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TLDR: They think they'll convert a large enough portion of the premium market (in specific geographic markets) that it'll put them into the top three.
This might work. Xiaomi used to lead the Indian market around 2015-20, but in the last 2-3 years their phones haven't improved significantly. And Moto is doing the same thing Xiaomi did before, releasing phones with good specs at low prices. The big drawback with their phones compared to Xiaomi is the weak SoC (and for power users the lack of official support for custom ROMs).