Xiaomi’s plan is in harmony with the Chinese government’s plan on encouraging the take up of electric vehicles. The Chinese government has invested billions of dollars in the development of EV infrastructure, battery technology, and subsidies for automakers to create a very conducive environment for new entrants. The company was able to get these incentives together with its production costs to launch the SU7 vehicle at $30,000, a price that is more convenient than that of some Western car manufacturers.

Despite the success, there are some issues with Xiaomi’s entry into the EV market. At present, the firm is losing money and its managers have stated that it will take time to become profitable. Lei Jun, the CEO of Xiaomi, pointed out that the company needs to sell between 300, 000 to 400,000 units of the SU7 to become profitable. This is a huge challenge given that the Chinese EV market is already very competitive and the various companies including Xiaomi, BYD, NIO and Li Auto are fighting for market share through price competition.

Xiaomi’s brief foray into the automotive industry also shows the broader industrial strategy of China. The country has been making significant investments in technological self-sufficiency in semiconductors and EV batteries. CATL and BYD are now global leaders in battery production, not only for Chinese automakers but also for Tesla and Volkswagen. This level of control of the supply chain is a key advantage to Chinese automakers versus their Western competitors who are still fighting to get key components because of global supply chain disruptions.

While the success of Xiaomi in the electric vehicle market has been applauded, Apple’s failure to launch an electric vehicle is a cause for concern to Western tech companies desiring to venture into the automotive sector. Apple’s EV project codenamed “Project Titan” faced strategic changes, leadership tweaks, and challenges in getting the factory. The company’s decision to walk away from the project reveals the difficulties of migrating from consumer electronics to automobile manufacturing on a mass scale.

The main challenge that Apple had was the company’s decision to build a fully autonomous vehicle. While Xiaomi developed smart features into a conventional EV, Apple wanted to change the rules of the game with a self-driving car. However, the technology for fully autonomous driving is still in the developmental stage and there are regulatory, safety, and technological issues that have not been addressed to enable widespread adoption. Apple’s visionary plan was simply too costly and unrealistic to bring to the market in a reasonable time.

Another issue was that Apple had no manufacturing experience in the automotive sector. The company is famous for its supply chain management in the smartphone market, but making a car is a completely different process. While smartphones can be built by contract manufacturers like Foxconn, cars need huge production facilities, rigorous safety tests, and a good network of suppliers. Apple was not able to get a partner who could build the car to the required quantity and with the quality that the company desired, which further delayed the project.

Xiaomi’s entry into the EV market also represents broader trends in the global automotive industry. With growing popularity of electric vehicles, more and more tech companies are planning to penetrate this segment of the market, regarding it as an extension of their main product portfolios. However, the struggles of Apple shows that success in the automotive industry is not only about technological competence but also requires a good supply chain management, productive production, and the capacity to deal with regulatory and market issues.

In the short term, Xiaomi has its challenges in expanding its EV business and achieving profitability. The company is moving into a market that is rapidly growing and is being entered by domestic and international competitors who are vying for a share of China’s EV market. Furthermore, the company must prove that it can sustain success in the automotive industry beyond its consumer electronics roots, an industry that is defined by reliability, safety, and brand reputation.

Despite these challenges, the company’s breakthrough in the EV sector is a clear demonstration of the company’s adaptability and creativity in a fast changing technological environment. It also provides a useful case study for other tech companies seeking to expand their business beyond their core operations. Even though Apple’s failure to launch an electric vehicle may imply that the transition is impossible for consumer electronics firms, Xiaomi’s success shows that with the right plan it is possible to break into the automotive industry and dispute established players.

In the next forward, everybody will be paying attention to Xiaomi’s journey as a global automotive market develops. Whether the company can keep up the pace and become a significant player in the EV market is yet to be seen, but for now, it has done something that even the biggest tech company in the world could not do – create a electric vehicle and make it work in a short amount of time.

By Keyeon Fan