The electric vehicle (EV) sector is experiencing a significant shake-up this week, with new entrants challenging established players. moomoo market strategist, Jessica Amir helps us scrutinise the major developments, highlighting the launch of Xiaomi's electric vehicle, the SU7, which is poised to compete directly with Tesla’s Model 3.
Smartphone maker launches EV to rival Tesla (NASDAQ:TSLA)
Xiaomi, primarily known for its smartphones, has made an impactful entrance into the EV market. Since unveiling the SU7 last week, the company witnessed a surge in its shares by up to 15%. Priced around $4,000 less than the Tesla Model 3, the SU7 not only undercuts its competitor on price but also boasts a longer travel range per charge.
Amir notes that remarkably, within the first hour of its launch, Xiaomi secured over 50,000 orders for the SU7. A standout feature of Xiaomi’s EV is its rapid charging capability, achieving a full charge in just 5 minutes, a significant improvement over the 30 minutes required for a Tesla using a fast charger.
Competition rises
The EV sector is becoming increasingly competitive.
Chinese firm BYD, along with Geely and Toyota’s hybrids, reported rising global sales. Conversely, Tesla observed a decline in sales year-on-year for the first time post-pandemic, marking a notable shift in consumer preferences and market dynamics.
Amir said the rise in competition and evolving consumer demands suggest that the EV industry will continue to grow, with manufacturers, both established and new, competing on price, features, and technological innovations.
Tesla shares drop
Tesla now faces stiff competition and saw its shares drop to new 10-month lows on April 2, 2024, on the New York Stock Exchange (NYSE).
The company’s sales fell by 8.5% compared to the previous year, with Q1 2024 sales of 386,810 EVs missing the anticipated 449,080 target.
This marked Tesla’s most significant shortfall in seven years.
However, Amir says despite these challenges, some investors remain optimistic. Notably, Cathy Wood of ARK Investment Management acquired an additional 134,000 Tesla shares, bringing her total holding to 4 million shares. Similarly, Deutsche Bank (ETR:DBKGn) expanded its investment in Tesla by purchasing an additional 1.3 million shares.
EV transition
These developments underscore a period of intense activity and transition in the EV market. With new players like Xiaomi entering the fray with competitively priced and technologically advanced offerings, the pressure on incumbent manufacturers like Tesla is mounting.
As the industry landscape reshapes and consumer preferences evolve along with technological advancements, the battle for market dominance is set to intensify.