Xiaomi Made a Cheap Ferrari EV. Who Needs Porsche?

Western premium and luxury carmakers with far higher sticker prices should fear the increasingly sophisticated rivals China is churning out.

- Chris Bryant

Watching the launch last week of Xiaomi's luxury electric sport utility vehicle, the YU7, stirred up two strong emotions: wonder at its impressive technology, and deep foreboding for the future of Western carmakers.

The YU7 is the complete package—a stylish and tech-laden SUV with up to 835km of driving range, all for an affordable price. The entry-level version costs just 253,500 yuan (S$45,000).

Xiaomi scores few points for design originality—the YU7 looks like a cross between a Ferrari Purosangue and a McLaren, while its first model, the sporty SU7 sedan, bears a striking resemblance to the Porsche Taycan.

Even so, these are astonishing achievements for a smartphone company that entered the automotive industry just four years ago. I was not in the least surprised the YU7 received almost 300,000 orders within one hour.

While the YU7 directly competes with Tesla's Model Y in China and is not available in the US or Europe for now, Western premium and luxury automakers with far higher sticker prices should fear the increasingly sophisticated EVs China is churning out.

How will they compete once the growling combustion engines that define their brands disappear?

Investors appear confident Ferrari will retain its cache. Indeed, it is fortunate that China accounts for less than 10 per cent of the Prancing Horse's global sales, because the V12 Purosangue starts at around US$430,000 (S$546,000) and once customized costs far more.

Porsche and Germany's other premium carmakers do not appear as resilient. Offering a fake V8 engine noise as Mercedes-Benz Group does on the electric hypercar concept it teased last week won't suffice.