Xiaomi shifts into fast lane with SU7, but can it win EV race?
Xiaomi shares rise after signs of strong demand for its SU7 electric sedan, but can it win the EV race against incumbents like Tesla and BYD?
IGTV's Angeline Ong looks at what the Chinese maker of smartphones has had to sacrifice in order to prompt the surge in demand for its EV.
(AI Video Summary)
Xiaomi's entry into the EV market
Xiaomi, a company well-known for its smartphones, has recently made a big move into the electric vehicle (EV) market with its SU7 model. This puts them in direct competition with popular brands like Tesla. The SU7 is priced lower than Tesla's Model 3 in China, which is attracting budget-conscious customers. However, it's estimated that Xiaomi will lose about $10,000 for each car sold to gain market share. Despite this, Xiaomi has received a large number of orders, showing that there is strong initial demand for their EV.
Impact on share price
This move into the EV market has had a big impact on Xiaomi's value as a company. It's now worth $55 billion, which is higher than established US automakers like General Motors and Ford. This shows that the EV industry is growing quickly and has a lot of potential. Xiaomi hopes to use its existing reputation and trust from its smartphone business to establish itself in the EV market.
The competition among EV manufacturers is getting more intense, and Xiaomi's entry into the market has made it even more competitive. The SU7 offers a more affordable option compared to Tesla's Model 3, which appeals to customers in China who are price-sensitive. Despite the expected losses for each car sold, Xiaomi believes that this pricing strategy will help them gain a significant market share.
It's still uncertain how Xiaomi's venture into the EV industry will turn out. While they may face financial challenges in the short term due to the expected losses, they hope to compensate for this by increasing their market share and benefiting from economies of scale in the future. As more people switch to EVs and regulations on traditional cars get stricter, Xiaomi's entry into the market could lead to long-term success and establish them as a major player in the evolving automotive industry.
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