Shares of Xiaomi had their biggest intraday gain in more than a year after the company announced that it will start selling its long-awaited electric cars this month.
The Chinese company has been developing its own electric vehicle for a long time. At the end of last year, Xiaomi showed its first electric sedan with a panoramic glass roof and a top speed of 265 km/h. Now the company is ready to start selling its cars and enter the highly competitive electric vehicle market in China, which is led by Tesla and BYD.
Xiaomi will offer its SU7 series for purchase starting March 28 in 29 cities, the company said in a post on Weibo, but did not disclose prices. Following the news, its shares rose by 9.9% in Hong Kong.
However, Xiaomi is entering the electric car market at a bad time. Recently, this niche has become less attractive as Tesla and BYD wage a price war to attract Chinese consumers, and the rest of the industry is facing falling margins and slowing sales growth. Apple recently canceled its long-running electric car project because it was unable to overcome the difficulties of adapting its technological expertise to a completely new area of production.
Xiaomi hopes to succeed where Apple failed. Launched 3 years ago, the electric vehicle initiative is significantly different from the Chinese company’s previous experience. Xiaomi’s main business is online sales of phones and other electronic devices at a relatively affordable price. However, co-founder Lei Jun said that Xiaomi’s electric car will not be a budget offer. Analysts expect the average price to be $30.7-$36.2 thousand with a production volume of 30-50 thousand units in the first year.
Xiaomi has partnered with the state-owned Beijing Automotive Group to avoid long waits for production permits from Chinese regulators. SU7 (Speed Ultra) cars will be able to accelerate from 0 to 100 km/h in just 2.78 seconds.
Source: bloomberg