• By Mariko Oi
  • Business reporter

Image source, Getty Images

Image caption,

The SU7 is the first electric car from technology giant Xiaomi

Chinese smartphone maker Xiaomi will launch its first electric vehicle (EV) and start taking orders on Thursday.

CEO Lei Jun said this week that the Speed ​​Ultra 7 (SU7) would cost under 500,000 yuan ($69,186; £54,836).

This move will pit the tech giant against rivals such as Tesla and BYD.

Xiaomi’s entry into the electric car market comes as sales growth has slowed globally, leading to a price war.

The company hopes the SU7’s shared operating system with its phones, laptops and other devices will appeal to existing customers.

Xiaomi is the third largest smartphone seller in the world with a market share of around 12%, according to research firm Counterpoint.

The car will be made by a unit of state-owned carmaker BAIC Group at a factory in Beijing that can produce as many as 200,000 vehicles a year.

“While getting this far is an achievement in itself, the ultimate achievement would be to demonstrate that there is a consumer market for Xiaomi as a smart EV brand,” Automobility’s Bill Russo told the BBC.

Mr Russo added that Xiaomi’s entry into the car market reflects confidence “in the relevance to their brand” in China, while Apple did not see enough potential in the EV market outside China.

Xiaomi has said it will invest $10 billion in its vehicle sector over the next decade.

“The Chinese EV market is very mature and creates a very stable ecosystem for EV manufacturers,” said Abhishek Murali of research firm Rystad Energy.

“For example, the battery supply chain is very strong and the charging network in the country is also growing to meet the growing EV feed.”

The launch of Xiaomi’s first car comes at a time when the price war in China’s EV market is heating up.

Tesla, which is led by multi-billionaire Elon Musk, has cut the cost of its cars in China by thousands of dollars in recent months after local rivals such as the world’s best-selling EV maker BYD slashed prices.

The world’s largest auto market is already overcrowded, so Xiaomi is one of the few new potential entrants to win regulatory approval as officials try to curb a flow of new entrants.

Earlier this week, BYD posted record annual profits but said growth had slowed towards the end of last year.

Shanghai-based electric car maker Nio on Wednesday cut its forecast for first-quarter deliveries as consumers tightened their spending as China’s economic growth weakens.

American EV giant Tesla will announce its delivery numbers for the first three months of 2024 next week.

At the same time, governments around the world are opposing the import of foreign-made electric vehicles.

On Tuesday, Beijing launched a dispute settlement proceeding against the US at the World Trade Organization to challenge “discriminatory subsidies” under the US Inflation Reduction Act.

Meanwhile, the European Union has launched an investigation into whether Chinese government subsidies have helped the country’s electric car makers undercut European-made models.

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