(Bloomberg) -- Xiaomi Corp. showed off a new SUV it plans to sell around the summer of 2025, intensifying an effort to take on Tesla Inc. and BYD Co. in the world’s biggest electric vehicle arena.
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Billionaire founder Lei Jun unveiled the YU7, a sport utility vehicle similar to Tesla’s Model Y, in a Weibo post. The 5 meter-long car is a pure electric SUV, fitted with a nickel-cobalt-manganese battery to be made by Contemporary Amperex Technology Co. Ltd. The motor will have a peak power of 220kW or 288kW, according to a separate notice from China’s Ministry of Industry and Information Technology.
An SUV would mark a big expansion of Xiaomi’s $10 billion EV endeavor, spearheaded personally by Lei. The company is trying to reduce its reliance on a volatile smartphone market dominated globally by Apple Inc., though with EVs it’s getting into a crowded arena and taking on established rivals Tesla and BYD. Apple Inc. nixed its own long-incubating EV project after failing to overcome challenges in adapting its expertise to a new field of manufacturing.
Xiaomi’s shares rose as much as 3.9% in Hong Kong before paring gains. The stock had surged more than 90% since Xiaomi’s maiden vehicle — the SU7 sedan — went on sale in March.
It’s unclear what specifications and pricing Xiaomi envisions for the SUV — a type of larger vehicle gaining in popularity across China. Macquarie analysts Cherry Ma and Eugene Hsiao expect the YU7 to go for 10% to 15% more than the SU7, in the range of 250,000 yuan ($34,500) to 330,000 yuan. Tesla’s Model Y starts from 249,900 yuan in China.
Xiaomi, known for making everything from smartphones to rice cookers and luggage, is prioritizing growth of the EV business over margins for now, Chief Financial Officer Alain Lam told Bloomberg Television in August.
Xiaomi is preparing a second model just months after entering the market with the SU7. It aims to deliver 130,000 units of the sedan this year, up from a previous target of 120,000. The Beijing-based company has already bought land near its existing EV plant, intending to expand production following the early success of its maiden vehicle.
Discussions about an SUV began as far back as when Lei announced in 2021 that EVs represented his final major entrepreneurial effort. But the company eventually decided to move first on the SU7, a $30,000-plus sedan with a design aesthetic similar to Tesla’s Model 3.