BEIJING – Chinese language smartphone firm Xiaomi believes it is recognized a shopper area of interest that can pay up for its upcoming electrical automobile in a fiercely aggressive market.

“We predict it is a good place to begin for us within the premium section as a result of we’ve got already 20 million premium customers in China based mostly on the smartphone,” Xiaomi Group President Weibing Lu instructed CNBC forward of the automobile’s worldwide reveal on the Cell World Congress in Barcelona, which kicks off Monday.

“I believe the preliminary purchases will probably be very overlapped with the smartphone customers.”

He stated the corporate thought-about a spread of worth factors, from entry degree to luxurious, for a automobile it is spending $10 billion to develop.

Xiaomi revealed its SU7 electrical automobile in China in late December however has but to announce a particular worth. Lu stated a proper launch would come “very quickly” and indicated home deliveries would begin as quickly because the second quarter.

The Beijing-based firm is a market chief within the smartphone business, rating third in international shipments behind Apple and Samsung, based on Canalys. Knowledge from the tech market evaluation agency confirmed that Xiaomi captured about 13% of the worldwide market and shipped 146.4 million telephones in 2023.

The corporate in recent times has additionally branched out into TVs and residential home equipment, that are smartphone-controllable and infrequently sport a modern, white design. Most of Xiaomi’s income is from telephones, with slightly below 30% coming from home equipment and different shopper merchandise.

Xiaomi has typically been recognized for extra affordably priced merchandise. That is raised doubts about whether or not it may well promote an electrical automobile – promoted as a rival to Porsche – in a market the place even established EV giants like BYD are slashing costs.

Lu stated Xiaomi’s strategy is predicated on ecosystem improvement, in addition to a smartphone “premiumization” technique launched in 2020 that has since “achieved excellent progress.”

In an earnings name in November, he famous the corporate benchmarked its newest Xiaomi 14 cellphone to the iPhone 15 Professional, and claimed the brand new gadget was “overtaking” Apple‘s, based on a FactSet transcript.

Nonetheless, additionally consuming into Apple’s market share is Huawei, whose widespread Mate60 Professional begins at 6,499 yuan ($900), between the value vary of the Xiaomi 14 Professional and iPhone 15 Professional.

Huawei noticed smartphone shipments within the mainland surge by 47% year-on-year within the fourth quarter, placing it forward of Xiaomi, based on Canalys.

Constructing on its tech capabilities as a telecommunications and smartphone firm, Huawei has swiftly develop into a participant in China’s electrical automobile market.

The corporate launched the Aito automobile model in late 2021 and sells its HarmonyOS working system and different software program to a number of auto producers. Huawei additionally promotes a few of these vehicles, together with the premium-priced Aito M9 SUV, by exhibiting them in its smartphone shops.

Apple has but to formally enter the electrical automobile market regardless of reviews it has been engaged on one. Within the fall, Chinese language startup Nio launched its personal Android smartphone.

Xiaomi launched a brand new working system within the fall known as HyperOS.

It claims the system contains a man-made intelligence part that may study from person habits to robotically alter related gadgets, corresponding to residence lighting.

“Sooner or later, we predict it isn’t [that] we give the instruction to the gadget however truly [that] the gadget can perceive your wants and meet your wants proactively,” Lu stated.

The corporate calls the technique “human x automobile x residence.”

HyperOS is just obtainable on Xiaomi’s 14 cellphone proper now. However the system is due for rollout within the coming months to home equipment and the forthcoming automobile, Lu stated.

Spending billions of {dollars} on the ecosystem and the automobile are all a part of Xiaomi’s efforts to outlive in an business the corporate expects will develop into much more aggressive.

In 10 or 20 years, the electrical automobile market will doubtless be similar to that of smartphones at the moment — with the highest 5 manufacturers holding about 70% of the market, Lu stated. “With out big funds, we do not suppose we will be the ultimate gamers.”

After the primary automobile, the subsequent step for Xiaomi is to construct its personal factories and make the important thing elements in-house, Lu stated.

Xiaomi earlier this month introduced its new smartphone manufacturing facility in Beijing had began operations, with manufacturing capability for greater than 10 million gadgets.

For the SU7 automobile, Chinese language authorities releases at the moment listing a subsidiary of state-owned Baic Group because the producer. Xiaomi instructed CNBC it did not have public info to share for the time being.

Much like an rising variety of Chinese language corporations, Xiaomi is wanting abroad for future progress. For the final six years, between 40% to 50% of the corporate’s income got here from exterior mainland China, primarily Europe and India.

Lu, who joined Xiaomi Group in 2019, can be president of its worldwide enterprise division and stated he spends “a whole lot of time” on the abroad market.

“It will likely be the amplifier of Xiaomi’s enterprise,” he stated, noting the abroad shopper electronics market is about triple the scale of China’s.

As a part of his journey to Barcelona for MWC, Lu stated he is visiting Paris, together with Africa and the Center East.

He acknowledged the political atmosphere makes it harder for Xiaomi to go international, however stated the corporate can overcome these challenges by increase in-house capabilities and diversifying the enterprise globally and by product.

As for the automobile, Lu declined to specify a timeframe for its abroad launch, however stated it sometimes takes two to a few years.