The electronics manufacturer’s fast electric automobile, which was introduced last week, attracted a lot of interest, and Xiaomi’s shares rose as much as 16 per cent on Tuesday. However, a stockbroker predicted the company would lose about $10,000 on each car this year.
After the company unveiled its first automobile on Thursday, which takes styling inspirations from Porsche, Xiaomi’s market worth increased by almost $7.6 billion. On the first day of trade, its shares reached their highest level since January 2022.
The Speed Ultra 7 (SU7, short for Xiaomi) has an eye-catching price tag of less than $30,000 for the base model, making it more affordable than Tesla’s Model 3 in China as it joins the congested Chinese EV market.
The fierce competition for EV prices and the slowing demand in the world’s largest auto market make it difficult for newcomers to succeed, but analysts point out that Xiaomi has more resources than most EV startups and that its experience with smartphones gives it an advantage in smart dashboards, a feature that Chinese consumers highly value.
Due to high demand, Xiaomi has informed prospective customers that they may have to wait four to seven months to get their sedan. In the first 24 hours of sales, it got 88,898 pre-orders for the automobile, it announced on Friday.
In the 200,000 to 300,000 yuan ($27,649.90 to $41,474.85) range, “we maintain our cautious view that ultimately everyone could be a loser,” according to a note released on Tuesday by Citi Research analysts.
Citi projects that the SU7 might result in a net loss of 4.1 billion yuan ($566.82 million) this year, or an average of 68,000 yuan ($9,400.96) per car, based on a predicted volume of 60,000 units.
However, Xiaomi has stated that it anticipates losing money on the SU7, and some analysts believe the loss would be significant.
The launch satisfies the goal of Lei Jun, the founder of Xiaomi, who declared the company’s entry into the electric vehicle market in 2021 and committed to investing $10 billion in the industry as “the last major entrepreneurship project” of his life.
Other Chinese EV brands with similar models offered price reductions and subsidies after the SU7’s launch. According to Citi analysts, there would be about 240 EV models competing for sales in the 200,000–300,000 yuan market in 2024, an increase of nearly a fifth from the previous year.
