Thematic Spotlight: Xiaomi Pivots from Mobile Phone to Automobile

Xiaomi Corp, a Chinese firm mainly known for mobile phones and electric scooters, has successfully made its first foray into the EV industry. Officially unveiled in the tail-end of 2023, the Speed Ultra 7 or SU7 is Xiaomi’s first ever attempt at designing and manufacturing an electric vehicle.1 With analysts forecasting weaker EV industry growth in 2024, many expected the release of the SU7 to be met with mild market interest at best.2 However, as of data released last week by Xiaomi, demand for the new EV far exceeded analysts’ expectations. Nearly 90,000 orders were received by the company within 24 hours of official release, in stark contrast to market estimates of roughly 40,000 orders across the entire year.3

The Xiaomi SU7 was one of the most surprising entrants to the EV industry in 2023. Despite Xiaomi starting from a seemingly blank slate, SU7 came equipped with impressive details such as a max range of up to 800km, adjustable spoilers, and a top speed of 265 km/h – statistics that more than rivalled industry veterans such as Tesla and BYD.4 In a year which saw Apple Inc. cancel its highly anticipated EV project, Xiaomi’s newfound success is a sign that the EV industry’s projected slow-down may not be as severe as first thought and that new entrants can still find success.5 Now, Xiaomi’s major challenge will be to match its customer demand with a ramp-up in manufacturing capability.

Xiaomi’s share price jumped as much as 16% on its first day of trading since the release of SU7’s order metrics. Chinese EV giant BYD also saw its share price rise 2.6% as investors noted the surprising demand.6

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Forecasts are not guaranteed and undue reliance should not be placed on them. This information is based on views held by Global X as at 03/04/2024. Investing involves risk, including the possible loss of principal. Diversification does not ensure a profit nor guarantee against a loss.