Xiaomi Corp., the Chinese smartphone maker, experienced a surge in its stock price in Hong Kong as orders for its first electric vehicle (EV) surpassed expectations.
The company received nearly 90,000 orders for its new EV, called the SU7, within the first 24 hours of sales. This strong demand has fueled optimism that Xiaomi may succeed in China’s highly competitive car market.
The success of the SU7 has drawn comparisons to Tesla Inc.’s Model 3, positioning it as one of the best-selling premium EV sedans in China.
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Analysts at Goldman Sachs Group Inc. projected that orders for Xiaomi’s EV may reach 100,000 units this year, while Citigroup Inc. estimated full-year sales to be around 55,000-70,000 units.
However, one key concern is Xiaomi’s ability to manufacture and deliver the vehicles promptly. The company will need to focus on ramping up its manufacturing capabilities over the next few months.
Goldman Sachs analysts, including Timothy Zhao, highlighted this as a top priority, noting that the average waiting time for the SU7 has already extended to 18-21 weeks compared to the initial estimate of 5-8 weeks.
The global EV market, once a booming sector with substantial government subsidies, has become highly competitive. China’s electrified car market is expected to slow for a second consecutive year, with sales growth projected to drop to 25% in 2024 compared to 36% in the previous year and 96% in 2022.
Xiaomi’s strong entry into the EV market may pose a threat to more established competitors.
Carmakers such as XPeng Inc. and BYD Co. may need to adjust their pricing strategies to keep up with the competition, according to analysts at Citigroup. XPeng’s stock fell as much as 9% in Hong Kong, while BYD’s stock rose 2.9%.
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