Xiaomi's launch of its first EV model drives shares to soar

In the midst of a fierce pricing war, China's Xiaomi announced that it will begin shipping its first electric vehicle (EV), the model SU7, this month.

The fifth-largest smartphone manufacturer in China said on Weibo that it will be accepting orders at 59 locations across 29 cities. The new EV's sticker tag is anticipated to be revealed at a launch ceremony on March 28. The morning session saw a 7% increase in Xiaomi's shares.

China had a 21% increase in EV sales for the entire year of 2023, with sales up 18% in January-February. In response to declining domestic demand, industry leader BYD has been cutting prices more deeply this year in an effort to win over customers.

Xiaomi intends to rank among the top five automakers in the world, according to Chief Executive Lei Jun, during the unveiling of the Speed Ultra 7 (SU7) vehicle in December. Lei claimed that the SU7's "super electric motor" technology could accelerate vehicles more quickly than those made by Tesla and Porsche. Analysts predict that the car's operating system, which is similar to that of Xiaomi's well-known phones and other electronics, will appeal to the company's current clientele.

With the market for smartphones stagnant, Xiaomi has been attempting to expand into EV sales in addition to its primary business, a strategy it first announced in 2021. A division of the state-owned carmaker BAIC Group will manufacture its automobiles in a Beijing plant with a 200,000 vehicle capacity annually.

The company behind smartphones, which has promised to invest $10 billion in cars over the course of ten years, is one of the few new entrants in China's EV market to receive approval from authorities, who have been hesitant to add to an already glut of supply.