Xiaomi made a cheap Ferrari EV. Who needs Porsche?

WATCHING THE LAUNCH last week of Xiaomi Corp.'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 automakers.

- CHRIS BRYANT Bloomberg

The YU7 is the complete package — a stylish and tech-laden SUV with up to 835 km of driving range, all for an affordable price. The entry-level version costs just CN¥253,500 ($35,400).

While the YU7 directly competes with Tesla Inc.'s Model Y in China and isn't 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's fortunate that China accounts for less than 10% of the Prancing Horse's global sales, because the V12 Purosangue starts at around $430,000 and once customized costs far more. Porsche and Germany's other premium automakers don't appear as resilient.

Offering a fake V8 engine noise as Mercedes-Benz Group does on the electric hyper-car concept it teased last week won't suffice.