Chinese tech giant Xiaomi as officially entered the electric vehicle (EV) market with its first offering, the SU7 sedan. The vehicle has already received an overwhelming response, with 120,000 orders placed within 36 hours of its launch.

What Happened: Xiaomi, a major player in the smartphone industry, has now set its sights on the EV market. The company's CEO, Lei Jun, unveiled the SU7 at a launch event in Beijing on Thursday, reports Fortune. Currently only available in China, the vehicle has already surpassed 120,000 orders, selling out the entire year's production capacity.

Lei Jun, a prominent figure in China, has positioned the SU7 as a direct competitor to Tesla Inc's (NASDAQ:TSLA) Model 3. He stated, "Many people ask me who the Xiaomi SU7 is built for. My answer is, isn't it time for Tesla Model 3 users to upgrade?"

Lei asserted that the SU7, initially exclusive to China, surpasses the Tesla Model 3 in 90% of its specifications. He noted that Xiaomi would require a few additional years to close the remaining gap. Lei highlighted the sedan's impressive minimum driving range of 700 kilometers (approximately 435 miles), compared to the Model 3's 606 kilometers.

Moreover, he mentioned that the base model will retail for under $30,000, making it more affordable than the Model 3 in the Chinese market.

Despite the fierce competition in the Chinese EV market, with companies like BYD (OTC:BYDDF) challenging Tesla's dominance, Xiaomi is confident in its new venture. Lei Jun admitted that the company would initially incur losses on each vehicle sold but assured Xiaomi had the financial reserves to withstand fierce competition for the next five years.

In March 2016, Tesla unveiled its Model 3 to overwhelming global enthusiasm, securing 325,000 reservations within a week. In response to this unprecedented demand, Tesla accelerated its production plans, aiming to achieve a 500,000-unit annual build by 2018, which is two years ahead of schedule, according to Bloomberg.

Why It Matters: Xiaomi's foray into the EV market has been coming for a long time. The company announced its first EV, the SU7, in December 2023, which was met with comparisons to Porsche's models.

In January, Xiaomi revealed its plans to start production of the SU7 and aimed to produce 10,000 units by July. In February, the company set its sights on attracting 20 million premium users in China with its new EV.

Despite the challenges, Xiaomi's strong start in the EV market is evident. Its entry into the EV market will likely further boost its standing in the tech and automotive industries.

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