Investing.com-- Shares of Xiaomi Corp (HK:1810) surged more than 8% on Tuesday after the Chinese technology giant said it will begin deliveries of its long-awaited SU7 electric vehicle by the end of the month.
Xiaomi’s shares jumped 8.5% in Hong Kong trade, reaching a two-month high of HK$14.52. They were among the top boosts to the Hang Seng index, which jumped 1.5%.
The firm said it will commence deliveries of the Speed Ultra 7 (SU7) sedan, which was revealed in December, by the end of March, marking its first foray into the world’s biggest automobile market.
But the move also marks a major diversification for the technology firm, which has so far largely stuck to consumer electronics, specifically smartphones- a sector that has seen steadily declining demand for nearly two years running.
Xiaomi’s cars will be produced by a unit of Chinese state-owned automaker BAIC Motor Corp Ltd (HK:1958). BAIC's shares rose nearly 2%.
Chinese EV competition heats up
Xiaomi’s entrance into the Chinese EV market also comes amid heated competition in the sector, after price cuts by Tesla Inc (NASDAQ:TSLA) sparked a bitter price war over the past two years.
Still, Chief Executive Lei Jun had said during the SU7’s reveal that Xiaomi (OTC:XIACF) planned to become one of the world's five largest automakers.
The firm will compete with established players including Tesla, Li Auto (NASDAQ:LI) Inc (HK:2015), NIO Inc (HK:9866), and BYD Co Ltd (HK:1211)- the world’s biggest EV maker by sales.
While overall Chinese automobile sales declined in the past year, amid pressure from weak consumer spending, the EV market has remained a sole bright spot. Government subsidies and lower usage costs also drew potential buyers towards EVs.
But despite some resilience in Chinese EV markets, global EV sales declined through 2023, with majors including Tesla signaling slower demand on stiff competition from hybrid models and traditional, internal combustion engines.