Xiaomi enters China’s electric vehicle sector to directly compete with Tesla | Wilnesh News
As the auto industry struggles with the rapid rise of BYD, Chinese smartphone company Xiaomi has burst onto the market, undercutting Tesla and vowing to become a global player. Although Apple abandoned the development of electric self-driving cars this year, Xiaomi founder and CEO Lei Jun promised that making the car would not only be his final legacy project, but a product that would make the company one of the world’s top five automakers . in the world over the next twenty years. Xiaomi’s Hong Kong-listed shares soared to a two-year high last week after the company launched its electric SU7 sedan, which is about $4,000 cheaper than Tesla’s Model 3 and has similar technical capabilities. Wider analyst attention In the past few days, Xiaomi has gained wider attention from analysts in the automotive and technology industries, not just those who previously viewed it as a smartphone business. “The addition of Xiaomi to the list comes as Western legacy auto companies seek ways to achieve greater scale, improve capital discipline and reduce execution risk,” Morgan Stanley auto analyst Adam Jonas said in a note. Among the list of capable Chinese auto/tech companies, these companies may represent attractive candidates for collaboration.” Watch out Thursday. Meanwhile, Tesla revealed last week that its first-quarter deliveries were down from a year earlier. Jonas pointed out that excluding the impact of the new crown epidemic, this is Tesla’s first decline in deliveries since 2012. While he remains bullish on Tesla in the long term, he and his team will host a customer webinar on Tuesday about Xiaomi, Tesla and global electric vehicles. Andy Meng, a technology hardware analyst at Morgan Stanley Greater China, said in a report on Monday: “If Xiaomi can continue to outperform its peers in driver assistance and smart cockpit features, we believe it is likely to become a company with huge growth potential. Potential disruptive power.” Meng reiterated the bank’s overweight rating on Xiaomi and its price target of HK$17.50 ($2.24). Xiaomi shares almost reached that price during last week’s surge. The stock has since given back most of those gains and is now little changed from this year. Meanwhile, Tesla shares are down 34% year to date. On Wednesday, Xiaomi said it had received more than 100,000 SU7 orders, of which more than 40,000 were locked and non-cancellable. On the same day, a delivery ceremony for the first batch of cars was held. Six-month waiting time According to data from Xiaomi’s online sales platform, most customers face a waiting time of nearly six months or even longer. Taylor Ogan, Shenzhen-based chief executive of Snow Cow Capital, said he was watching how consumers actually like driving cars before committing to buying Xiaomi shares. “I don’t think the stock price will do particularly well over the next two quarters,” he said in an interview on Friday. “After that, this could be a cash cow. This is something every avid Xiaomi ecosystem user needs.” A few months before the car’s launch, Xiaomi announced a new operating system called HyperOS, and A strategy to connect consumers to their homes and cars. The company generates most of its revenue from smartphones, but a large portion also comes from a range of home appliances, many of which are controlled using apps. At the recent SU7 launch event, Xiaomi CEO Lei Jun claimed that connected lights and appliances can automatically turn on to predetermined settings as drivers approach home. Such an ecosystem offers “the built-in recurring revenue model every CEO dreams of,” Ogan said. “The most important thing is that you can subscribe.” He said that he thinks the probability of SU7 failure is low, but if the car does not live up to expectations, Xiaomi will have a hard time recovering. Although Xiaomi is trying to build its own ecosystem, the company also supports Apple’s Car Play system and iPad. Nick Lai, head of China equity research and head of Asia-Pacific automotive business at J.P. Morgan, said: “We believe that the ultimate result of Xiaomi’s entry into the electric vehicle market will be the faster penetration of pure electric vehicles/new energy vehicles in China, so internal combustion engine brands or products will become Major losers,” Research said in a report on Monday. He refers to internal combustion engine vehicles, pure electric vehicles and new energy vehicles. Xiaomi’s strengths include existing brand recognition in China and 110 billion yuan ($15.7 billion) of cash on its balance sheet, which could help the company weather a recent price war, the report said. Lei Jun said Xiaomi currently produces each car at a loss, but noted that the company has invested in its own factories to increase production. It’s unclear whether the factory is fully operational, but Ray claimed last month that the factory could produce an SU7 every 76 seconds in an almost fully automated process. “Xiaomi also demonstrated its electric vehicle factory, which has highly automated production lines for key processes (painting, stamping, die-casting, body assembly, etc.) and is backed by smart manufacturing expertise. We believe that a high degree of automation will help accelerate Improvement in profitability of its electric vehicles. Medium to long term,” J.P. Morgan technical analyst Gokul Hariharan said in a separate note. The bank gave Xiaomi an investment recommendation of overweight, with a target price of HK$21. That’s about 35% higher than the stock’s closing price on Friday. One risk is China’s ability to produce electric vehicles at far lower prices than overseas rivals, prompting warnings that trade tensions will intensify. Just on Friday, U.S. Treasury Secretary Janet Yellen highlighted concerns about overcapacity in China during a high-level meeting in China. But while Xiaomi has hinted at overseas car plans, it has pledged to focus on the Chinese market first.Currently, the company sells smartphones globally, but not in the United States
