Chinese smartphone giant Xiaomi has made waves with the launch of its first electric vehicle, the SU7, recently. This successful launch has boosted its market value by $4 million, inching closer to valuations surpassing those of GM and Ford.
Reuters reported that Xiaomi’s shares surged by as much as 16%. However, analysts caution that the company could face significant losses in the range of $10,000 per car this year.
Xiaomi’s stock hit its highest point since January 2022, reaching a valuation of $55 billion with a share price of HK$17.34, surpassing the valuations of General Motors and Ford.
With the launch of its SU7 sedan, positioned as a direct competitor to Tesla’s Model 3, Xiaomi received nearly 90,000 pre-orders in the first 24 hours, offering competitive pricing starting at $29,870.
Despite the early success, Xiaomi anticipates financial losses with the new SU7, potentially significant enough to impact the company’s bottom line.
Analysts project a volume of 60,000 units this year, estimating a net loss of 4.1 billion yuan ($566.82 million) or approximately 68,000 yuan ($9,400) per car.
Furthermore, Xiaomi aims to increase the monthly production capacity of its new EVs to 10,000 units, up from 3,000 in March and 6,000 in May, according to reports by Chinese news outlet Yicai.
Electrek’s Take
Despite the projected losses on the SU7, Xiaomi’s significant cash reserve of $15 billion may help offset the financial impact in the competitive electric vehicle market in China. The company’s strong brand appeal and technological edge in software and autonomous driving could give it a crucial advantage.
Although Xiaomi faces stiff competition in the EV market, particularly from BYD, its early success with the SU7 is promising and likely to attract investors.
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