China's Xiaomi to launch first electric SUV with company now worth more than BYD
China's Xiaomi to launch first electric SUV with company now worth more than BYD
Hong Kong – The unveiling of Xiaomi's first electric SUV on June 26 will showcase how the Chinese tech company has become an investor darling with its high-stakes bet on the auto market.
Shares of the firm founded by billionaire Lei Jun are within striking distance of a fresh record in Hong Kong after a 64 per cent surge in 2025. Now valued at US$187 billion ($239 billion), Xiaomi is worth more than Chinese EV leader BYD as it grows its footprint in the world's largest car market.
The new YU7, a direct competitor to Tesla's Model Y, may help it accomplish that goal. The SUV is a hallmark of Xiaomi's US$10 billion EV strategy as larger vehicles gain popularity across China. It also signifies a deeper shift in Xiaomi's business model, offering consumers the ability to sync key aspects of their daily lives. That combined ecosystem is what some investors are saying will cement its place as a leader in China's trillion-dollar tech sector.
The new offering 'not only gives Xiaomi business exposure in the fast growing EV business in China, but more importantly the synergy,' said June Lui, a portfolio manager at Polen Capital. 'Globally, there is no one company that can connect your mobile device, your home appliances and your car – and they have all three.'
Over the past 12 months, Xiaomi's shares have more than tripled, topping a gauge of peers as it leverages its smartphone success into China's crowded EV market.
The rally, which stands out even amid the renaissance in China tech thanks to DeepSeek's breakthrough, has made Xiaomi one of the country's most expensive tech stocks. Shares are now trading at nearly 30 times forward earnings, almost double the valuation of Tencent and even above US giant Apple.
Still, overwhelmingly bullish sell-side analysts hope its sportier and more premium second EV will help Xiaomi capture a new customer segment and drive the stock even higher. Order momentum for the YU7 is also key for boosting production scale, which is critical for improving unit economics in the auto business.
Pricing estimates by analysts for the YU7 range from 250,000 yuan (S$44,400) to 330,000 yuan. In comparison, Tesla's Model Y starts from 263,500 yuan while the electric version of BYD's Tang L SUV, which is just slightly smaller than the YU7, sells for between 239,800 and 289,800 yuan.
Xiaomi expects to deliver 350,000 cars in 2025, more than double the level in 2024, following a strong debut for its SU7 sedan. Xiaomi plans to turn its EV arm profitable in the second half of 2025.
Part of its strategy is emulating Tesla by focusing on producing a small number of products but selling a lot of them, said Edison Lee, an analyst at Jefferies. 'Their first car is a big success. But if they cannot repeat that success, they will not be able to scale up to the extent that they thought they can.'
Xiaomi's SUV launch comes amid a setback in the company's plans after a fatal crash involving its marquee electric car in March. The accident forced Xiaomi to scrap the YU7 unveiling at the Shanghai auto show in April and spurred regulators to tighten rules around such autonomous driving systems.
Co-founded in 2010 by Lei Jun, a serial Chinese entrepreneur, Xiaomi has learned from experience as it fought fiercely to become one of the world's top smartphone vendors. From early on, the company was known for its value-for-money products and internet marketing that lured young consumers.
Xiaomi needed a new growth engine as its core smartphone business matured, with revenue declining for two years during a global market downturn through 2023. Its 2024 EV entry was initially met with industry and investor trepidation as it competed with dozens of others amid a brutal price war.
Looking forward, how well Xiaomi continues to perform will depend on how quickly the YU7 sells and where pricing ends up. BLOOMBERG
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