry as ripe for modular innovation similar to PCs and smartphones.

Competitive EV Landscape

• Faced established giants and nimble startups like BYD, Tesla, NIO, and more.
• Partnerships and technological advancements were key to survival.

Announcement and Launch

• March 2021: Announced a $10 billion investment over 10 years into EV development.
• December 2023: Launched the SU7, a sleek mid-size sedan.
• Integrated the EV into Xiaomi’s broader ecosystem.

Market Reception and Future

• Strong initial sales with 50,000 orders in the first 27 minutes of open sales in 2024.
• Ended 2024 with nearly 140,000 SU7 deliveries.
• EVs contributed to product diversification and revenue growth.

Conclusion

• Xiaomi drew comparisons to Apple in terms of innovation and brand loyalty but took bolder steps into EVs.
• Critics of Apple suggest missing a significant opportunity in the car market.
• Lei Jun’s leadership and willingness to take risks have been pivotal in driving Xiaomi’s ambitious expansion.