One of the technological highlights of 2024 is the Xiaomi SU7, the first car from the Chinese brand. Its significance lies not only in its debut vehicle but also in its strong competitive presence. The SU7’s capabilities even surpass those of rivals priced three times higher.
The key question surrounding the Xiaomi SU7 is how it went from concept to commercial launch in less than three years. This is especially intriguing given that Apple had to cancel its own car development project after a significant investment in time and resources. Even Xiaomi CEO Lei Jun was “very shocked” by Apple’s decision.
So, how did Xiaomi mass-produce a car in just three years? We asked industry experts.
Idiosyncrasy and Scale
Brad Templeton is a Canadian software engineer and autonomous mobility consultant who worked at Waymo, Google’s self-driving car company, in its early days. He provides the first clue: China isn’t the U.S. or Europe.
“The Chinese don’t operate by the same rules and schedules that Western automakers have tended to follow, and they have a different supplier system as well,” he says.
These differences stem from government support for companies that drive technological innovation and export globally. This support includes financial incentives and more lenient regulations aimed at fostering the development, production, and marketing of new products.
However, there are additional factors at play related to lead times. John Helveston is a professor in the Department of Engineering Management and Systems Engineering at George Washington University and specializes in China’s electric vehicle industry. He tells Xataka On, “[It’s] easier to make a Ferrari than a Ford.”
Helveston clarifies that he isn’t comparing the SU7 to a Ferrari. Rather, he’s addressing the concept of scale. “To pull together the resources to make a car in relatively smaller quantities from scratch is not near as difficult as mass producing them for many, many years with little to no defects,” he says.
In simpler terms, while it’s commendable that Xiaomi has reached the initial stages of commercialization, the company’s long-term success as a car manufacturer remains to be seen.
“Going from zero to production in three years is certainly an achievement, but the longevity of Xiaomi’s success is something we will have to wait to observe. When you mass produce a complex product like a car, the after-sales performance is the important part to watch. How many defects are present across the produced fleet? How many recalls occur in the next 2-5 years? How long will it take them to design and release a new model, and are they learning from any mistakes they may have made in this round?” Helveston points out.
In the end, only time will tell whether Xiaomi can maintain a strong performance as an automaker. “The auto industry is a tough one, and success is usually measured in years of existence, not speed to first launch. In short, while, yes, three years is an impressive feat, it isn’t necessarily a measure of success. I’ll have to wait and see how ‘good’ those cars are before I judge this feat as truly noteworthy,” Helveston adds.
A Lot of Groundwork and Beijing Auto
Bill Russo is the CEO and founder of Automobility, a strategy consulting firm focused on the automotive sector, particularly in China. He’s also co-author of the book Selling to China. In his opinion, Lei’s professional experience prior to becoming Xiaomi CEO is crucial in understanding the company’s success with the SU7.
“Actually, Lei Jun started investments into the auto industry for a long time before that three year period through his own venture capital firm as well as through Xiaomi,” he says.
Lei’s investment fund, Shunwei Capital, has made significant investments in numerous companies, such as the self-driving car startup Momenta in 2018. It’s also invested in almost 100 companies related to electric vehicles, including Jiangxi Ganfeng Lithium (a lithium producer), battery manufacturer CATL, and automakers like Xpeng and NIO. This strategy has allowed Lei access to some of the best components and technologies available in the market.
Moreover, Russo points out the differences in operational pace between tech companies and traditional automakers. “Tech firms like Xiaomi typically work with a faster clock speed than traditional carmakers,” he says.
According to Russo, another important factor is Beijing Auto, a state-owned company where several manufacturers produce their vehicles. This partnership has enhanced Xiaomi’s agility in both production and bureaucratic processes.
“They also leveraged existing plant capacity from Beijing Auto to save time and capital investment by using existing factory infrastructure. This also allowed them to avoid wait time to secure the license to produce the SU7,” Russo explains.
Xiaomi has used several resources to develop at a pace that likely exceeds competitors’ expectations, especially for a newcomer to the automotive field. However, the biggest challenge remains maintaining success, gradually introducing new models, and ensuring that SU7 buyers are inclined to purchase from the brand again in the future. For now, Lei has shifted his focus from smartphones to cars. He clearly means business.
In the meantime, Xiaomi’s initial achievement in the automotive industry is unquestionable.
Image | Xiaomi
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