Xiaomi's Electric Car Launch Sparks 16% Surge in Hong Kong-Listed Shares

Xiaomi's Success in the Electric Car Market

April 6, 2022

Surge in Xiaomi's Stock

Beijing - Xiaomi, the Chinese smartphone maker, experienced a significant surge in its stock value on Tuesday, escalating by a remarkable 16% on the occasion of the launch of its SU7 electric car. This surge marks the first trading day since the introduction of the vehicle just ahead of the Easter holiday. The Hong Kong-listed shares of Xiaomi peaked at 17.34 Hong Kong dollars on an intraday basis, reaching their highest level since January 2022.

Competitive Market Entry

In an unmistakable demonstration of the fierce competition within China's electric car market, Xiaomi boldly declared that the SU7 would be available at a price approximately $4,000 lower than Tesla's Model 3. Additionally, the company claimed that the new car would offer an extended driving range, further intensifying the competition in the electric car segment.

Overwhelming Response

The SU7 has already garnered immense interest, as indicated by Xiaomi's online store, which displayed wait times of at least 5 months for the basic version. Within a remarkably short time frame of 27 minutes since the commencement of sales at 10 p.m. Beijing time on Thursday, the company received orders for over 50,000 cars. This overwhelming response underscores the strong demand and potential for growth in the electric vehicle industry.

Market Dynamics

Distinctive incentives were announced by Chinese electric vehicle startups Xpeng and Nio on Monday, offering substantial car purchase subsidies of 20,000 yuan ($2,800) and 10,000 yuan per vehicle, respectively. These promotional deals were initiated in alignment with the Chinese government's policy efforts to stimulate consumption through trade-ins. These initiatives reflect the competitive and evolving landscape of the electric car market in China.

Market Trends

Despite the recent competitive initiatives, the growth of new energy vehicles in the world's largest auto market has displayed signs of deceleration. The penetration of battery and hybrid-powered passenger cars has surpassed one third of new cars sold in China. Li Auto, a significant player in the industry, delivered 28,984 cars in March. While this demonstrates an increase from the previous month, it falls below the company's recent delivery performance. With regards to other market players, Nio and Xpeng also adjusted their first quarter forecasts, signaling a challenging landscape in the electric car industry.

Industry Giants

Amidst these market dynamics, Huawei's new energy car brand Aito delivered 31,727 cars in March. However, BYD remains the dominant industry player, with 139,902 battery-powered passenger cars and 161,729 hybrid vehicles sold in March. BYD's total passenger car sales exhibited a substantial increase of nearly 14% compared to the previous year, solidifying its position as a formidable force in the electric car market.