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Xiaomi’s EV Ambitions – From Smartphones to Sedans

by Violet Dawson
0 comment

Estimates from Wall Street banks suggest Xiaomi’s sedan could be priced between 200,000 yuan ($27,667) and 300,000 yuan.

Xiaomi Corp’s recent surge of $8 billion in stock value confronts a significant trial as the Chinese tech giant prepares to introduce its inaugural electric vehicle on Thursday. Xiaomi will now be entering a fiercely competitive domain.

Set to launch its SU7 in its native market, Xiaomi’s entry into the world’s largest EV market marks a bold move, challenging incumbents like Tesla and BYD Co. The sedan is anticipated to enter a highly contested segment, according to industry experts’ pricing forecasts.

Co-founder Lei Jung has described this particular challenge as a pivotal test of Xiaomi’s capabilities, highlighting the company’s determination to enter a saturated market once again. Amidst a year-long price war in China’s EV sector, the reception of the SU7 will likely influence the tech giant’s stock performance following a notable 22% upswing since February.

Analysts from JPMorgan Chase & Co., including G Hariharan anticipate the EV venture to initially weigh on Xiaomi’s profitability until it achieves scale. However, they foresee a positive impact on stock price during the early phase of volume shipments. The market anticipates over 50,000 SU7 shipments in the first year post-launch.

Ahead of the sedan’s unveiling ceremony on Thursday, Xiaomi’s shares experienced a 3% uptick in Hong Kong.

Projections indicate a slowdown in China’s electrified car market for the second consecutive year, with sales growth expected to decline from 36% last year to 25% in 2024, as per industry forecasts. Market leader BYD aims for a 20% sales increase this year, following its sale of three million new energy cars in 2023. Smaller player Li Auto Inc. delivered approximately 376,000 units last year.

Estimates from Wall Street banks suggest Xiaomi’s sedan could be priced between 200,000 yuan ($27,667) and 300,000 yuan. A local media report cited a starting price of 266,000 yuan for the standard SU7 version. Lei previously disclosed that the car could accelerate from 0 to 100 kph in 2.78 seconds.

Although the exact pricing remains undisclosed, Lei hinted that it won’t be as low as 99,000 yuan, dismissing social media speculations. Cars with similar specifications typically fetch 400,000 yuan or higher, Lei noted.

Johnson Wan, an analyst at Jefferies Financial Group Inc., believes that the 200,000-to-250,000-yuan range is the most competitive segment in China’s EV landscape at present.

Investors await the initial orders and consumer response to the SU7 with great interest. Optimists draw parallels between Xiaomi’s EV debut and tech giant Huawei’s success in the EV realm.

Unlike Huawei, which collaborated with multiple automakers, Xiaomi’s EV venture follows a different model and involves higher costs. Amidst the ongoing price war, only a few local manufacturers, including BYD and Li Auto, have managed to sustain profitability.

Timothy Zhao, an analyst at Goldman Sachs Group Inc., predicts Xiaomi’s EV sales to reach 14 billion yuan in 2024, based on shipments of 65,000 units and an average selling price of 225,000 yuan. “We see the unveiling of Xiaomi’s first smart EV model as a window for the market to re-value its new initiatives,” wrote Zhao in a recent note.

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