Key Takeaways
Citigroup reiterated its Buy rating on Xiaomi Corp. (01810.HK) and set a HKD 37 price target, citing an attractive new pricing strategy for its YU7 electric vehicle lineup revealed on May 21.
"A more affordable pricing strategy and an expanded number of SKUs will effectively stimulate a rebound in order volume and improve capacity utilization," Citi analysts said in a report.
The bank's note followed Xiaomi's launch of a new YU7 "Standard Edition" priced at RMB 233,500 ($32,400). The new entry-level model is now RMB 30,000 ($4,350) cheaper than the competing Tesla Model Y, a significant widening from the previous RMB 10,000 gap. The new model offers 643 kilometers of range, 50 km more than its Tesla rival.
Citi believes the move will improve market sentiment toward Xiaomi's EV business, which had seen sales momentum cool after clearing its initial order backlog. The new pricing directly addresses what CEO Lei Jun called a key weakness against Tesla.
Alongside the volume-focused Standard Edition, Xiaomi also unveiled the YU7 GT, a high-performance model priced at RMB 389,900 (~$54,100). The GT version produces a combined 1,003 horsepower and recently set a Nürburgring Nordschleife lap record for a production SUV with a time of 7 minutes and 22.755 seconds, beating the previous record holder by 14 seconds.
The new entry-level YU7 comes standard with features often reserved for premium trims, including air suspension, LiDAR, and Nvidia's DRIVE AGX Thor computing platform. All advanced driver-assistance features are included for the life of the vehicle with no subscription fees, adding further pressure on competitors.
The aggressive pricing of the YU7 Standard is a direct challenge to Tesla's dominance in China's competitive EV market and is crucial for reigniting Xiaomi's sales growth. Investors will be watching the company's upcoming delivery reports to see if the strategy successfully translates into sustained market share gains against the Model Y.
This article is for informational purposes only and does not constitute investment advice.
