Four years ago, Xiaomi was a successful smartphone business and its car business consisted of nothing more than a plan approved by the board and a vow by billionaire founder Lei Jun to make it work.
This year, the company’s assembly lines are set to turn out 300,000 vehicles, and it has already shipped more than 135,000 in less than a year on the market. The wait list for its first car, the SU7, a Porsche look-alike that starts at around $30,000, is around half a year, and Xiaomi’s Hong Kong-listed shares have more than tripled in a year.
Lei has done what Tesla, Apple, Ford Motor and General Motors have been unable to do: create a hit, inexpensive electric vehicle—and fast. Tesla took more than a decade from its founding to reach the 300,000-vehicle production level. Fifteen-year-old EV truck maker Rivian made one-sixth that number last year.
Lei, a 55-year-old serial entrepreneur, is a household name in China with tens of millions of followers on social media and a Steve Jobs-like flair for hourslong presentations where he touts his products. His latest was on Thursday, where he showed off a new $73,000 version of his car that zips from zero to 60 mph in less than two seconds.
He has never lived outside China but from a young age harbored admiration for U.S. tech titans. He has said he was inspired by a 1999 book, “Fire in the Valley,” that described Jobs and other Silicon Valley personal-computer pioneers.
He has been called “Lei Jobs” for his casual outfit with jeans resembling the Apple co-founder’s. In addition to marathon livestreams, he has posted more than 20 TikTok-style short videos this year—sometimes pitching products, sometimes just chatting.
Xiaomi CEO Lei Jun spoke at the launch of the Xiaomi SU7 Ultra in Beijing on Thursday. - andres martinez casares/Shutterstock
Lei has carved out his place in an overcrowded Chinese EV landscape that has come to dominate the global industry. Chinese companies manufacture more EVs than all other carmakers in the world combined, selling mostly to local consumers who—unlike Americans—have flocked to EVs and plug-in hybrids. China’s biggest EV maker, Warren Buffett-backed BYD, now sells more cars than Honda.
American automakers such as Ford and GM, by contrast, have scaled back ambitious EV expansion plans, hampered by high battery costs and the slow rollout of EV chargers. Ford’s chief executive, Jim Farley, has said China’s widening lead poses an “existential threat.”
‘The Apple of China’
Xiaomi—pronounced SHAU-mee—sells its cars almost entirely in China. Other Chinese EV makers, though, are piling into global markets, sparking a backlash that has led the U.S., European Union, Brazil and other nations to impose tariffs.
While their overall share is still small, Chinese EV makers are grabbing a bigger chunk of the car market in Europe and Southeast Asia. One sign of the times: The bestselling car brand last year in Singapore, long a bastion for Japanese carmakers led by Toyota, was China’s BYD.
Farley, Ford’s CEO, had a Xiaomi SU7 specially shipped to the U.S. and spent six months last year driving it.
“It’s fantastic,” Farley said on an October podcast. “I don’t want to give it up.” The maker of the sporty sedan, he said, was “the Apple of China.”
Xiaomi’s rise could probably happen only in China. Chinese EV makers control nearly every aspect of manufacturing and can turn to domestic suppliers for most of their materials and parts. That makes their operations more efficient than those of non-Chinese car manufacturers, which depend on a global supply chain that is susceptible to delays, price fluctuations and logistical hiccups.
There’s a wait list for the Xiaomi SU7 vehicle, pictured in November. - Du Jianpo/VCG/Getty Images
Chinese companies also enjoy government support and the freedom to put aside the quest for short-term profits to satisfy investors.
The local government of Beijing, eager for a hometown carmaking champion, pulled strings to fast-track the central-government approvals needed to launch Xiaomi’s carmaking, according to people familiar with the matter. Whatever Lei needed, he could readily find it in his country—including the thousands of construction workers needed to put up a plant the size of 135 football fields in 19 months.
“China as a manufacturing base for cars is simply impossible to match in scale, supply chains, materials, regulatory speed and intensity of competition,” said Michael Dunne, who runs a consulting firm focused on the China auto market, in a recent blog post.
EV origins
The Xiaomi smartphone—still the company’s core product, accounting for about half of its revenue—was an attempt to bring a less-expensive version of Apple’s iPhone to the masses. Lei built Xiaomi into the world’s third-largest smartphone maker by unit sales after Apple and Samsung.
By the mid-2010s, Apple was researching a possible Apple car, and Xiaomi executives repeatedly pressed Lei to consider the idea as well, say people who worked with him. He said making a car looked too risky and costly.
