 "China’s EV market, the largest globally, is expected to see sales surpass 11 million units this year. While competition is fierce, Xiaomi’s innovative approach and cost-effective manufacturing processes have set it apart. Image Credit: Reuters")
Xiaomi Corp. is riding high on the success of its electric vehicle (EV) ventures, with its stock skyrocketing by an unprecedented 103 per cent this year. The tech giant, best known for its dominance in the smartphone market, has made an impressive entry into China’s competitive EV sector, positioning itself as a significant challenger to established leaders like BYD and Tesla.
This momentum has brought Xiaomi’s Hong Kong-listed shares within striking distance of their 2021 peak, bolstered by anticipation of its upcoming electric SUV launch this summer.
From smartphones to EVs: A winning formula
The company’s rapid success in the EV market mirrors its meteoric rise in the smartphone industry. Xiaomi’s first smartphone, launched in 2011, quickly propelled it into the ranks of global giants like Apple and Samsung. Now, the company’s EV business is following a similar trajectory. Its recently launched SU7 sedan has gained widespread popularity, accounting for 10 per cent of Xiaomi’s total revenue in the September quarter. With features like smart driving capabilities and a connected entertainment system, the vehicle has helped Xiaomi carve out a niche among younger, tech-savvy consumers.
Xiaomi’s ambitious forecast of 130,000 deliveries for the SU7 this year has already been raised twice, reflecting strong demand. Analysts expect the company’s forthcoming YU7 SUV to drive even greater growth, predicting total sales could more than double by 2025. This optimism is rooted in the rising appeal of larger vehicles in China and the company’s plans to scale production at its second EV factory.
Navigating a competitive landscape
China’s EV market, the largest globally, is expected to see sales surpass 11 million units this year. While competition is fierce, Xiaomi’s innovative approach and cost-effective manufacturing processes have set it apart.
By leveraging its expertise in the smartphone sector, the company has managed to optimise production and keep costs under control—a critical advantage in a crowded market. Analysts at Macquarie Group predict Xiaomi’s YU7 SUV, priced between $34,000 and $45,000, could help the company gain further market share.
Challenges ahead, but analysts stay optimistic
Despite Xiaomi’s remarkable growth, challenges remain. The company faces valuation concerns after its massive stock rally, with shares now trading above their five-year median. Additionally, potential geopolitical risks, such as parts procurement hurdles under a possible Trump second term, loom on the horizon.
Nevertheless, analysts remain bullish. With 42 buy recommendations against just one hold and one sell, the consensus is clear: Xiaomi’s profitability, innovative edge, and strong foothold in the EV market position it for continued success. Its transition from smartphones to EVs could mark the beginning of an even bigger growth story.