Despite a predicted loss per car sold, Xiaomi’s market capitalization has increased by $7.6 billion as a result of the introduction of the SU7 electric vehicle. The sporty electric vehicle that the electronics manufacturer Xiaomi 1810.HK unveiled last week attracted a lot of interest, sending its shares soaring as high as 16% on Tuesday. However, a stockbroker predicted that the company would lose close to $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, adding almost $7.6 billion to its market worth.
Xiaomi SU7 EV Market
Featuring an eye-catching price tag of less than $30,000 for the base model, Xiaomi’s SU7, short for Speed Ultra 7, enters the competitive Chinese EV market at a lower cost than Tesla’s TSLA.O Model 3.
Although the fierce competition for electric vehicle prices and the slowing demand in the world’s largest auto market make it difficult for newcomers, analysts have noted that Xiaomi has more resources than most EV startups and that its experience with smartphones gives it an advantage in smart dashboards, a feature that Chinese consumers highly value. 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. Considering that 60,000 units are expected to be sold this year, Citi calculates that the SU7 might result in a net loss of 4.1 billion yuan ($566.82 million) or, on average, 68,000 yuan ($9,400.96) per vehicle.
The launch satisfies the goal of Lei Jun, the founder of Xiaomi, who declared the company’s entry into the electric vehicle market in 2021 and committed to investing $10 billion in the industry as “the last major entrepreneurship project” of his life.
Considering that 60,000 units are expected to be sold this year, Citi calculates that the SU7 might result in a net loss of 4.1 billion yuan ($566.82 million) or, on average, 68,000 yuan ($9,400.96) per vehicle.
The launch satisfies the goal of Lei Jun, the founder of Xiaomi, who declared the company’s entry into the electric vehicle market in 2021 and committed to investing $10 billion in the industry as “the last major entrepreneurship project” of his life. Shortly after the SU7’s release, similar models from other Chinese EV makers revealed price reductions and promotions. There will be about 240 EV models competing for sales in the 200,000–300,000 yuan market in 2024, an increase of nearly a fifth from the previous year.
