(Bloomberg) — Xiaomi Corp.’s shares had their biggest intraday jump in greater than a yr after the company announced it’s going to begin selling its long-awaited electric vehicles this month.
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The Beijing-based electronics firm, best known for its smartphones, has made a multibillion-dollar bet on breaking into the red-hot contest in China’s EV market led by Tesla Inc. and BYD Co. It might offer its SU7 series for purchase on March 28 in 29 cities, the company said in a Weibo post, without disclosing pricing. Its shares rose as much as 9.9% in Hong Kong after the news.
The crowded EV arena has grown less attractive in recent times, as Tesla and BYD are locked in a price competition to woo Chinese consumers and the rest of the industry sees margins eroding and growth slowing. Apple Inc. recently canceled its long-incubating EV project, after failing to beat challenges in adapting its technological expertise to an entire latest field of manufacturing.
Xiaomi’s foray into carmaking, led by billionaire co-founder Lei Jun, can should succeed where Apple didn’t. Initiated three years ago, the EV endeavor is Lei’s final entrepreneurial bet and arguably even tougher than constructing a smartphone maker from scratch. Xiaomi’s primary business is in online sales of high-specification, low-price handsets, but Lei has said the company’s EV won’t be a budget proposition.
What Bloomberg Intelligence Says
Xiaomi’s plan to start selling its first EV on March 28, announced by CEO Lei Jun on Weibo, could boost sales by as much as 4% this yr and can grow to be a long-term growth driver. Pricing will be crucial amid strong competition with BYD, Nio and Li Auto. We expect a mean price of 220,000-260,000 yuan and first-year volume of 30,000-50,000 units.
— Steven Tseng and Woo Jin Ho, BI analysts
The Chinese firm has partnered with state-owned Beijing Automotive Group Co. for the brand recent EVs, to avoid extending the protracted wait for a producing permit from domestic regulators. The SU7 vehicles are entering a hard market, as state reimbursements for EV buyers of as much as 60,000 yuan ($8,400) led to 2022.
The SU7 name stands for Speed Ultra, and the vehicles can go from 0 to 100kmh in 2.78 seconds, Xiaomi said.
–With assistance from Jessica Sui.
(Updates with analyst comment)
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