Xiaomi’s success means more trouble for battered China electric vehicle stocks
- In contrast to Apple’s failed car dreams, Xiaomi and Huawei are demonstrating early success in transferring their smartphone prowess into the crowded EV market
- The cash-burning Chinese start-ups are seen as more vulnerable to the negative impact of industry-wide price cuts than established traditional carmakers like BYD
Xiaomi’s roaring entry into the electric vehicle (EV) market is dimming the recovery outlook for China’s beaten down auto start-ups.
Hype around the launch and better-than-expected initial orders for the SU7 have helped a rally in Xiaomi shares gain momentum.
Investors, meanwhile, have ramped up bets on further declines in EV makers Nio and Xpeng, with short interest on their US listings at about 86 per cent and 36 per cent of total shares outstanding, respectively.
In stark contrast to Apple’s failed car dreams, Xiaomi and Huawei Technologies are demonstrating early success in transferring their smartphone prowess into the crowded EV market, where rampant price competition is taking a toll.
“The entry of Xiaomi and Huawei is a significant disruption, particularly by the leverage of their expertise in consumer technology and supply chain management,” said Bing Yuan, fund manager at Edmond de Rothschild Asset Management. “Their focus on smart functionalities set a high bar for what consumers expect in terms of vehicle capabilities.”