Xiaomi Bets on Existing Strengths in its EV Foray

Xiaomi, which is currently the most successful Chinese smartphone OEM globally, has announced its entry into the electric vehicle (EV) market. The company will kick-start the project with an investment of 10 billion yuan ($1.5 billion) and expects to spend up to $10 billion over the next decade.

counterpoint xiaomi enters ev segment 10 billion
Source: Xiaomi

It is not Xiaomi alone, other smartphone OEMs are also looking to enter the EV market, which is poised for growth. For example, ZTE has announced its entry into the segment while Huawei and Chinese automaker SERES recently launched a Level 2 autonomous electric hybrid vehicle that uses Huawei’s solutions for smart cars.

Why Xiaomi and Other Smartphone OEMs are entering EV Segment?

Xiaomi, through its IoT strategy, has been investing in future growth drivers beyond smartphones, and EVs fall into this category. While on the outside, the automobile may seem like an unrelated business for Xiaomi to enter, but it is not the case thanks to two broad trends happening in the automobile segment ؘ– electrification and digitization. And the latter falls within Xiaomi’s competency.

Future cars will be more connected, will generate lots of data to be analyzed, will have greater processing power on the edge, and will have higher engagement with the driver, much like smartphones and other connected devices. And this is where Xiaomi will focus.

Over the years, Xiaomi has been building an ecosystem with smart devices, smart home and smart white goods. It will be looking to provide this digital ecosystem experience through cars as well. Further, it will be aiming to have control over the software and thus, streams of user data, on which it can build revenue models. Thanks to its smartphone and IoT business, Xiaomi has strong know-how on integrating software with hardware and building revenue models on top. It has a strong brand name with a large user base, which also gives it an advantage.

As far as the manufacturing of EVs is concerned, Xiaomi is likely to partner an ODM. Building manufacturing capabilities from scratch for automobiles would require massive investment, increase time-to-market and is outside Xiaomi’s core competence. Reportedly, Xiaomi is in talks with Great Wall (GWM) to use its plants to manufacture Xiaomi branded cars. Great Wall is China’s prominent SUV and pick-up truck producer.

counterpoint xiaomi ev segment great wall pickup truck
Source: motor1

On the other hand, competition in China’s EV market is heating up. GWM is facing challenges from rivals like NIO, Xpeng and Li-Auto. Established OEMs are losing share to start-ups. With Xiaomi’s collaboration, GWM has an opportunity to become an ODM and increase volumes in the segment. Besides, becoming an ODM for vehicle segments other than pick-up trucks and SUVs will give GWM an opportunity to grow scale with a less direct competition. Software and internet-based business models have not been a core strength of automakers (with the exception of Tesla), and this is another area where Xiaomi’s partnership can benefit GWM.

Xiaomi also has a long-standing relationship with Foxconn, which also announced its foray into the EV space.

Xiaomi has not revealed the price segment its EVs would cater to, but it will likely go after the mass market like with its smartphones.

China: Large Market Potential for EVs

China is one of the world’s largest EV markets. In 2020, the Chinese government imposed a mandate on automakers that at least 40% of their sales should be EVs by 2030. China has also been ahead in rolling out 5G. Close to two-thirds of the smartphones sold in China in February were 5G capable. The ultra-reliable and low-latency communication capability which 5G brings, would be suitable for the mission-critical applications like autonomous driving and connected cars. 5G will also be important in enhancing the overall digital experience of the driver. How fast the information is being transferred from sensors to car, from object to vehicle, or even from vehicle to vehicle, and how quickly it is being analyzed would be critical. This is where low latency of 5G can help. Further, 5G can help the AI in the car make faster and reliable decisions, thus enhancing user experience.

The government support, 5G availability and rising demand together make the EV segment a lucrative opportunity to bet on, and Xiaomi does not want to miss this.

Counterpoint’s Take

The EV market in China is booming, but also getting crowded. Tesla is setting early industry benchmarks, but challengers like NIO also have a head start and are gaining popularity. The first wave of growth is already underway. The market is only set to be more crowded in the future with other smartphone OEMs possibly following Xiaomi’s footsteps. Therefore, time-to-market will be crucial for Xiaomi’s success, and this is where landing the right partner will be important.

Looking at the bigger picture of Xiaomi’s IoT strategy, and its strengths in the hardware-based internet service business, we can find natural synergies with the smart automotive segment. Xiaomi has been able to build a successful business by democratizing the smartphone market by playing on lower margins and developing a software and ecosystem-based business model. It is aiming to do the same in the automotive segment as well.


Related Posts:

Varun is a Senior Analyst at Counterpoint Research based out of Gurgaon. In Counterpoint, he closely tracks mobile devices and ecosystem with a focus on Emerging Markets. He also tracks Global Refurbished Smartphone market. He started his career as a Consultant with Infosys Limited where he was able to identify strategic avenues for business growth through deep research and analysis of markets and companies in various domains. He holds a Master of Business Administration in Marketing from Institute of Management Technology, Ghaziabad and a bachelors degree from Coventry University, UK.

Term of Use and Privacy Policy

Counterpoint Technology Market Research Limited


In order to access Counterpoint Technology Market Research Limited (Company or We hereafter) Web sites, you may be asked to complete a registration form. You are required to provide contact information which is used to enhance the user experience and determine whether you are a paid subscriber or not.
Personal Information When you register on we ask you for personal information. We use this information to provide you with the best advice and highest-quality service as well as with offers that we think are relevant to you. We may also contact you regarding a Web site problem or other customer service-related issues. We do not sell, share or rent personal information about you collected on Company Web sites.

How to unsubscribe and Termination

You may request to terminate your account or unsubscribe to any email subscriptions or mailing lists at any time. In accessing and using this Website, User agrees to comply with all applicable laws and agrees not to take any action that would compromise the security or viability of this Website. The Company may terminate User’s access to this Website at any time for any reason. The terms hereunder regarding Accuracy of Information and Third Party Rights shall survive termination.

Website Content and Copyright

This Website is the property of Counterpoint and is protected by international copyright law and conventions. We grant users the right to access and use the Website, so long as such use is for internal information purposes, and User does not alter, copy, disseminate, redistribute or republish any content or feature of this Website. User acknowledges that access to and use of this Website is subject to these TERMS OF USE and any expanded access or use must be approved in writing by the Company.
– Passwords are for user’s individual use
– Passwords may not be shared with others
– Users may not store documents in shared folders.
– Users may not redistribute documents to non-users unless otherwise stated in their contract terms.

Changes or Updates to the Website

The Company reserves the right to change, update or discontinue any aspect of this Website at any time without notice. Your continued use of the Website after any such change constitutes your agreement to these TERMS OF USE, as modified.
Accuracy of Information: While the information contained on this Website has been obtained from sources believed to be reliable, We disclaims all warranties as to the accuracy, completeness or adequacy of such information. User assumes sole responsibility for the use it makes of this Website to achieve his/her intended results.

Third Party Links: This Website may contain links to other third party websites, which are provided as additional resources for the convenience of Users. We do not endorse, sponsor or accept any responsibility for these third party websites, User agrees to direct any concerns relating to these third party websites to the relevant website administrator.

Cookies and Tracking

We may monitor how you use our Web sites. It is used solely for purposes of enabling us to provide you with a personalized Web site experience.
This data may also be used in the aggregate, to identify appropriate product offerings and subscription plans.
Cookies may be set in order to identify you and determine your access privileges. Cookies are simply identifiers. You have the ability to delete cookie files from your hard disk drive.