BEIJING – Chinese smartphone firm Xiaomi believes it is recognized a client area of interest that may pay up for its upcoming electrical automotive in a fiercely aggressive market.

“We think it’s a good starting point for us in the premium segment because we have already 20 million premium users in China based on the smartphone,” Xiaomi Group President Weibing Lu instructed CNBC forward of the automotive’s worldwide reveal on the Mobile World Congress in Barcelona, which kicks off Monday.

“I think the initial purchases will be very overlapped with the smartphone users.”

He stated the corporate thought of a variety of value factors, from entry stage to luxurious, for a automotive it is spending $10 billion to develop.

Xiaomi revealed its SU7 electrical automotive in China in late December however has but to announce a particular value. Lu stated a proper launch would come “very soon” and indicated home deliveries would begin as quickly because the second quarter.

The Beijing-based firm is a market chief within the smartphone trade, rating third in international shipments behind Apple and Samsung, based on Canalys. Data from the tech market evaluation agency confirmed that Xiaomi captured about 13% of the worldwide market and shipped 146.4 million telephones in 2023.

The firm lately has additionally branched out into TVs and residential home equipment, that are smartphone-controllable and sometimes sport a smooth, white design. Most of Xiaomi’s income is from telephones, with slightly below 30% coming from home equipment and different client merchandise.

Xiaomi has usually been recognized for extra affordably priced merchandise. That’s raised doubts about whether or not it might promote an electrical automotive – promoted as a rival to Porsche – in a market the place even established EV giants like BYD are slashing costs.

Lu stated Xiaomi’s method is predicated on ecosystem growth, in addition to a smartphone “premiumization” technique launched in 2020 that has since “achieved very good progress.”

In an earnings name in November, he famous the corporate benchmarked its newest Xiaomi 14 telephone to the iPhone 15 Pro, and claimed the brand new gadget was “overtaking” Apple‘s, based on a FactSet transcript.

However, additionally consuming into Apple’s market share is Huawei, whose in style Mate60 Pro begins at 6,499 yuan ($900), between the worth vary of the Xiaomi 14 Pro and iPhone 15 Pro.

Huawei noticed smartphone shipments within the mainland surge by 47% year-on-year within the fourth quarter, placing it forward of Xiaomi, based on Canalys.

Building on its tech capabilities as a telecommunications and smartphone firm, Huawei has swiftly grow to be a participant in China’s electrical automotive market.

The firm launched the Aito car model in late 2021 and sells its HarmonyOS working system and different software program to a number of auto producers. Huawei additionally promotes a few of these automobiles, together with the premium-priced Aito M9 SUV, by exhibiting them in its smartphone shops.

Apple has but to formally enter the electrical automotive market regardless of reviews it has been engaged on one. In the autumn, Chinese startup Nio launched its personal Android smartphone.

Xiaomi launched a brand new working system within the fall referred to as HyperOS.

It claims the system contains a synthetic intelligence part that may be taught from person habits to robotically regulate linked units, akin to residence lighting.

“In the future, we think it’s not [that] we give the instruction to the device but actually [that] the device can understand your needs and meet your needs proactively,” Lu stated.

The firm calls the technique “human x car x home.”

HyperOS is just out there on Xiaomi’s 14 telephone proper now. But the system is due for rollout within the coming months to home equipment and the forthcoming automotive, Lu stated.

Spending billions of {dollars} on the ecosystem and the automotive are all a part of Xiaomi’s efforts to outlive in an trade the corporate expects will grow to be much more aggressive.

In 10 or 20 years, the electrical car market will seemingly be similar to that of smartphones as we speak — with the highest 5 manufacturers holding about 70% of the market, Lu stated. “Without huge funds, we don’t think we can be the final players.”

After the primary automotive, the subsequent step for Xiaomi is to construct its personal factories and make the important thing parts in-house, Lu stated.

Xiaomi earlier this month introduced its new smartphone manufacturing unit in Beijing had began operations, with manufacturing capability for greater than 10 million units.

For the SU7 automotive, Chinese authorities releases at the moment listing a subsidiary of state-owned Baic Group because the producer. Xiaomi instructed CNBC it did not have public data to share in the intervening time.

Similar to an rising variety of Chinese corporations, Xiaomi is trying abroad for future progress. For the final six years, between 40% to 50% of the corporate’s income got here from outdoors mainland China, primarily Europe and India.

Lu, who joined Xiaomi Group in 2019, can be president of its worldwide enterprise division and stated he spends “a lot of time” on the abroad market.

“It will be the amplifier of Xiaomi’s business,” he stated, noting the abroad client electronics market is about triple the dimensions of China’s.

As a part of his journey to Barcelona for MWC, Lu stated he is visiting Paris, together with Africa and the Middle East.

He acknowledged the political surroundings makes it tougher for Xiaomi to go international, however stated the corporate can overcome these challenges by increase in-house capabilities and diversifying the enterprise globally and by product.

As for the automotive, Lu declined to specify a timeframe for its abroad launch, however stated it sometimes takes two to a few years.