The market value of Chinese electric vehicle startup Xiaomi reportedly increased by a whopping $4 billion following the successful launch of its first-ever model, SU7, Reuters reported.
Xiaomi shares surged following the SU7’s launch
Xiaomi shares rose as much as 16% on Tuesday after launching its inaugural electric vehicle offering, which attracted considerable interest among investors and enthusiasts.
However, brokerage projects Xiaomi to lose almost $10,000 per electric car it sells this year.
The stock reportedly reached its highest level since January 2022 on the first day of trading after Xiaomi SU7’s launch on Thursday. Xiaomi’s market value rose 9%, adding $4 billion.
It is worth noting that Xiaomi’s market valuation of $55 billion at a HK$17.34 share price during the day’s highest beat American legacy automakers General Motors ($52 billion) and Ford ($53 billion).
Strong demand
Xiaomi warned prospective SU7 customers that wait times may last four to seven months, suggesting a very high demand for the electric sedan.
True enough, it announced that pre-orders reached 88,898 in just the first 24 hours of launch. In this sense, customers who placed a 5,000-yuan ($850) deposit for the SU7 will need to wait up to seven long months to receive their cars.
Xiaomi has already built 5,000 SU7 vehicles in the “Founder’s Edition,” which apparently features extra accessories for early customers.
Due to the growing demand, Chinese news platform Yicai reported that Xioami had instructed suppliers to bolster the SU7’s monthly production output to 10,000 units. This capacity indicates a huge increase from just 3,000 in March and 6,000 in May.
Xiaomi founder and chief executive Lei Jun announced yesterday on his social media account the company’s plans to kick off the first batch of deliveries across 28 local cities as early as Wednesday.
Loss forecast
Citi Research analysts indicated in a note on Tuesday that the SU7 could yield a 4.1 billion yuan ($566.82 million) net loss or 68,000 yuan ($9,400.96) per car on average. This forecast is based on the 60,000 units project annual volume.
They further said that they retain their “cautious view that ultimately everyone could be a loser” within the 200,000 to 300,000 yuan ($27,649.90 to $41,474.85) market segment.
The Xiaomi SU7 (Speed Ultra 7) seeks to compete in the highly competitive Chinese market with a very enticing price of just below $30,000 for the base model, undercutting the popular Tesla Model 3.
Despite the potential losses, analysts believe that the Chinese automaker has “deeper pockets” than most of electric vehicle startups. In addition, its commendable knowledge and expertise in smartphone-making give it a huge advantage in delivering smart dashboards that are well-loved by Chinese buyers.
