Shares of China's Xiaomi 1810.HK rose on Tuesday, at times reaching 16%, as the electronics maker's sporty electric vehicle, launched last week sparked widespread interest, although one stockbroker predicted the company would lose nearly $10,000 per car this year.
Xiaomi added some US$7.6 billion to its market value and Its shares hit their highest level since January 2022 on the first day of trading, after the company launched its first car on Thursday.which is inspired by Porsche styling.
The Chinese company, which derives most of its $37.5 billion in revenue from selling smartphones, now has a valuation of $55.2 billion, higher than that of traditional American automakers General Motors and Ford, with US$52.4 billion and US$53.1 billion, respectively.
Xiaomi's SU7 (short for Speed Ultra 7) enters the crowded Chinese electric vehicle market with an eye-catching price: less than US$30,000 for the base model, cheaper than the Tesla Model 3 in China.
Although the world's largest auto market is a challenge for newcomers due to the fierce price war for electric vehicles and slowing demand, analysts surveyed have said that Xiaomi has a deeper wallet than most EV startups and its smartphone experience gives it an advantage in smart dashboardsa feature highly appreciated by Chinese consumers.
Xiaomi has warned potential buyers of its sedan that they could have to wait between four and seven months, which is a sign of great interest. On Friday it said it had received 88,898 pre-orders for the car in the first 24 hours of sale.
The company has already manufactured 5,000 SU7 vehicles, which include additional accessories for early buyers. On Tuesday, Xiaomi founder and CEO Lei Jun said on social media that deliveries of that batch would begin in 28 Chinese cities on Wednesday and would include a ceremony at its Beijing factory.
Xiaomi has said it expects to lose money on the SU7, and some analysts predict the loss would be substantial.
“We maintain our cautious view that ultimately everyone could lose” within the 200,000 to 300,000 yuan ($27,649.90 to $41,474.85) segment, analysts at Citi Research said in a note on Tuesday.
Taking into account the expected volume of 60,000 units this year, Citi estimates that the SU7 could generate a net loss of 4.1 billion yuan (US$566.82 million), an average of 68,000 yuan (US$9,400.96) per car.
The launch fulfills the ambition of Lei, who announced the company's foray into electric vehicles in 2021, committing to invest US$10 billion in the automobile business as “the last great business project” of his life.
