Xiaomi SU7 Ultra disrupts performance car market

The release of the Xiaomi SU7 Ultra marks the company’s first venture into the performance car market. It has already made a splash with several high-profile marketing campaigns centered on it breaking lap records on major racetracks in China. The most impactful moment in Xiaomi’s CEO Lei Jun’s launch keynote was unveiling the final retail price of CNY529,900 (approximately US$73,000), a 35% decrease from the initial launch price revealed in October 2024. According to Lei, the decision to drop the price was to ensure this “dream car” is attainable for more enthusiasts, namely buyers of BMW 5 series, Audi A6 and Mercedes-Benz E-Class. He quickly demonstrated the effectiveness of his pricing strategies, revealing that 50% to 60% of initial buyers came from the highlighted demographic.

Xiaomi, an unexpected entrant in the performance car market

In addition to the premium brands previously mentioned, makers of premium performance EVs, including Porsche, Lotus and Tesla, have found a formidable yet unexpected competitor. Xiaomi has easily surpassed its initial goal of selling 10,000 SU7 Ultras, nearly doubling that number just days after its release. Xiaomi has rocketed to the top in a niche category, reinforcing its reputation as a disruptor and proving strong market acceptance of its premium vehicles. This newfound confidence allows Xiaomi to compete more aggressively in higher-end market segments. But the company must keep emphasizing intelligence, engineering quality, driving dynamics and performance in its offerings.

The rise of Xiaomi highlights a significant trend: global carmakers and automotive technology suppliers are facing competition from a new generation of more capable and technologically advanced Chinese companies. Traditional global players should not underestimate Chinese carmakers, and they must move past the mindset that these companies are competing unfairly, relying on government support, subsidies and questionable trade practices.

As a market newcomer, Xiaomi has shown that investing in key technologies and forming strategic partnerships can help a brand rapidly become one of the most highly anticipated in the industry. For Xiaomi, using a well-established EV supply chain was vital. Other automakers have access to the same EV resources in China, and brands such as Lexus are also looking to maximize these resources by establishing their own manufacturing operations in the country.

Xiaomi evolves to disrupt

Xiaomi has shown that technology companies can replicate and adapt successful strategies from the smart device market, such as innovation, ecosystem building, branding and marketing, for the premium automotive market. By rapidly delivering compelling products that live up to the hype, Xiaomi is in a strong position to build brand equity and advance its position in the value chain. This also contributes to its goal of achieving success in the premium smartphone segment, which the company has been actively pursuing.

Developing and selling the SU7 Ultra is a great learning lesson for Xiaomi. It has gained insights into how to appeal to performance and premium car buyers, and found the perfect sweet spot of user overlaps, tackling it with basically one product with options to widen the appeal further. Xiaomi shows great attention to detail in ensuring customer satisfaction, offering opportunities to change the car’s specifications despite locking in the booking, with Lei delivering vehicles himself. After all, these high-value customers have just made a purchase that not even the biggest Mi Fan with all the Xiaomi devices would have come close to.

Going global is Xiaomi’s ambition

Xiaomi wasted no time in showing off the SU7 Ultra at MWC 2025. It aims to let its products speak for themselves, which is likely to be a central strategy as it prepares for global expansion, which, according to Lei in a TV interview, is projected for 2027. It might be possible to see Xiaomi promoting its vehicles in premium locations, such as major global airports, to maintain excitement and continuously cultivate a premium innovative automotive brand.

Xiaomi has complete control over the customer journey in China. It will be interesting to see which retail model it adopts and how it leverages its global channel knowledge to collaborate with dealers in high-value markets, such as European countries and affluent regions in Asia Pacific. A lot of effort is still needed to localize the product effectively, including determining the right pricing and crafting strategies that align with buyers’ preferences across regions.

Challenges remain for the new entrant

The SU7 has already made a notable impact in a market traditionally dominated by the Tesla Model 3 and European luxury brands. Anticipation is building for the YU7, Xiaomi’s first SUV, which is expected to make a big splash in the market. There is an urgency for Xiaomi to launch the YU7 in time to take advantage of the excitement it has generated so far. With SUV sales comprising a substantial portion of China’s passenger vehicle market – 49.4% in 2024 – Xiaomi aims to cater to diverse consumer needs and preferences, potentially expanding its long-term influence by introducing more models and unique intelligent features.