SINGAPORE: Xiaomi revealed its first electric vehicle (EV) on Thursday, marking an ambitious stride into the competitive EV market. With a US$8 billion (approx. S$10.8 billion) surge in stock value, all eyes are on Xiaomi as it ventures into this new terrain.
The Edge Singapore reports the eagerly anticipated SU7 series, born out of a US$10 billion (approx. S$13.5 billion) investment, is set to debut in China. This marks Xiaomi’s bold foray into the world’s largest EV market, currently dominated by giants like Tesla Inc. and BYD Co.
Analysts foresee the sedan entering a fiercely competitive segment, highlighting the significance of this launch for Xiaomi’s future trajectory.
Co-founder Lei Jun has termed this venture as ”his final major endeavour”, testing Xiaomi’s prowess in cracking a saturated market once again with its technological prowess. With a recent 22% stock surge, the reception of the SU7 will undoubtedly influence Xiaomi’s stock momentum, especially amid the ongoing price war in the EV sector in China.
JPMorgan Chase & Co. analysts, including Gokul Hariharan, anticipate the initial phase of the EV business to be a profitability drag until Xiaomi achieves scale. However, they also anticipate it to be a positive driver for Xiaomi’s stock price during the early volume shipments. They added that the market expects over 50,000 shipments within the first year of the SU7’s launch.
Despite projections of a slowdown in China’s electrified car market, with sales growth expected to dip to 25% in 2024, Xiaomi remains poised to make a significant impact. Market leaders like BYD, which sold three million new energy cars in 2023, and smaller players like Li Auto Inc., are setting formidable benchmarks.
Analysts estimate the price range for Xiaomi’s sedan to be between 200,000 yuan to 300,000 yuan (approx. S$37,349 to S$56,024).
A local media report suggests a starting price of 266,000 yuan (approx. S$49,674) for the standard SU7 model, dubbed the Speed Ultra.
Mr Lei Jun has teased the car’s impressive acceleration capabilities, boasting a 0 to 100 kph time of 2.78 seconds. He also hinted before that it wouldn’t cost 99,000 yuan as some on social media joked. He mentioned that cars with similar features usually sell for 400,000 yuan (approx. S$74,699) or more.
Johnson Wan, an analyst at Jefferies Financial Group Inc., said, “If my guess is correct, the 200,000 to 250,000 yuan (approx. S$37,349 to S$46,687) range, that actually is the most competitive segment in the China EV space at the moment.”
The success of initial orders and consumer feedback for the SU7 will be pivotal for Xiaomi’s investors, with hopes pinned on Xiaomi emulating Huawei Technologies Co.’s early triumphs in the EV sector.
Unlike Huawei, which partnered with multiple automakers, Xiaomi’s EV business model leans towards heavy investment and a different approach. Despite its loyal following and smart tech ecosystem, Xiaomi faces the challenge of navigating a cost-intensive market amid a relentless price war.
Analysts project Xiaomi to generate significant EV sales in 2024, with Timothy Zhao of Goldman Sachs Group forecasting 14 billion yuan (approx. S$2.6 billion) in sales based on shipment estimates and an average selling price.
According to Mr Zhao, “We see the unveiling of Xiaomi’s first smart EV model as a window for the market to re-value its new initiatives.” /TISG
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