China Xiaomi's market value soars by up to $7.6 billion on EV launch

Visitors film around Xiaomi’s first electric vehicle, the SU7, displayed at an event in Beijing, China December 28, 2023. REUTERS/Florence Lo/File Photo

By Sarah Wu and Anne Marie Roantree

BEIJING/HONG KONG (Reuters) -Shares of China’s Xiaomi surged as much as 16% on Tuesday as the electronics maker’s sporty electric vehicle launched last week drew strong interest, though a brokerage forecast the firm would lose nearly $10,000 per car this year.

Xiaomi added about $7.6 billion to its market value as its shares touched their highest since January 2022 on the first day of trading after the firm on Thursday launched its debut car, which draws styling cues from Porsche.

Xiaomi’s SU7 – short for Speed Ultra 7 – enters a crowded China EV market with an attention-grabbing price tag – under $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 underway and slowing demand, analysts have said Xiaomi has deeper pockets than most EV startups and its smartphone expertise gives it an edge in smart dashboards – a feature prized by Chinese consumers.

Xiaomi’s first electric vehicle SU7 is displayed at a showroom of a newly opened Xiaomi store in Beijing, China March 25, 2024. REUTERS/Tingshu Wang/File Photo

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 Friday that it had received 88,898 pre-orders for the car in the first 24 hours of sales.

But 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 to 300,000 yuan ($27,649.90 to $41,474.85) segment, Citi Research analysts said in a note on Tuesday.

Based on a projected volume of 60,000 units this year, Citi estimates the SU7 could generate a net loss of 4.1 billion yuan ($566.82 million) – on average, 68,000 yuan ($9,400.96) per car.

The launch fulfils the ambition of Xiaomi’s founder, Lei Jun, who announced the company’s foray into EVs in 2021, pledging to invest $10 billion in the auto business as “the last major entrepreneurship project” of his life.

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.

($1 = 7.2333 Chinese yuan renminbi)

(Reporting by Sarah Wu in Beijing and Anne Marie Roantree in Hong Kong; Editing by Tom Hogue and Muralikumar Anantharaman)