The EV king, Tesla Inc (NASDAQ: TSLA) kicked off the week by raising prices for all Model Y cars in the United States by $1,000. But last week, Bloomberg reported that Tesla has cut production at its Shanghai factory in response to intense competition and unsatisfactory growth in China.
Besides the homegrown competitor BYD Company Limited (OTC: BYDDY) that even dethroned it during the last three months of 2023 as the top EV maker, Tesla also has startups to worry about, as well as other new entrants that keep on coming.
One such threat is Xiaomi Corporation (OTC: XIACY) that is going for its piece of the EV pie. Xiaomi informed its potential buyers that they could face four to seven months of waiting for its first-ever vehicle due to robust demand.
Xiaomi is coming for its piece of the EV pie
On Thursday, the smartphone and consumer electronics maker began taking orders for its SU7 electric sedan. Xiaomi revealed that within the first 24 hours, 88,898 pre-orders were made. Within 36 hours, that figure went up to 120,000. While newcomers face a challenging environment, Reuters evaluated that Xiaomi has deeper pockets compared to many EV startups.
Moreover, its smartphone expertise gives it an edge when it comes to smart dashboards, which are a highly valued feature by Chinese consumers. In other words, Xiaomi promises to be a worthy opponent to Tesla, just like it is to Apple Inc (NASDAQ: AAPL) on the smartphone front.
The EV growth slowdown seems to be imminent
EV growth in China has slowed down. Besides an unfavorable macroeconomic backdrop, the government pulled back a decade-long promotion of the sector. According to China's Passenger Car Association, Tesla delivered 131,812 vehicles during the first two months of 2024. This figure represents a 6% YoY drop. Moreover, only 53% of those shipments went to the local market, despite the effort Tesla made to boost demand with price cuts. Early April is also when the Sweeping Day is celebrated in China, which will additionally quiet down consumption.
The China Passenger Car Association still expects shipments of new-energy vehicles to dealers to grow this year but at a slower pace. The PCA guided for 25% growth to 11 million units, which is lower than 2023's 36% and 2022' 96% growth. Even the mighty Tesla seems to be struggling with weakness plaguing its major regions, but BYD sales also took a dive in January and February amid the typically weak Lunar New Year holidays. With the sporty EV priced below Tesla's Model 3, Xiaomi promises to make Tesla's troubles even worse.
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