Shares of China's Xiaomi were up as much as 16% on Tuesday as the electronics maker's sporty electric vehicle (EV) launched last week garnered much interest, though a brokerage forecast the firm would lose nearly $10,000 per car this year.
Xiaomi added about $7.6 billion to its market value, and its shares touched their highest since January 2022 on the first day of trading. The firm launched its debut car on Thursday, which draws styling cues from Porsche.
The Chinese company, which gets a majority of its $37.5 billion revenue from being a smartphone vendor, now has a valuation of $55.2 billion, higher than that of traditional U.S. automakers General Motors (GM) and Ford at $52.4 billion and $53.1 billion, respectively.
Xiaomi's SU7 – short for Speed Ultra 7 – enters a crowded China EV market with an attention-grabbing price tag – under $30,000 for the base model, cheaper than Tesla's Model 3 in China.
While the world's largest auto market is challenging for newcomers due to a cut-throat EV price war underway and slowing demand, analysts have said Xiaomi has deeper pockets than most EV startups and its smartphone expertise gives it an edge in smart dashboards – a feature prized by Chinese consumers.
Xiaomi has advised potential buyers of its sedan that they could face wait times of four to seven months, a sign of strong interest. It said on Friday that it had received 88,898 pre-orders for the car in the first 24 hours of sales.
The company has already produced 5,000 SU7 vehicles, which it dubbed the "founders edition," and it says they come with additional accessories for early buyers. On Tuesday, Xiaomi founder and CEO Lei Jun said on his social media account deliveries from that batch would start across 28 Chinese cities on Wednesday and would include a ceremony at its Beijing factory.
Xiaomi has said it expects to lose money on the SU7, and some analysts predict a substantial loss.
"We maintain our cautious view that ultimately everyone could be a loser" within the 200,000 to 300,000 yuan ($27,649.90 to $41,474.85) segment, Citi Research analysts said in a note on Tuesday.
Based on a projected volume of 60,000 units this year, Citi estimates the SU7 could generate a net loss of 4.1 billion yuan ($566.82 million) – on average, 68,000 yuan ($9,400.96) per car.
The launch fulfills Lei's ambition. In 2021, he announced the company's foray into EVs, pledging to invest $10 billion in the auto business as "the last major entrepreneurship project" of his life.
Following the SU7 launch, other Chinese EV brands with comparable models announced price cuts and subsidies. In 2024, the 200,000 to 300,000 yuan segment will see around 240 EV models vying for sales, up by almost a fifth versus the previous year, Citi analysts said.