Key Takeaways:
Xiaomi has designated Sunwoda Electronic Co. and CALB Co. as battery suppliers for its third vehicle, an extended-range electric vehicle (EREV), in a strategic move to diversify its supply chain as it accelerates its automotive expansion. The new model is being developed under the codename 'Kunlun'.
"Sunwoda will have a 60% share of the battery supply, with CALB accounting for the remaining 40%," according to multiple sources cited by the 21st Century Business Herald.
The supplier designation for the 'Kunlun' model was finalized in early 2024. The decision brings new partners into Xiaomi's fold, which is critical as the company plans to launch the vehicle under a completely new brand, complete with a dedicated sales channel and operating system, separate from its existing SU7 sedan.
This move to a dual-supplier system for a new brand signals Xiaomi's deepening commitment to the fiercely competitive electric vehicle market. By engaging both Sunwoda and CALB, Xiaomi mitigates supply chain risks and increases its bargaining power, a crucial advantage in a market defined by price wars and component volatility.
The 'Kunlun' project represents a significant strategic pivot for Xiaomi Auto. Unlike the all-electric SU7 and the recently announced high-performance YU7 GT SUV, the 'Kunlun' will be an EREV. This powertrain, which uses a small gasoline engine to charge the battery and extend range, has proven immensely popular in China, with competitors like Li Auto Inc. building their entire brand around the technology.
By creating a separate brand for its EREV line, Xiaomi is aiming to clearly differentiate its product offerings and target a different segment of the market that prioritizes range and practicality over the pure-electric performance of its initial models.
The supplier news comes as Xiaomi's auto division is moving at a rapid pace. The company recently launched the YU7 GT, a high-performance SUV boasting 1,003 horsepower, with deliveries of its first car, the SU7, already underway. The company delivered 36,702 vehicles in April, showing strong initial production ramp-up.
For the suppliers, the deal is a major victory. Securing a contract with a high-volume, high-visibility client like Xiaomi provides a significant revenue boost for both Sunwoda and CALB. For Xiaomi (1810.HK), executing a multi-brand, multi-powertrain strategy is a costly and complex undertaking, but it demonstrates the scale of its ambition to become a major player in China's new energy vehicle market.
This article is for informational purposes only and does not constitute investment advice.
