Xiaomi Adds $7.6B to Its Market Capitalization after Latest EV Launch

Shares of China's Xiaomi saw a remarkable surge of up to 16 percent on Tuesday (Apr 2), propelled by strong interest in the electronics maker's recently launched electric vehicle. Despite a brokerage's forecast of significant losses per car this year, Xiaomi's market value soared, reaching its highest level since January 2022.

The debut of Xiaomi's first car, which borrows styling cues from Porsche, generated significant excitement among investors. The surge in Xiaomi's shares added approximately US$7.6 billion to its market capitalization, which now stands at US$55.2 billion, surpassing the valuations of traditional US automakers General Motors and Ford.

Xiaomi's entry into the electric vehicle market with its SU7, or Speed Ultra 7, comes with an appealing price point - under US$30,000 for the base model, making it cheaper than Tesla's Model 3 in China. Despite the competitive landscape of China's electric vehicle market, characterized by intense price competition and slowing demand, Xiaomi's strong financial position and expertise in smartphones are seen as advantages.

Analysts highlight Xiaomi's deeper pockets compared to many EV startups and its smartphone expertise, which could give it an edge in developing smart dashboards, a feature highly valued by Chinese consumers. The company's SU7 sedan has garnered significant interest, with potential buyers facing wait times of four to seven months. Xiaomi reported 88,898 pre-orders for the car within the first 24 hours of sales, indicating robust demand.

Furthermore, Xiaomi has already produced 5,000 units of the SU7, branded as the "founders edition," which includes additional accessories for early buyers. Despite the anticipated losses per car, Xiaomi's foray into the electric vehicle market has generated considerable enthusiasm and investor confidence.