Hong Kong – Lei Jun, founder and chairman of Xiaomi, the only tech company to have successfully diversified into carmaking, couldn’t resist.

Speaking at a triumphant launch event in Beijing in June for Xiaomi’s second electric vehicle, a long-anticipated SUV, Mr Lei pointedly mentioned Apple, which spent a decade and US$10 billion (S$12.7 billion) trying to make a car before giving up in 2024.

“Since Apple stopped developing its car, we’ve given special care to Apple users,” he said, noting that owners of the US giant’s iPhones would be able to seamlessly sync their devices to Xiaomi’s vehicles.

The not-so-subtle dig was followed by a flex: Xiaomi then said it had received more than 289,000 orders for its new sport utility vehicle within an hour of its announcement, more than its first EV, a sedan launched in March 2024.

Xiaomi succeeding where Apple failed has burnished Mr Lei’s reputation, made his company one of the most valuable in China and shaken up both the tech and automobile industries.

The collapse of Apple’s moonshot car programme has only underscored the effectiveness of Xiaomi’s grounded approach, which took inspiration from proven designs from Tesla and Porsche Automobil Holding while staying true to the affordable ethos that’s made it a cult brand for Gen Z consumers.

Crucially, it also launched into the most fertile EV ecosystem in the world – China. With state subsidies, existing charging infrastructure and a ready made supply chain, Xiaomi had a structural tailwind Apple lacked.

Xiaomi declined to comment for this story.

Mr Lei and Xiaomi’s “charisma, brand recognition and ecosystem cannot be underestimated,” Yale Zhang, the managing director of Shanghai-based consultancy Automotive Foresight, said. “It’s a big influence on young consumers who have filled their homes with Xiaomi products. When it comes time to buy an EV, they naturally think of Xiaomi.”

Recruitment tactics

Xiaomi’s public narrative is that Mr Lei and his team learned by visiting multiple Chinese automakers, including Zhejiang Geely Holding Group and Great Wall Motor, and talked to more than 200 industry experts in some 80 meetings.

The reality is also that he used Xiaomi’s reputation as an innovative consumer behemoth to get close to China’s large carmakers and pick off their top talent. Geely and its billionaire founder Li Shufu welcomed Mr Lei to the automaker’s research institute in Ningbo in the months leading up to Xiaomi’s announcement that it would enter the car business to discuss topics, including potential collaboration.

It’s Geely lore that Mr Lei added the WeChat contacts of many staff at the institute, including then-director Hu Zhengnan. Mr Hu later joined Shunwei Capital Partners, the investment firm co-founded by Mr Lei.

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Mr Hu, known for his love of the German luxury marque Porsche, was one of the team members credited as being instrumental to developing Xiaomi’s EV business, Mr Lei said at the SU7 launch in 2024. He added that Mr Hu left his previous employer after his contract ended.

Other executives who joined Xiaomi came from companies including BAIC Motor, BMW, SAIC-GM-Wuling Automobile – the General Motors joint venture with SAIC Motor and Wuling Motors Holdings – and auto supplier Magna Steyr.

Besides assembling top Chinese automaking talent, Mr Lei made a prescient bet on investing in a self-controlled supply chain – insulating Xiaomi’s operation from manufacturing vagaries. This came from painful lessons learned in Xiaomi’s early smartphone-producing days, when external suppliers would cut off components unpredictably.

With the 10 billion yuan (S$1.8 billion) it committed to the first phase of its EV venture, Xiaomi also built its own factory, rather than going down the contract manufacturing route that some Chinese makers, including Nio and Xpeng, did when they started out.  

“Among tech companies that now build electric vehicles, those who previously had hardware products seem to be more successful than those who only had software products or information services,” said Paul Gong, UBS Group’s head of China autos research.

Copycat allegations

Despite its early success, there are many who argue Xiaomi’s one hit car is copied from elsewhere – and that a sole successful vehicle does not a successful auto producer make. Mr Lei’s aggressive approach has also raised hackles in China’s car industry.

Yu Jingmin, vice president of SAIC’s passenger car division, reportedly described Xiaomi’s approach as “shameless” in a critique of the SU7 resembling Porsche. The SU7 has been colloquially dubbed “Porsche Mi” by netizens.

Xiaomi’s design team, led by former BMW designer Li Tianyuan, has defended the SU7’s aesthetics, emphasizing that the choices were driven by aerodynamic efficiency and performance benchmarks.

In late March, there was another setback after a fatal accident involving the SU7. The car had its advanced driver assistance technology turned on before the crash, which afterward led to authorities reining in the promotion and deployment of the technology.

The usually vocal Mr Lei kept a low profile on social media for more than a month post the March accident. He returned to more active engagement in May with a missive that said this period of time was the most difficult in his career.

Fortunately for Xiaomi, its consumer base is sticky. Known as “Mi Fans,” the loyal customers have played a pivotal role in the company’s rise. Xiaomi cultivated this fandom early on by prioritising user feedback and the grassroots allegiance has helped it build strong brand equity, especially in China. The SU7 has remained a top selling model even after the accident in March.

Small scale

The EVs are also showing financial promise. Xiaomi posted record revenue for first quarter this year, driven by car and smartphone sales. Its EV division is expected to turn profitable in the second half of 2025, Mr Lei said in an investor meeting in June.

But even if the popularity of Xiaomi’s EVs can spring beyond the company’s devoted base, production is still on a much more boutique scale. China’s top car brand, BYD, sold around 4.3 million EVs and hybrids last year, many overseas, while Tesla moved about 1.78 million vehicles globally. Toyota Motor, the world’s No. 1 automaker, sold some 10.8 million vehicles and boasts a lineup of approximately 70 different models.

Mr Lei doesn’t seem to be prioritizing the mass market of below US$20,000 yet, which drives significant volume and is where BYD dominates, Automotive Foresight’s Zhang said. 

Without a lineup in that segment, Xiaomi cars will remain niche purchases for middle to higher-income consumers and Xiaomi may face the same risks as Tesla, which is seeing its sales slump exacerbated by a narrow consumer base and limited models.

Nonetheless, Mr Lei seems buoyed by Xiaomi’s early wins and is now looking at global expansion. Xiaomi will consider selling cars outside China from 2027, he said last week.

Success or otherwise, the European Union, the US and Turkey have all slapped tariffs on Chinese EVs, but Xiaomi wants to set up a R&D centre in Munich and may test sales starting in European markets such as Germany, Spain and France when the time is right, Chinese media 36Kr reported in April. 

“Xiaomi is a latecomer to the auto industry,” Mr Lei admitted on Weibo in June. But, he said, in a market driven by technology and innovation and the rising global influence of China’s EV culture, “there are always opportunities for latecomers.” BLOOMBERG

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