According to Citi analysts, Xiaomi’s successful EV launch exceeded expectations, with demand for its SU7 EV being 3-5 times higher than anticipated. The analysts attribute this success to the model’s aggressive pricing, which undercuts Tesla’s Model 3 and other competitors in the Chinese EV market. Despite the highly competitive landscape, Xiaomi’s EV ambitions have boosted investor confidence, prompting Citi to hike its target price for the company.
Xiaomi aims to become the world’s largest smartphone maker by shipments in 2028 and among the top three EV makers. However, the company acknowledges that it expects to lose money on each SU7 EV sold. Nonetheless, Xiaomi’s financial resources give it an advantage over its EV competitors.
Citi expects a modest increase in Xiaomi’s smartphone sales despite weak global demand, although margins are predicted to decline due to rising raw material costs. The company’s goal to become the top smartphone maker by shipments adds to the positive outlook.
The Chinese EV market, the world’s largest, has become increasingly competitive in recent years, with manufacturers slashing prices to gain market share. This trend, initiated by Tesla’s aggressive price cuts, has intensified competition. However, concerns linger about a potential slowdown in Chinese EV demand due to the country’s broader economic challenges.
