Electric vehicles are becoming increasingly popular. As this trend continues, competition is also rising at a similar rate. For now, Tesla and BYD are leading the market, but the number of brands in the sector is quickly increasing. Although most newcomers don’t make a significant impact and only capture a small market share, Xiaomi could be the brand that changes all. Recently, new informations has emerged about the long-anticipated vehicle. Here are the details…

Xiaomi Electric Vehicle to Be Priced Competitively, Thanks to Software-Driven Approach

It’s been known for some time that Xiaomi plans to enter the electric vehicle market. In addition to the company’s announcements, a lot of information has already been revealed about this. For example, we know that the upcoming vehicle will support 800V fast charging, and thanks to spy photos, we also have some idea about its design. New information has now emerged, suggesting that Xiaomi plans to make money through software, rather than from vehicle sales.

As you may know, the automobile industry is not very open to new players. If you want to enter the market, you need to make a substantial investment. For this reason, especially small and new manufacturers struggle to outperform their competitors with competitive pricing. To avoid similar challenges, Xiaomi wants to take a different approach for their electric vehicle. According to the latest reports, they won’t make much money from the hardware, or the physical parts of the vehicle.

They plan to make about 1% profit from that. But they will try to make more money from the software, or the programs that run the vehicle. Actually, this isn’t a new strategy for the company. When Xiaomi was a new player in the global smartphone market, they kept their profit margins low. Thanks to the price-to-performance ratio of their products, they won the hearts of millions of tech enthusiasts worldwide. This is also how companies like Tesla make money.

Xiaomi’s Battery Suppliers Revealed

Another key revelation is Xiaomi has chosen Zhongchuang Xinhang and CATL to be their main battery suppliers for RV’s. At first, Xiaomi was thinking about using both CATL and BYD. But now, various sources say that BYD is not part of the plan. Before, there were rumors that Xiaomi wanted two kinds of batteries, one from CATL and another from BYD. But new information says they’ve decided to go with Zhongchuang Xinhang and CATL, especially after some legal problems happened between them.

Battery costs are a significant aspect of electric vehicle manufacturing. As Xiaomi is still in the initial stages, its bargaining power is not strong. According to insiders, the cost of a single battery pack starts at around $10.000, making it nearly 50% of the total car cost. With such high upfront costs, Xiaomi has begun readjusting its supply chain to mitigate the expense.

When all these factors are considered, we get the impression that even a 1% profit margin for the company may not be enough to keep the car’s price low. However, it is certain that it will not be more expensive than its competitors in the same market segment. Xiaomi’s entry into the automotive industry is still in its early stages, but the company has made significant progress in a short period of time. How successful the car, expected to be released in 2024, will be remains a topic of speculation for now.

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