Xiaomi, a Chinese smartphone giant, has launched its first electric vehicle (EV) and will begin taking orders. Its CEO, Lei Jun, announced last week that the Speed Ultra 7 (SU7) would be priced below 500,000 yuan ($69,186).

The move pits the technological behemoth against rivals like Tesla and BYD. Xiaomi’s debut into the electric vehicle market comes as worldwide sales growth has stalled, resulting in a pricing war.

The company hopes that the SU7’s shared operating system, which runs on its phones, laptops, and other devices, would appeal to existing customers. According to Counterpoint research, Xiaomi is the world’s third-largest smartphone seller, with a market share of approximately 12%.

Xiaomi has been hyping the SU7 since last year, drawing similarities to Porsche’s Taycan and Panamera sports cars.

It will be manufactured by a unit of the state-owned car maker BAIC Group at a Beijing plant capable of producing up to 200,000 vehicles per year.

“While getting this far is itself quite an achievement, the ultimate achievement would be to demonstrate that there is a consumer market for Xiaomi as a smart EVs brand,” Bill Russo of Automobility said.

iPhone maker Apple reportedly halted its intentions to produce an EV last month, highlighting the obstacles that technology businesses face when developing electric vehicles.

Russo went on to say that Xiaomi’s move into the car business demonstrates its belief “in the relevancy for their brand” in China, whereas Apple did not see enough promise in the EV market outside of China.

Xiaomi has announced that it will invest $10 billion in its car industry over the next ten years.

“The Chinese EV market is very mature and creates a very stable ecosystem for the EV manufacturers,” said Abhishek Murali from research firm Rystad Energy.

“For example, the battery supply chain is very strong, and the charging network in the country is also growing to meet the growing EV feed.”

The introduction of Xiaomi’s first automobile coincides with an increasing price battle in China’s EV sector.

Tesla, led by multibillionaire Elon Musk, has reduced the cost of its vehicles in China by thousands of dollars in recent months, while local competitors such as BYD, the world’s best-selling EV producer, have lowered pricing.

The world’s largest car industry is already congested, therefore Xiaomi is one of the few new potential entrants to receive approval from authorities as officials try to limit the influx of new firms.

BYD reported record yearly profits earlier this week, but indicated growth had slowed near the end of the previous year.

Nio, a Shanghai-based electric vehicle manufacturer, cut its first-quarter delivery forecast on Wednesday as consumers cut back on spending as China’s economic development slows.

Tesla, the American electric vehicle company, is set to reveal its delivery numbers for the first three months of 2024 next week.

At the same time, governments around the world are resisting imports of foreign-made EVs.

On Tuesday, Beijing filed a dispute settlement action against the United States at the World Trade Organisation, claiming “discriminatory subsidies” under the US Inflation Reduction Act.

Meanwhile, the European Union has initiated an investigation into whether Chinese government subsidies have enabled the country’s electric car manufacturers to undercut European-made cars.

(Adapted from BBC.com)