Marc Andreessen says US carmakers need to make a $20,000 EV if they don't want to 'lose the auto industry' to China

• Investors Marc Andreessen and Ben Horowitz said Chinese EVs are beating out American and European automakers.
• Chinese automakers, like Xiaomi, are gaining global traction with affordable, quality EVs.

It's not just Ford's CEO singing the praises of low-cost Chinese electric cars from buzzy companies like Xiaomi.

Andreessen Horowitz founders Marc Andreessen and Ben Horowitz said on their podcast that Chinese automakers have developed high-quality and affordable vehicles supported by a robust supply chain ecosystem.

With the American auto industry struggling with slowing growth in its EV market, American automakers need to be able to offer a compelling $20,000 EV that also competes on quality if the US doesn't want to "lose the auto industry," Andreessen said.

"What China has now is not just really good car companies, but they've got this entire constellation of supply chain componentry," Andreessen said.

China's government has spent at least $230 billion to support electric vehicle makers such as BYD since 2009, according to a study published in 2024 by the Centre for Strategic & International Studies think tank.

Andreessen and Horowitz specifically highlighted Chinese tech giant Xiaomi, which is known for making smartphones but has turned heads in the auto sector after launching its first line of EVs with the Speed Ultra 7, also known as the SU7, in March. Along with impressive performance, the SU7 is also integrated with Xiaomi smart home devices, which allows for remote voice control of household appliances from inside the car.

"You watch the reviews, and it's just crystal clear how good the thing is," Andreessen said.

The SU7 sold out after attracting 90,000 pre-orders within a day of its unveiling, and Horowitz said its popularity has spread globally in favor of other American and European brands.

The electric sedan is the designated ride of Ford CEO Jim Farley, who called Xiaomi an "industry juggernaut."

"It's just been all around the world," Horowitz said. "In Mexico and the Middle East, and so forth — they love these Chinese cars. They like them better than their Porsche Cayenne."

The VC founders said they had recently met with "one of the most successful guys in Dubai" whose "entire personal fleet of cars has been replaced by Chinese cars, not because they're cheaper but because they're better."

The Xiaomi SU7 range is cheaper than much of the competition — starting at 215,900 yuan ($30,000) compared to the lowest Porsche Cayenne model price of $87,400. The SU7 also beats out Tesla's most affordable model, the Model 3 Long Range Rear-Wheel Drive, which retails for $42,490.

Other Chinese carmakers have even lower-priced offerings. Chinese automaker BYD, Tesla's rival as one of the world's top-selling EV companies, released a newer version of its best-selling Yuan Plus for $16,000, which is 12% cheaper than the original model.

Andreessen said that Chinese car brands are outperforming American EV automakers in affordability and quality, calling them "super technologically sophisticated."

"For example, they've got this feature where you just come in, and you just drop your phone down on the center divider, and basically, the car lights up," he said. "The whole system inside the car comes off your phone — like all your music and your maps and your calendar and all that stuff is just automatically there."

The venture capitalist also highlighted other features, such as customized dancing animations in the LED headlights that greet the driver and self-driving capabilities, which are already integrated into several lower-cost Chinese EVs.

To keep up, American automakers need to be able to offer a similarly affordable and full-featured car at the $20,000 price point, Andreessen said.

The investor said that the American carmaker with the "highest odds" of competing on price was Elon Musk and Tesla.

Tesla has said lower-priced vehicles are on the way, including the fully autonomous Cybercab robotaxi, a two-seater without a steering wheel or pedals. Musk has said it will cost around $25,000 to $30,000 and is expected to launch in 2026. Musk has also said there are no plans to offer a traditional version of the Cybercab with a steering wheel and pedals, as the company is all-in on autonomous vehicles being the future.

In the US, the cheapest electric vehicle is currently the Nissan Leaf S. The 2025 model carries an MSRP of $28,140.

Meanwhile, Xiaomi is also experimenting with targeting the luxury market. On Wednesday, the company revealed the SU7 Ultra, a high-performance version of the original SU7, priced at 814,900 yuan ($114,000). With a range of 630 km (391 miles), the SU7 Ultra is set to release in China in March 2025.