But in January 2021, Lei was startled when a friend called to say that the U.S. Defense Department added Xiaomi to a list of companies that support China’s military, which would prohibit Americans from investing in the company. The designation was later removed, but Lei said in a speech last year that the experience prompted him to reconsider cars as a way to diversify.
There was another concern: Some of Xiaomi’s top talent had defected to EV companies.
Xiaomi’s board met in March 2021. Lei told directors that the car had become an extension of people’s digital lives. “It’s the future and Xiaomi must be part of it,” he recalled saying at the time. Lei told directors the project would cost some $10 billion.
They decided to say yes—on the condition that Lei personally lead the project.
Lei Jun checked out cars of various brands at the Guangzhou Auto Show in November. - Costfoto/NurPhoto/Getty Images
Cities across China vied to attract Xiaomi’s car factory, from Lei’s home province in central China to Tesla’s host city, Shanghai. Beijing’s city government, like the others, offered help with getting land and tax benefits, but it had a trump card: pull with the central government, which had begun holding back approvals for new EV makers to avoid oversaturation. Xiaomi got the go-ahead.
Lei told his team to speak to potential customers one-on-one rather than rely on market surveys. He was sometimes spotted in Xiaomi’s underground garage, inspecting cars he had never driven. He would approach the owner, strike up a conversation about its pros and cons, and find a way to borrow it for a day or two.
He also insisted that all the executives in Xiaomi’s auto division, himself included, take professional racing training.
His conclusion: People wanted an affordable and sporty sedan, costing less than a Tesla and with a range of more than 400 miles. And it must connect seamlessly with Xiaomi’s smartphones and other smart devices.
Barely any profit
Lei turned to his network of contacts developed through making smartphones as well as Xiaomi-brand home appliances. Xiaomi and Lei had invested in dozens of companies with technology critical to EVs, including autonomous-driving systems, batteries and automotive chips, according to corporate filings.
Lei said the founders of fellow EV startups Xpeng and NIO offered him tips in the hopes that Xiaomi could give the entire EV industry credibility.
To keep the price down, Lei decided Xiaomi should make barely any profit on the cars to start and hope for future profits by selling car software and other services, according to people with knowledge of his strategy. Several suppliers said they felt squeezed, but the firms Lei was pressuring often owed their start, in part, to his investments or early support. Plus, association with Lei was a badge of honor that could open doors with other clients.
Drawing on its R&D team of tens and thousands of people and profits from the smartphone business, Xiaomi invested in production technology that could save money in the long run.
To assemble a car at Xiaomi’s factory, more than 700 robots work in unison. - VCG/Getty Images
Foremost was an idea borrowed from Tesla. Xiaomi called it the hypercasting machine, which employs large-scale, high-pressure aluminum die-casting to create car frames. Automakers traditionally forge dozens of parts separately and weld them together. The Xiaomi machine, several stories high and two basketball courts long, creates a car frame as a single piece in 100 seconds, taking molten metal heated to 1,300 degrees Fahrenheit and dunking the shape into 45-degree water to harden it.
To assemble the car, more than 700 robots work in unison in what is known as a dark factory—so automated that, in theory, the lights could be shut off.
With a following of tens of millions on social media, Lei used his personal brand to market the car, bypassing conventional advertising. The wait list was already ballooning when the SU7 went on sale last spring.
Lei has faced criticism for the car’s resemblance to a Porsche. In an interview with local media in April, Lei said it was common for cars to resemble one another and pointed to distinctive features in the SU7 such as the headlight design. “But people are saying we look like McLaren,” Lei said wryly.
Recently, Lei was spotted driving a Ferrari Purosangue, a $400,000 Italian SUV, which prompted fans to speculate he might create a more affordable version of the Ferrari. Wan Ni, a BMW 3 series owner, said she wanted to go electric because of high gas prices and was planning a test drive of the Xiaomi SU7, drawn by the design and vibrant colors.
Lei says women account for half of Xiaomi car customers and are driving the brand’s growth.
He recently said he doesn’t want Xiaomi perceived as merely a low-price brand.
On New Year’s Eve, Lei streamed a 4 ½-hour show live on social media, showing off his leviathan casting machine and talking about how he wants to push the brand toward the higher end, as Apple has done with its products. Xiaomi is still a fraction of the size of the world’s top automakers that make millions of vehicles a year.
“My current priority is to simply get a seat at the table,” he said. “Unlike Steve Jobs, I’m more pragmatic and willing to show humility.”
Lei Jun looks at Chinese startup Li Auto’s Li L6 SUV during a car show in Beijing in April. - VCG/Getty Images
