Xiaomi's EV Ambitions Soar Its Stock

Xiaomi's Hong Kong-listed shares have experienced a meteoric rise in recent months, fueled by its growing success in the electric vehicle (EV) sector. The smartphone giant unveiled its maiden EV, the SU7, nearly a year ago.

With its EV aspirations, Xiaomi aims to deliver 300,000 vehicles by 2025, driving up the wealth of its CEO, Lei Jun.

A Competitive Entry into the EV Market

Despite its prominence in smartphone manufacturing, Xiaomi's EV aspirations have propelled its stock to new heights. The Chinese company's Hong Kong-listed shares have surged by 31% this year and an impressive 255% over the past 12 months. Investors are drawn to Xiaomi's ambitious EV plans.

Xiaomi's first offering in the EV market, the SU7, debuted just three years after the company's announcement to foray into the automotive industry. Its launch came shortly after Apple abandoned its long-standing car project.

Initial reviews of the SU7 were overwhelmingly positive, with critics praising its impressive performance despite Xiaomi's lack of prior experience in vehicle production. The car has also garnered admiration from Ford CEO Jim Farley.

The SU7's competitive pricing of 215,900 yuan (approximately $30,000) positions it favorably against competitors. In China, it is priced about 30,000 yuan ($4,000) below the Tesla Model 3.

Strong Demand and Production Constraints

Xiaomi sold over 135,000 vehicles last year, and Lei Jun has set a target of 300,000 units in 2025. The SU7's popularity is evident in its long waiting lists.

Deutsche Bank's Bin Wing reports that as of January 2025, the estimated number of SU7 orders stands at 41,000, up from 30,000 in December. The company's impressive showroom traffic has significantly contributed to these orders.

Xiaomi acknowledges supply chain constraints due to high demand and the upcoming launch of the SU7 Ultra on March 31 and the YU7 in mid-2025. Jun expressed his commitment to streamline production without compromising quality and safety.

Positive Analyst Sentiment and Share Performance

Xiaomi's stock performance has benefited from the strong demand for its EV. Lei Jun's net worth has climbed by $5.8 billion this year to $35.4 billion, according to the Bloomberg Billionaires Index, propelling him to 49th place on the rich list.

HSBC analyst Frank He maintains a "buy" rating on Xiaomi's stock, raising the target price from 37.90 to 49.90 HK dollars. He notes that SU7 deliveries exceeded 20,000 units in January for the fourth consecutive month.

HSBC also anticipates China's smartphone subsidy scheme to further boost Xiaomi's smartphone shipments. The company's third-quarter global smartphone market share stands at 14%, with shipments exhibiting a 3% year-on-year growth driven by solid performance in China.