(Bloomberg) — Xiaomi Corp. is rapidly closing in on a new all-time-high share price, having cracked the crowded market for electric vehicles in a repeat of its earlier success with smartphones.
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Its stock has slightly more than doubled this year, outpacing global peers, on the company’s surprisingly quick rise in China’s EV market to challenge leaders BYD Co. and Tesla Inc. The next big leg up may come as Xiaomi prepares for the possible summer launch of its next model, a pure electric sport utility vehicle.
Investors are hoping to see a similar trajectory to when Xiaomi launched its first smartphone in 2011 and grew within a few years to rival Apple Inc. and Samsung Electronics Co., making its founder Lei Jun a billionaire in the process. Xiaomi’s Hong Kong-listed shares are now about 10% away from their 2021 peak.
“Xiaomi is the dark horse,” said Shuyan Feng, deputy general manager for investment management at Huatai Asset Management (Hong Kong) Co. “When Lei Jun touted Xiaomi’s $10 billion foray into the EV market, there was serious discounting of the stock, and few believed it would actually make it given how competitive this market is.”
Xiaomi’s stock has outperformed global gauges of auto and smartphone makers amid cloudy prospects for recoveries in markets for their products. Its strong EV debut is notable in a year when Chinese upstarts like Nio Inc. and Li Auto Inc. have struggled with worries over the demand outlook, weighing on their share prices.
Beijing-based Xiaomi reported stronger-than-expected sales growth for the September quarter, with the new EV business accounting for about 10% of its total revenue. The company made quick inroads by leveraging the marketing capabilities and strong appeal among young consumers it cultivated in smartphones.
Xiaomi has forecast 130,000 deliveries for its SU7 sedan this year, a target it has raised twice. The vehicle is available in nine color and features smart driving functionality plus a connected entertainment system. Analysts expect the company’s total sales to more than double in 2025 with the launch of its YU7 SUV.
“Xiaomi’s EV business could overtake smartphones as the company’s key sales-growth driver in 2025,” Bloomberg Intelligence analyst Steven Tseng wrote in a note. It’s next model “might spur EV sales growth of 137% in 2025 due to the popularity of larger vehicles in China and a ramp-up in capacity at its second EV factory.”
