4/2/2024

Xiaomi’s capitalization increased by $7.6 bil

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ХОЧЕШЬ УЗНАТЬ КАК ЗАРАБАТЫВАТЬ НА НОВОСТЯХ?

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Key points:

  • Xiaomi shares rose sharply to January 2022 highs after the presentation of the electric car.
  • The company’s debut electric car SU7 belongs to the budget segment.
  • At the same time, at the initial stage, Xiaomi expects losses from the sale of the new model.

Shares of Chinese electronics giant Xiaomi Corporation soared 16% on Tuesday, reaching their highest level since January 2022. The reason for the rapid growth was the presentation of an electric sports car, which took place last week.

Despite forecasts predicting Xiaomi would lose $10,000 for every car sold, the company’s market value increased by $7.6 billion in one day.

Xiaomi’s debut electric car, whose design is inspired by Porsche, has aroused great interest among potential buyers.

Xiaomi is a new competitor for the automotive giants

The Chinese company Xiaomi, known primarily as a smartphone manufacturer, made its debut in the electric vehicle market with the SU7 model. Xiaomi’s valuation after entering the electric vehicle market has exceeded that of traditional automakers such as General Motors and Ford.

The SU7 is positioned as a car in the budget segment and is priced at less than $30,000 for the base model, which is below the price of the Tesla Model 3 in the Chinese market.

Despite the high competition in the Chinese electric vehicle market, Xiaomi has a number of advantages:

  • Significant financial resources compared to most startups in the field.
  • Expertise in smartphone development, which allows the company to create smart dashboards highly valued by Chinese consumers.

The high demand for SU7 is confirmed by the fact that the waiting period for the car is from 4 to 7 months. In the first 24 hours of sales, 88,898 pre-orders were received.

Pessimistic forecasts

The first batch of 5,000 SU7 electric vehicles called is already ready for delivery. Deliveries will begin this Wednesday in 28 cities in China.

However, despite current successes, the prospects are not so clear. The company does not hide that it expects losses from the sale of SU7. Some analysts’ forecasts are even more pessimistic. Citi Research predicts that the SU7 could have a net loss of 4.1 billion yuan ($566.82 million) this year on sales of 60,000 units. The average loss per car will be 68,000 yuan ($9,400.96).

Despite the risks, Xiaomi continues to implement its ambitious plans to enter the electric vehicle market. Thus, the founder of the company, Lei Jun, announced in 2021 his intention to invest $10 billion in the automotive business.

ХОЧЕШЬ УЗНАТЬ КАК ЗАРАБАТЫВАТЬ НА НОВОСТЯХ?

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