How Xiaomi Beat Tesla, Porsche and Apple by Copying Them

Welcome to Issue #97 of The German Autopreneur.

A smartphone company builds a Porsche clone. Gets laughed at. Then becomes profitable in 19 months.

This took Tesla 10 years.

The company is Xiaomi.

In Germany, one thing caught attention: Their first car looks exactly like a Porsche Taycan. A Chinese company copying Porsche? The pride of German engineering? How could they.

But there's a bigger story here.

Apple spent 10 years on their car project. Invested $10 billion. Then killed it.

Smartphone maker Xiaomi announced their car in 2021. Launched it in March 2024. 19 months later? Profitable. How did the smartphone maker achieve what Apple couldn't?

The answer: Xiaomi copied. Systematically. From day one.

Today we'll look at how strategic copying became one of the most successful auto launches in history.

The Birth of the Xiaomi Playbook

Back to the beginning. 2011.

Xiaomi unveils its first smartphone, the Mi 1. And everyone sees it immediately: This is an iPhone clone.

The catch? It’s half the price. But comparable specs.

Lei Jun founded Xiaomi. He appears on stage in a black turtleneck. Just like Steve Jobs. Chinese media calls him "Leibos." A mix of Lei and Jobs.

Here in Europe, we would have laughed at this. In China, it's strategy.

China treats copying as strategy. The concept even has a name: "Shanzhai."

It means something like "knockoff." But it's more than just copying. It’s fast iteration and clever adaptation of existing ideas.

It's pragmatic. Why reinvent the wheel?

The Xiaomi playbook is born: To learn from the best. Iterate quickly. And make it better.

It worked for smartphones. They copied Apple's design. Adopted Samsung's hardware. Added their own software.

By 2014, Xiaomi is China's largest smartphone manufacturer.

How Could This Work So Fast?

Xiaomi follows two principles at once.

Principle 1: The Fast-Follower Strategy

Apple and Samsung invest billions in R&D. They want to be ahead of the wave. Bring innovations to market first.

Xiaomi does the opposite. They watch what others develop. See what works in the market. Then they jump in.

No risk. Minimal costs. Fast time-to-market.

The principle: Innovation through recombining what already exists.

Principle 2: The "Triathlon" Model

This is how Xiaomi described their early business model:

1. They sell hardware at cost price. To build a massive user base

2. The real money comes from software, services, apps, and subscriptions

3. Sales runs exclusively online and later through their own stores

The numbers? Hardware margins under $10 per device. Service margins are 75%.

Hardware is the door opener. Services are the actual business.

In 2021, they wanted to apply this playbook to cars.

Xiaomi Enters the Car Business

In 2021, Xiaomi faces a decision: Should we build a car?

The board is skeptical at first. A smartphone has 2,000 components. A car has over 30,000.

But Lei Jun sees the parallels. A car is becoming a "smartphone on wheels." Software, connectivity, digital experience. That's exactly Xiaomi's playground.

The decision is made: We're doing it.

Of course they rely on their proven playbook. They just need a benchmark.

For smartphones, it was Apple. For cars, they choose Porsche. Simply because of what Porsche represents.

In March 2024, they launch the SU7.

It looks like a Porsche Taycan. Same silhouette. Similar taillights.

The reactions? Chinese competitors call it "shameless." The press calls it "Porsche Mi." Mi stands for Xiaomi in China.

And in Germany? Nobody takes it seriously. Nice try. But that's not a Porsche. A cheap Chinese copy. Nothing more.

But the strategy works. For two reasons:

1. The car is surprisingly good. Reviews are positive. Customers are satisfied. It's not the cheap knockoff everyone expected

2. The controversy brings attention. Positive or negative doesn't matter. Everyone's talking about Xiaomi. That's marketing you can't buy.

The result: Nearly 90,000 orders in 24 hours. The entire year's production sold out in one day.

The SU7 becomes a success.

The Second Car

Just a year later, the second car arrives. In June 2025, they launch the YU7.

