Xiaomi founder Lei Jun said US sanction fears spurred smartphone maker’s EV push

Within two months of being temporarily placed on a US military blacklist, Xiaomi announced plans to enter China’s saturated electric vehicle market

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Xiaomi founder and CEO Lei Jun speaks in front of an image of the SU7 sedan at an event in Beijing on July 19. Photo: AFP

Published: 7:00pm, 22 Jul 2024

Lei Jun, founder and CEO of Chinese smartphone maker Xiaomi, said his fear of US sanctions in 2021 pushed him to build an electric vehicle (EV) business from scratch, revealing for the first time a key motivating factor in his decision to venture into a notoriously challenging business segment.

During a three-hour long speech on Friday, Lei recounted his initial response to seeing his company had been added to a US Defence Department blacklist in the final days of the administration of former president Donald Trump. He called an urgent board meeting, he said, to address the new rules that made it illegal for American investors to hold stock in the smartphone maker because of alleged ties to the Chinese military.

Xiaomi scored a rare legal victory four months later, getting its name scraped off the list – one of the first Chinese companies to do so. But the incident forced Lei to think about the future of the company he founded in 2010, the entrepreneur said during his 2024 annual speech.

Visitors film around Xiaomi’s first electric vehicle, the SU7, displayed at an event in Beijing on December 28, 2023. Photo: Reuters

Unlike Huawei Technologies, which has been targeted by harsh US sanctions, Xiaomi is not on any US trade blacklist and thus able to source the latest chips from Qualcomm, which are important to remain competitive in the global smartphone market, where Xiaomi competes with the likes of Apple and Samsung Electronics. It is also able to bundle Google services with its handsets, the omission of which all but killed Huawei’s smartphone business outside China.

While just announcing its SU7 sedans in March, Xiaomi has already found some success in the market owing to its aggressive pricing strategy. It has delivered more than 30,000 of the vehicles so far, and Xiaomi said it is on track to meet its minimum annual target of 100,000 deliveries by November.

By comparison, Tesla has sold 603,664 vehicles in China last year, up by more than 37 per cent from 2022.

Xiaomi announced plans to launch an EV subsidiary in March 2021, just two months after it was blacklisted by the US.