BEIJING - Shares of China’s Xiaomi surged as much as 16 per cent on April 2 as the electronics maker’s sporty electric vehicle (EV) launched last week drew strong interest, though a brokerage forecast the company would lose nearly US$10,000 (S$13,500) per car in 2024.
Xiaomi added about US$7.6 billion to its market value as its shares touched their highest since January 2022 on the first day of trading after the company on March 28 launched its debut car, which draws styling cues from Porsche.
The Chinese company, which gets a majority of its US$37.5 billion revenue from being a smartphone vendor, now has a valuation of US$55.2 billion, higher than that of traditional US carmakers General Motors and Ford, at US$52.4 billion and US$53.1 billion, respectively.
Xiaomi’s SU7 – short for Speed Ultra 7 – enters a crowded China EV market with an attention-grabbing price tag – under US$30,000 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 under way and slowing demand, analysts have said Xiaomi has deeper pockets than most EV start-ups and its smartphone expertise gives it an edge in smart dashboards – a feature prized by Chinese consumers.
Xiaomi has advised potential buyers of its sedan that they could face wait times of four to seven months, a sign of strong interest. It said on March 29 that it had received 88,898 pre-orders for the car in the first 24 hours of sales.
The company has already produced 5,000 SU7 vehicles it dubbed the “founders’ edition” that it says come with additional accessories for early buyers. On April 2, Xiaomi founder and chief executive Lei Jun said on his social media account that deliveries from that batch would start across 28 Chinese cities on April 3.
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 be a loser” within the 200,000 yuan (S$37,900) to 300,000 yuan segment, Citi Research analysts said in a note on April 2.
Based on a projected volume of 60,000 units in 2024, Citi estimates the SU7 could generate a net loss of 4.1 billion yuan – or 68,000 yuan per car on average.
Following the SU7 launch, other Chinese EV brands with comparable models announced price cuts and subsidies.
In 2024, the 200,000 to 300,000 yuan segment will see around 240 EV models vying for sales, up by almost a fifth versus the previous year, Citi analysts said. REUTERS
