Last week, the electronics manufacturer Xiaomi unveiled its fast electric automobile, generating significant interest. Consequently, Xiaomi’s shares surged by as much as 16% on Tuesday. However, a stockbroker predicted the company would lose about $10,000 on each car this year.
Following the company’s Thursday introduction of its debut car, which takes styling inspirations from Porsche, Xiaomi’s shares hit their highest level since January 2022 on the first day of trade. This surge added almost $7.6 billion to its market worth.
With a base price of less than $30,000, undercutting Tesla’s Model 3, Xiaomi’s SU7, abbreviated as Speed Ultra 7, enters the competitive China EV market. Its affordability positions it as a significant player amidst the crowded landscape of electric vehicles in China.
Despite the fierce competition in electric vehicle pricing and the slowing demand in the world’s largest auto market, analysts highlight that Xiaomi possesses more resources than most EV startups. Additionally, its experience with smartphones provides an advantage in smart dashboards, a feature highly valued by Chinese consumers.
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.
However, Xiaomi has stated that it anticipates losing money on the SU7, and some analysts believe the loss would be significant.
In a report on Tuesday, researchers from Citi Research stated, “We maintain our cautious view that ultimately everyone could be a loser” in the 200,000 to 300,000 yuan ($27,649.90 to $41,474.85) range.
Citi projects that the SU7 might result in a net loss of 4.1 billion yuan ($566.82 million) this year. This estimation is based on a predicted volume of 60,000 units, averaging 68,000 yuan ($9,400.96) per car.
Lei Jun, the founder of Xiaomi, declared the company’s entry into the electric vehicle market in 2021. He committed to investing $10 billion in the industry, considering it “the last major entrepreneurship project” of his life. The launch of Xiaomi’s electric vehicle satisfies Lei Jun’s goal and vision for the company’s future.
Other Chinese EV brands with similar models offered price reductions and subsidies after the SU7’s launch. Citi analysts predict approximately 240 EV models will compete for sales in the 200,000–300,000 yuan market in 2024. This marks a nearly one-fifth increase from the previous year, as reported by them.
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