Charlotte Yang

Updated Thu, Jun 26, 2025, 1:32 AM4 min read

(Bloomberg) — The unveiling of Xiaomi Corp.’s (1810.HK, XIACY) first electric SUV on Thursday will showcase how the Chinese tech company has become an investor darling with its high-stakes bet on the auto market.

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Shares of the firm founded by billionaire Lei Jun are within striking distance of a fresh record in Hong Kong after a 64% surge this year. Now valued at $187 billion, Xiaomi is worth more than Chinese EV leader BYD Co. as it grows its footprint in the world’s largest car market.

The new YU7, a direct competitor to Tesla Inc.’s Model Y, may help it accomplish that goal. The SUV is a hallmark of Xiaomi’s $10 billion EV strategy as larger vehicles gain popularity across China. It also signifies a deeper shift in Xiaomi’s business model, offering consumers the ability to sync key aspects of their daily lives. That combined ecosystem is what some investors are saying will cement its place as a leader in China’s trillion-dollar tech sector.

The new offering “not only gives Xiaomi business exposure in the fast growing EV business in China, but more importantly the synergy,” said June Lui, a portfolio manager at Polen Capital. “Globally, there is no one company that can connect your mobile device, your home appliances and your car — and they have all three.”

Over the past 12 months, Xiaomi’s shares have more than tripled, topping a gauge of peers as it leverages its smartphone success into China’s crowded EV market.

The rally, which stands out even amid the renaissance in China tech thanks to DeepSeek’s breakthrough, has made Xiaomi one of the country’s most expensive tech stocks. Shares are now trading at nearly 30 times forward earnings, almost double the valuation of Tencent Holdings Ltd. (TCTZF) and even above US giant Apple Inc. (AAPL).

Still, overwhelmingly bullish sell-side analysts hope its sportier and more premium second EV will help Xiaomi capture a new customer segment and drive the stock even higher. Order momentum for the YU7 is also key for boosting production scale, which is critical for improving unit economics in the auto business.

Pricing estimates by analysts for the YU7 range from 250,000 yuan ($34,900) to 330,000 yuan. In comparison, Tesla’s (TSLA) Model Y starts from 263,500 yuan while the electric version of BYD's (BYDDY, BYDDF) Tang L SUV, which is just slightly smaller than the YU7, sells for between 239,800 and 289,800 yuan.