On Tuesday China’s Xiaomi said that it will start deliveries of its first electric car model SU7 this month. By bringing SU7 EV Xiaomi will be venturing into the world’s largest auto market amid a brutal price war. Xiaomi didn’t specify a price for the car. Xiaomi shares were up 9.55% by midday in Hong Kong trade, on track for their largest percentage jump since January 2023.
China’s fifth-largest smartphone maker, said in a Weibo post it has 59 stores in 29 cities nationwide that will take orders for Xiaomi SU7 EV. A launch event is scheduled for March 28 when the new EV’s sticker tag is expected to be announced for Xiaomi Electric Car.
China’s EV sales
Xiaomi’s shares rise was seen where it rallied 7% during morning trade.
China’s EV sales climbed 18% in January and February, not too far off 21% growth seen for all of 2023. This year has seen a round of deeper price cuts amid weakening domestic demand.
The SU7’s release comes as EV makers battle for sales in the world’s largest auto market. Xiaomi will enter the fray as leading brands like BYD and Tesla are cutting prices aggressively to entice consumers to buy their EVs in an oversupplied market, as economic pressures weigh on demand.
February retail sales of electric vehicles and plug-in hybrids dropped 12% on year to 388,000 units, according to data from the China Passenger Car Association. Chinese EV startups including NIO and XPeng, which have been selling EVs for more than five years, are still posting operating losses.
Xiaomi electric car
At the unveiling of the Speed Ultra 7 (SU7) sedan in December, Chief Executive Lei Jun said Xiaomi plans to become one of the world’s top five automakers.
The launch of the SU7 comes three years after Xiaomi said it would enter the car-making business, which Lei said at the time would be “the last big start-up project of my life.”
The Xiaomi electric car SU7, Lei touted, has “super electric motor” technology capable of delivering acceleration speeds faster than Tesla and Porsche’s EVs.
Xiaomi expenses
Analysts said the SU7’s release will likely cut into Xiaomi’s bottom line as marketing and other expenses for the venture rise. Xiaomi posted a net profit of 4.87 billion yuan ($677.9 million) in the third quarter, up 52% from the preceding quarter on the back of improved margins.
Analysts also say the car’s shared operating system with Xiaomi’s popular phones and other electronic devices will appeal to the company’s existing customers.
Xiaomi electric car production
Xiaomi has been seeking to diversify beyond its core business to EVs amid stagnating demand for smartphones.
Its cars will be produced by a unit of state-owned automaker BAIC Group, in a Beijing factory with an annual capacity of 200,000 vehicles.
The smartphone giant has pledged to invest $10 billion in autos over a decade and is one of the few new players in China’s EV market to gain approval from authorities who have been reluctant to add to a supply glut.
Xiaomi electric car price
The key thing to watch for the launch will be the price, specifically if it’s below or above CNY200,000, Huatai Securities equity analyst Leping Huang said. The level serves as a sort benchmark for EVs in the same class as the SU7.
Xiaomi may have some advantages over competitors since it is “already a very well-known brand and may be able to leverage on existing distribution channels,” Morningstar equity analyst Dan Baker said. But “near-term profit forecasts could well be negative.”
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