Xiaomi’s stock rose after the release of its new electric car, the SU7, which attracted considerable consumer interest. Analysts, however, predict potential losses for Xiaomi on each car sold this year. The company’s market value increased by $7.6 billion, reaching its highest point since January 2022. With SU7 competitively priced below $30,000 for the base model, it presents a challenge to Tesla’s Model 3 in the Chinese market. Xiaomi warned prospective buyers about potential wait times of four to seven months due to high demand, with initial pre-orders reaching 88,898 within the first 24 hours.
Experts caution Xiaomi about potential financial challenges in the fiercely competitive electric vehicle market. Estimates suggest a significant loss of approximately $9,400 per car sold, indicating hurdles for Xiaomi despite its ambitious venture into automotive manufacturing. CEO Lei Jun’s aspiration to enter the automotive sector was realized with the launch of SU7, following his commitment to invest $10 billion in the auto business. The introduction of SU7 also prompted price reductions and subsidies from other Chinese EV manufacturers, intensifying competition in a market expected to see a significant influx of new electric car models this year.
