Xiaomi Share Value Surges 16% After the First EV Launch

China’s Xiaomi witnessed a remarkable surge in its shares, climbing up to 16% on Tuesday, following the enthusiastic reception of its recently launched electric vehicle (EV), despite brokerage forecasts indicating substantial losses per car for the firm this year.

The vehicle, drawing inspiration from Porsche’s design aesthetics, garnered substantial interest, propelling Xiaomi’s market value by $4 billion as it closed 9% higher.

The stock soared to its highest level since January 2022 on the first trading day following the debut of Xiaomi’s inaugural car last Thursday. (Credits: Xiaomi)

At its peak during the trading session, the Chinese tech giant boasted a valuation of $55 billion, with its share price reaching HK$17.34—surpassing the market capitalizations of traditional U.S. automakers General Motors and Ford.

Xiaomi’s SU7, abbreviated for Speed Ultra 7, ventures into the competitive Chinese EV market with an attractive price point, priced below $30,000 for its base model, making it cheaper than Tesla’s Model 3 in China.

While penetrating the world’s largest auto market poses challenges due to fierce competition and diminishing demand, analysts suggest that Xiaomi, with its substantial financial resources and expertise in smartphones, holds a strategic advantage, particularly in smart dashboard technology—a feature highly valued by Chinese consumers.

The robust demand for Xiaomi’s sedan is evidenced by potential buyers facing waiting periods of four to seven months. Within the first 24 hours of sales, the company received an impressive 88,898 pre-orders for the vehicle.

Xiaomi’s founder and CEO, Lei Jun, announced via social media that deliveries of the initial batch, named the “Founder’s Edition,” would commence across 28 Chinese cities, starting from Wednesday, with a ceremony at its Beijing factory.

The launch of the SU7 realizes Lei’s ambition, announced in 2021, to venture into the EV market, with Xiaomi pledging a $10 billion investment in its auto business. (Credits: Xiaomi)

However, Xiaomi anticipates losses on the SU7, with some analysts forecasting significant deficits.

“We maintain our cautious view that ultimately everyone could be a loser” within the 200,000 to 300,000 yuan segment, stated Citi Research analysts, projecting a potential net loss of 4.1 billion yuan for Xiaomi based on estimated sales volume, translating to an average loss of 68,000 yuan per car.

Following the SU7 launch, other Chinese EV manufacturers with similar models announced price reductions and subsidies.

In 2024, the 200,000 to 300,000 yuan segment is expected to witness increased competition, with approximately 240 EV models competing for market share, according to Citi analysts.

Reportedly, Xiaomi has urged suppliers to ramp up the SU7’s monthly production capacity to 10,000 units, signaling the company’s efforts to meet surging demand.

However, Xiaomi refrained from immediate comments in response to requests for clarification.

Josh Alba
Josh Alba
Josh Alba stands at the forefront of contemporary business journalism, his words weaving narratives that illuminate the intricate workings of the corporate world. With a keen eye for detail and a penchant for uncovering the underlying stories behind financial trends, Josh has established himself as a trusted authority in business writing. Drawing from his wealth of experience and relentless pursuit of truth, Josh delivers insights that resonate with readers across industries.
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