Lei Jun’s Deserved Respect: Xiaomi’s YU7 Success Signals New Economic Expectations in China

CNBC AI News, July 20th – Xiaomi’s inaugural electric SUV, the YU7, is electrifying the Chinese market. Clocking over 240,000 pre-orders within just 18 hours of its launch, the YU7 has shattered industry records, signaling a potential shift in China’s economic outlook.

Prior to the launch of Xiaomi’s SU7 and YU7 vehicles, some analysts anticipated a race-to-the-bottom price war, fueled by lingering perceptions of Chinese brands. The question was: would Xiaomi, known for its disruptive pricing strategies in other sectors, initiate a similar strategy in the automotive industry?

However, both the SU7, starting at ¥215,900, and the YU7, a luxurious high-performance SUV starting at ¥253,500, steered clear of the cutthroat low-price battleground. Instead, Xiaomi focused on technological innovation, safety enhancements, and overall user experience – prioritizing these aspects over simply undercutting the competition. This strategic decision has garnered respect from industry observers.

This move, from simply catching up to potentially overtaking, underscores a rising trend: Chinese NEV (New Energy Vehicle) manufacturers, exemplified by Xiaomi Auto, are achieving market success not through aggressive pricing, but through genuine innovation, earning accolades industry-wide.

“70% percent of the EVs in the entire world are made in China. They have really advanced technology in the vehicle, a lot of Huawei, Xiaomi technology in the vehicles. You get in, you don’t have to pair your phone, your whole digital life is in the car,” Ford CEO Jim Farley recently stated, acknowledging China’s prowess in the EV sector.

Back in 2024, Farley recognized the significance of the tech giant when he remarked that Xiaomi is “a much bigger juggernaut and consumer brand than any car company.”

“Some traditional demands are either saturated or outdated, while new consumption has become a common appeal of consumers. The fact proves that consumers do have money, but they have not found suitable consumer goods.”

Pan Helin, a member of the Expert Committee on Information and Communication Economics under the Ministry of Industry and Information Technology, notes that the YU7’s success, much like the popularity of the animated film “Ne Zha”, indicates that Chinese consumers are not lacking purchasing power. Instead, the market has been yearning for products that effectively address their needs and pain points.

Li Keaobo, Executive Vice President of the Institute for Chinese Economic Thought and Practice at Tsinghua University, suggests that Xiaomi is reshaping the landscape. Consumers are increasingly willing to invest in domestic electric vehicles that understand their needs, demonstrate innovation, and offer high quality. This, in turn, incentivizes companies to increase R&D investments, creating a positive feedback loop. The YU7’s strong sales further solidify the notion that innovation is the key to unlocking China’s vast consumer potential.