Xiaomi Entered EV Market ‘Due To US Sanctions’

The founder of smartphone maker Xiaomi has said his company’s addition to a US Defence Department blacklist in January 2021 was behind his decision to enter into China’s highly saturated electric vehicle market.

Xiaomi founder and chief executive Lei Jun spoke for the first time of his key motivation for entering the EV market in a three-hour annual speech on Friday.

Hearing the company had been added to the blacklist forced him to rethink the future of the company, Lei said.

The company was blacklisted in the final days of the Donald Trump administration along with a number of other companies alleged to have ties to China’s military, but was removed from the list four months later after Joe Biden took over.

Strategy rethink

Its presence on the list made it illegal for American investors to hold shares in the company.

Xiaomi, which started off making low-cost smartphones, announced in March 2021 that it would launch an EV subsidiary, two months after being added to the blacklist.

The company launched its SU7 electric sedans in March and has delivered 30,000 of the vehicles so far.

Lei said at the SU7 launch the cars were being sold at a loss with an aggressive starting price of 215,900 yuan ($29,700, £23,000).

In his speech he said the company turned down venture capital funding and instead put $10bn of its own funds into the business over 10 years.

That included the construction of a 5.5bn yuan, 718,000 square metre EV factory in Beijing.

The factory went onto double shifts in June as it ramped to meet its maximum delivery target of 120,000 vehicles this year.

EV launch

Xiaomi has said it is on track to meet its minimum delivery target for the year of 100,000 vehicles by November.

Tesla sold 603,664 vehicles in China last year by comparison.

The EV market in China is highly competitive with numerous start-ups and established companies vying for share.

Huawei, which has been under US sanctions since 2019, also started an EV venture called Aito with car manufacturing partner Seres and saw sales of its first offerings surge in the final quarter of last year.

Xiaomi last week showed a prototype hyper-sports version of its SU7 called the SU7 Ultra, offering some 1548 horsepower, or more than double the 673hp of the SU7 Max, its most powerful consumer model.