EV launch boosts Xiaomi shares
Shares of China’s Xiaomi surged as much as 16% yesterday as the electronics maker’s sporty electric vehicle launched last week drew strong interest, though a brokerage forecast the firm would lose nearly $10,000 (R188,073) per car this year.
Xiaomi added about $7.6bn (R142.93bn) to its market value as its shares touched their highest since January 2022 on the first day of trading after the firm on Thursday launched its debut car, which draws styling cues from Porsche.
The Chinese company, which gets most of its $37.5bn (R705.21bn) revenue from being a smartphone vendor, has a valuation of $55.2bn (R1.038trillion), higher than that of traditional US automakers General Motors and Ford, at $52.4bn (R985.29bn) and $53.1bn (R998.6bn) respectively.
Xiaomi’s SU7 short for Speed Ultra 7 enters a crowded China EV market with an attention-grabbing price tag under $30,000 (R564,316) for the base model,
cheaper than Tesla’s Model 3 in China.
While the world’s largest auto market is challenging for newcomers due to a cut-throat EV price war and slowing demand, analysts said Xiaomi had deeper pockets than most EV start-ups and its smartphone expertise gave it an edge in smart dashboards, a feature prized by Chinese consumers.
Xiaomi has advised potential buyers of its sedan they could face wait times of four to seven months, a sign of strong interest.
It said on Friday it had received 88,898 pre-orders for the car in the first 24 hours of sales.
The company has produced 5,000 SU7 vehicles it dubbed the “founders edition” that it said came with additional accessories for early buyers.
Yesterday, Xiaomi founder and CEO Lei Jun said on social media deliveries from that batch would start across 28 Chinese cities today and would include a ceremony at its Beijing factory.
Xiaomi has said it expected to lose money on the SU7, and some analysts predict the loss would be substantial.
“We maintain our cautious view that ultimately everyone could be a loser” within the 200,000 to 300,000 yuan (about R520,000) to R780,000) segment, Citi Research analysts said in a note yesterday.
Based on a projected volume of 60,000 units this year, Citi estimates the SU7 could generate a net loss of 4.1bn yuan (R10.66bn) on average, 68,000 yuan (R176,812) per car.
The launch fulfils the ambition of Lei, who announced the company’s foray into EVs in 2021, pledging to invest $10bn (R188.07bn) in the auto business as “the last major entrepreneurship project” of his life.
After the SU7 launch, other Chinese EV brands with comparable models announced price cuts and subsidies.
In 2024, the 200,000to 300,000 yuan segment would see about 240 EV models vying for sales, up by almost a fifth versus the previous year, Citi analysts said.