This time they take the world's best-selling EV as their benchmark: The Tesla Model Y.

But by now, Xiaomi is more than just a copy.

Independent testers compared the YU7 with the Model Y. Their conclusion: "They took the Model Y as a benchmark and beat it in almost every aspect."

• Faster: 0-100 km/h in 3.2 seconds instead of 3.7

• More range: 835 km instead of 593 km

• Faster charging: 10-80% in 15 minutes

• Cheaper: $46,000 instead of $57,000

The hype is even bigger than for the SU7: 289,000 orders in one hour. That's more cars than Tesla sells in China in an entire quarter.

Only 12 months between the two models. But a huge tech leap.

The first car runs infotainment, navigation, and driver assistance on 4 separate computers. The YU7 combines everything into a single control unit.

At Xiaomi, a car rolls off the line every 76 seconds.

For Tesla, getting to this speed was a hell. Years of struggle. They literally called it "Production Hell." Xiaomi did it with their first car.

Now here's the latest news: Xiaomi just announced their car division is profitable. After 19 months.

Tesla took 10 years. Most Chinese EV startups still aren't profitable today.

The secret?

Xiaomi didn't pioneer. The market was established. They watched what worked. Copied it. Then made it their own.

The Recipe for Success

Two things helped.

1) The New Copy-Paste Strategy

Professor Howard Yu calls it "Shanzhai 2.0."

In the past, Chinese companies simply copied. The products were cheaper. But always worse than the original.

That has changed. Now they follow a 3-stage process:

1. Deconstruct: Analyze and understand the best products

2. Source: Get the best components worldwide

3. Recombine: Put everything together and improve it

The result is no longer a clone. But an independent product. Better in many areas.

2) The Apple Supply Chain

Here's the irony.

Apple invested in China for decades. Built a network of iPhone suppliers. Taught them to produce at the highest level.

These exact suppliers now build Xiaomi's car.

• Luxshare Precision supplies the electrical wiring (they usually build iPhones)

• Lens Technology supplies the screens & sensor glass (they usually make iPhone displays)

• AAC Technologies supplies the sound (they usually make acoustics for Apple devices)

All of them produced for Apple for years.

Then came geopolitical tensions. Apple had to reduce risks. Diversify the supply chain. To India, to Vietnam.

These suppliers lost their biggest customer.

Right then, Xiaomi showed up. They got access to an established network.

Xiaomi inherited the supply chain which Apple built over decades.

My Take

It all starts with copying. The first Xiaomi smartphone looks like an iPhone. The SU7 like a Porsche. The YU7 like a Model Y.

But that's never the end goal. It's the beginning.

Then comes phase 2: They understand. They improve. Make it their own.

And here's where the cultural difference comes in.

In the West, copying has negative connotations. Theft. Uncreative. Embarrassing.

In China, it's pragmatic. Smart. A valid business strategy.

Xiaomi takes Tesla's production technology. Porsche's design. Apple's supply chain. And their own digital ecosystem. And puts it all together into a new product.

The result? Not the sum of the parts. But something more.

A car that fits into their digital ecosystem. That works seamlessly with all their other devices. Probably just like Apple imagined. But they never got there.

The numbers prove Xiaomi right. By the end of 2025, over 60% of their revenue comes from non-smartphone products. The car is becoming the core business.

Xiaomi proves one thing: You don't need to be first. Just take what's there. And build the best package.

The good news for legacy automakers? They can do this too.

The tech exists. The playbook exists. Just take what works. And build.

The hard part isn't the technology. It's the ego. Being willing to learn from others. Even from copycats.

🔗 bl1 | bl2 | ft1 | li1 | nyt1 | yb1 | yt1 | yt2 | yt3 | wcc

That's all for today.

Feel free to reply to this email with your thoughts.

Until next week,
Philipp

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After 10 years at Mercedes-Benz, I quit in 2020. In 2024, I started writing "Der Autopreneur". It became Germany's largest newsletter on automotive transformation. Now it’s also available in English.

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