Sanctions Propel Xiaomi into the Electric Car Market

Xiaomi Corporation's entry into the electric vehicle (EV) market was spurred by unexpected U.S. sanctions announced during the Trump administration in 2021. CEO Lei Jun discussed the company's pivot from electronics to EVs at a recent Beijing event, revealing ambitious plans and significant early sales achievements for its SU7 model.

A decision by the Trump administration to sanction China's Xiaomi Corp in early 2021 was the impetus for the company's venture into the electric vehicle market, according to CEO Lei Jun. Xiaomi, best known for its smartphones and home appliances, entered China's EV market this year, diversifying its product lineup.

During an annual event in Beijing, Lei disclosed that Xiaomi's consideration of EV production followed an 'accident'—U.S. sanctions announced in the waning days of the Trump administration, putting Xiaomi on a sanction list. 'I received a phone call from a friend saying that we had been sanctioned. It was like a bolt from the blue,' said Lei, describing how Xiaomi convened an emergency board meeting to launch its electric car initiative.

'If it weren't for the huge impact of the unexpected U.S. sanctions, we would not have rashly entered the complex automotive industry,' Lei noted. Lei, a celebrity figure in China renowned for his product presentations, detailed Xiaomi's plans to compete with leading brands like Tesla, BMW, Audi, and Mercedes. Over 1.5 million people streamed the event on WeChat.

Xiaomi legally challenged the 2021 sanctions and won a reversal in May that year, ending U.S. investment restrictions. By then, Lei had initiated the development of the SU7, Xiaomi's first electric car, resembling a sporty Porsche and priced under $30,000. Despite a $10 billion valuation offer from venture capital, Xiaomi opted for self-funding in its EV aspirations.

Xiaomi aims to deliver at least 100,000 SU7 EVs this year, targeting 120,000 sales, a significant increase from its initial goal of 76,000. By the end of June, the company had already delivered 25,000 EVs, projecting to meet its 100,000-unit target by November. 'I have to thank the accident three years ago,' Lei remarked about the sanctions that drove Xiaomi's diversification into the EV market. The SU7 is currently only available in China, with aspirations for Xiaomi to become a top-five global automaker.

Former U.S. President Donald Trump, in his nomination acceptance speech, mentioned rolling back vehicle emissions regulations and imposing hefty import tariffs on Chinese EVs built in Mexico. Conversely, Trump indicated support for Chinese investments in U.S. plants if re-elected.

(With inputs from agencies.)