The electronics manufacturer Xiaomi’s fast electric automobile, which was introduced last week, attracted a lot of interest, and shares of the company rose as much as 16% on Tuesday. However, a stockbroker predicted the company would lose about $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.

With a valuation of $55.2 billion, the Chinese firm is now valued higher than traditional U.S. manufacturers General Motors and Ford, at $52.4 billion and $53.1 billion, respectively. The Chinese company’s revenue comes primarily from selling smartphones, accounting for 37.5 billion of its total sales.

With a base price of less than $30,000, which is less than Tesla’s Model 3, Xiaomi’s SU7, short for Speed Ultra 7, joins the congested China EV market.

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.

The “founders edition” SU7 cars, which the company has already made in 5,000 units, are said to include extra accessories for first-time purchasers. Lei Jun, the founder and CEO of Xiaomi, said on social media on Tuesday that deliveries from that batch will begin on Wednesday throughout 28 Chinese cities and would include a ceremony at the company’s Beijing plant.

Xiaomi has stated that it anticipates losing money on the SU7, and a number of analysts believe the loss will be significant.

“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.

Citi projects that the SU7 might result in a net loss of 4.1 billion yuan ($566.82 million) this year, or an average of 68,000 yuan ($9,400.96) per car, based on a predicted volume of 60,000 units.

The launch satisfies Lei’s goal, as he 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.

Other Chinese EV brands with similar models offered price reductions and subsidies after the SU7’s launch. According to Citi analysts, there would 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.

(Adapted from ChannelNewsAsia.com)

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