Xiaomi Corp. (XIACF, Financial) is gearing up to introduce its inaugural electric vehicle (EV) this Thursday, a move that puts its recent $8 billion market surge to the test. The launch marks Xiaomi's ambitious entry into the highly competitive EV sector, challenging established players like Tesla Inc. (TSLA, Financial) and BYD Co. (BYDDF, Financial).
The Chinese tech giant is set to commence sales of its SU7 series in China, leveraging a $10 billion investment to tap into the world's largest EV market. Analysts predict the sedan will compete in a fiercely contested price segment, potentially impacting Xiaomi's stock momentum which has seen a 22% increase since February.
Lei Jun, Xiaomi's billionaire co-founder, views this venture as a significant challenge, aiming to replicate the company's previous success in the tech industry. However, with the ongoing EV price war in China, the market's reception of the SU7 could be crucial for Xiaomi's future growth.
Despite expectations of initial profitability challenges, JPMorgan Chase & Co. analysts believe the EV segment could positively influence Xiaomi's share price in the early stages, anticipating over 50,000 SU7 shipments within the first year.
The EV market in China is expected to see a slowdown, with sales growth projected to decrease. Yet, leaders like BYD and Li Auto Inc. (LI, Financial) have maintained strong sales, setting a high bar for Xiaomi's entry. The SU7, with its competitive pricing and advanced features, aims to capture consumer interest amidst a crowded marketplace.
Investors and analysts are keenly watching the initial orders and consumer feedback for the SU7, with some hopeful that Xiaomi can mirror Huawei Technologies Co.'s success in the EV space through strategic partnerships and leveraging its tech ecosystem.
Goldman Sachs Group Inc. (GS, Financial) forecasts Xiaomi's EV sales to hit 14 billion yuan in 2024, a significant contribution to the company's overall revenue. The unveiling of the SU7 is seen as an opportunity for the market to reassess Xiaomi's growth potential in new sectors.
