Imitation game: Can Big Auto emulate Xiaomi’s EV strategy?

The move will raise funds for Xiaomi to invest in its burgeoning EV business to build on the success of its SU7, a sporty model launched just a year ago that looks like a Porsche Panamera but costs roughly what you’d pay for a Toyota Camry.

Like BYD’s announcement of five-minute fast-charging technology last week, it is a sign of a Chinese EV industry at the peak of its powers.

Also Read: Mint Quick Edit | BYD versus Tesla: Let merit decide pole position

It might seem surprising that Xiaomi, of all companies, should be the herald of doom for Big Auto. For years, the company was treated like a punchline—an Apple imitator whose founder Lei Jun looked like a Steve Jobs cosplayer. It spent much of the 2010s flailing around for a business model selling robot vacuum cleaners, massage guns and rice cookers after Huawei and Oppo squeezed its position in the Chinese smartphone market.

All along, Xiaomi was quietly learning Apple’s most profound lesson, one BYD’s rise to dominance recently shows it learnt too: “If you keep your eye on the profit, you’re going to skimp on the product [...] but if you focus on making really great products, then the profits will follow." This quote is most often attributed to Jobs.

Translate that into accountant-speak, and it’s an exhortation to deploy capital generously when the moment is right. Look back at Apple’s history, and you can see the arrival of the iMac, iPhone and iPad from the way capital expenditure spiked as sales surged and the supply chain ballooned to meet customer demand.

Also Read: Mint Quick Edit | BYD has leapt ahead on charging speed

That captures Xiaomi’s approach to product development pretty well . Despite its occasional reputation as a capital-lite business that depends more on selling ads and online services than physical devices, it’s one of the most aggressive investors out there. Among 36 major global manufacturers for which Bloomberg has comparable data, only Lockheed Martin and Panasonic spend more on capital expenditure, relative to depreciation.

This week’s share sale will augment that ambition. Xiaomi is looking to expand its car production lines to support demand for both the basic SU7, plus a high-performance variant and an electric SUV planned for later this year. Analysts expect the car unit to overtake smartphones, home appliances and services to become the company’s biggest profit driver as soon as 2026.

There is a virtuous circle here that Steve Jobs would recognize. Come up with a great product, sell it at a decent price, and let customers queue up to get their hands on it. That way, you can grow business at a tremendous pace and attract billions in investment capital to turbocharge your expansion.

Also Read: The iPhone needs a new strategy to salvage Apple Intelligence

Much of the auto industry has spent decades learning the opposite lesson. Plagued with dismal valuations and struggling to manage global supply chains in the midst of trade shocks, executives have tried to prove themselves prudent custodians of their shareholders’ money—investing less, and doing their best to support margins in a sagging market.

This hasn’t yielded good results. The auto companies trading on the best valuations, after Tesla, are mostly the same Chinese carmakers that have deployed capital most aggressively to capture the wide-open EV market: BYD, Seres, GAC and Great Wall Motor. Big Auto, more concerned with conserving its shareholders’ capital than conquering a brand new market, has been left behind.

Xiaomi seems to have been quite shameless about imitating Apple’s capital- and product-driven business model, but that’s in the tradition of the master himself. “We have always been shameless about stealing great ideas," Jobs once said, in the same interview where he popularized that “great artists steal" quote.

Also Read: EV adoption: How to spark off a charging infrastructure boom

BYD and the winners of the cut-throat Chinese car industry have in turn copied Xiaomi’s approach, developing new products at a breakneck pace and selling them at thin margins to win their place in a booming market. Lei is now in a race to keep a slice of the pie in the face of his own imitators.

If the rest of the global auto industry wants to survive the onslaught as our roads go electric, they’ll have to do the same: Let go of their pride, start imitating the world’s most vibrant EV sector, and surrender to Xiaomi-fication. ©Bloomberg