Jakarta, CNBC Indonesia – Xiaomi is selling its first electric car at a much cheaper price than the Tesla Model 3. This 'price war' tactic is creating fierce competition between the Chinese company and Tesla, the United States (US) giant owned by Elon Musk.

Xiaomi CEO Lei Jun said the standard version of the SU7 will be sold for 215,900 yuan (Rp. 474 million) in China. Meanwhile, the Tesla Model 3 starts at 245,900 yuan (Rp. 540 million) in China.

Lei claims the standard version of the SU7 beats the Model 3 with 90% superior specifications, except in two aspects which he says will take at least 3-5 years for Xiaomi to catch up with Tesla.

He also said the SU7 has a minimum range of 700 kilometers compared to the Model 3 which is only 606 kilometers. The company said orders had exceeded 50,000 cars within 27 minutes of sales starting at 10 pm Beijing time, Thursday (28/3).

Lei promises that deliveries of Xiaomi electric cars will start at the end of April. He also claims that Xiaomi's fully automated car factory can produce an SU7 every 76 seconds. It is not yet clear whether the factory is fully operational or not.

Earlier this week, Lei said on social media that the SU7 would be the best sedan under 500,000 yuan.

The car enters a highly competitive market in China, where companies are launching a slew of new models and cutting prices to survive.

The SU7 is part of Xiaomi's recently launched “People x Car x Home” strategy in its efforts to build an ecosystem of devices connected to the new HyperOS operating system. Most of the company's revenue comes from HP, with less than 30% coming from equipment and other consumer products.

Meanwhile, the Tesla Model 3 is China's best-selling new energy sedan with a range of at least 600 kilometers and a price of less than 500,000 yuan, according to data from industry website Autohome.

In the United States (US), Tesla is the market leader for electric cars (EV). However, on a global scale, Tesla faces the pressure of intense competition from other manufacturers.

In China, Tesla is unable to compete with local car manufacturers who produce vehicles with advanced features and affordable prices. Apart from Xiaomi which has just spread its wings, BYD is also actively expanding its reach to other countries.

In the fourth quarter of 2023, BYD, which is supported by Warren Buffet, succeeded in overtaking Tesla as the largest electric vehicle maker in the world. BYD sells more battery-powered vehicles than Elon Musk's company.

[Gambas:Video CNBC]

(fab/fab)