In a strategic move to diversify beyond its smartphone roots, Xiaomi, China’s fifth-largest smartphone maker, announced on Tuesday that it is set to roll out deliveries of its inaugural electric vehicle (EV), the SU7, later this month. The move marks Xiaomi’s bold entry into the highly competitive Chinese electric car market, currently the world’s largest, as industry players engage in a fierce price war to capture market share.

Through a Weibo post, Xiaomi revealed that 59 stores across 29 cities nationwide are ready to accept orders for the SU7. The official launch event is scheduled for 28 March, during which the electric vehicle’s pricing details will be unveiled. Notably, Xiaomi’s shares experienced a notable 7% surge during morning trade, reflecting investor confidence in the company’s ambitious venture.

China’s electric vehicle market has witnessed an 18% surge in sales during the first two months of this year, closely following the impressive 21% growth recorded in 2023. Xiaomi’s decision to enter the market comes amid intensified price cuts by key players like BYD (002594.SZ) to entice consumers amidst a backdrop of weakening domestic demand.

At the unveiling of the SU7 in December, Xiaomi’s Chief Executive Lei Jun expressed the company’s aspirations to become one of the world’s top five automakers. Lei emphasised the SU7’s cutting-edge “super electric motor” technology, boasting acceleration speeds that rival top competitors like Tesla (TSLA.O) and Porsche in the electric vehicle segment.

Analysts predict that Xiaomi’s unique selling proposition lies in the shared operating system between its popular smartphones and other electronic devices, creating a seamless user experience for existing customers. This integrated approach is expected to appeal to tech-savvy consumers and contribute to Xiaomi’s success in the electric vehicle market.

Xiaomi’s foray into electric vehicles follows a strategic decision made in 2021 to diversify its business amid stagnant demand for smartphones. The company has committed to investing US$10 billion in the automotive sector over the next decade. Notably, Xiaomi secured approval from Chinese authorities, a significant feat in an industry grappling with oversupply concerns.

The production of Xiaomi’s electric cars will be handled by a subsidiary of the state-owned automaker BAIC Group (1958.HK). The manufacturing will take place in a Beijing factory with an annual capacity of 200,000 vehicles, positioning Xiaomi to scale up production to meet growing demand in the evolving electric vehicle landscape.