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New electric car launches always excite me. Another important step was taken the other day regarding electrification. Xiaomi's long-awaited new model named su7 has been launched. I'm actually making a mistake when I say it was launched. The product starts to be delivered directly from the end of April. It has an incredible price, the price range starts from 29900 dollars and extends to 41500 dollars. But they are really good cars for this price. In fact, they are so good that they received over 90000 orders within 24 hours of their first introduction. The company's stock immediately jumped 12%, and the 2-hour presentation by the company's charismatic CEO Lei Jun was viewed millions of times. It was truly one of the most exciting automobile launches of recent times. The last time this much excitement was created was the Tesla Cyber Truck.
So why is Xiaomi, one of the world's most important mobile phone manufacturers, getting into this business? How much money is he willing to allocate to this business that will obviously make a big loss? What's his strategy? What is his vision? I will explain all this today and of course I will compare it with Tesla. Because the CEO of the company stated that SU 7 was produced as a direct competitor to Model 3 and said that it is time for Model 3 users to upgrade. During the presentation, he compared the product's autonomous driving features with Tesla. He also said that it is far above Tesla in many other features. In other words, it is a direct competitor to Tesla. He is very ambitious, he says that we will be among the five largest automobile companies in the world in the coming years. He says we planned everything accordingly.
That's why we definitely need to examine the strategy of this company, and as you know, Apple recently abandoned its project called Titan. After spending $10 billion and years of time, it gave up on producing electric smart cars. Although this has been talked about a lot, Xiaomi is taking on this with great courage. So what does all this mean? How will Tesla stock be affected by these? Is Xiaomi stock a worthwhile investment? What will happen at Apple? I have compiled, compiled and will interpret all of these for you.
First, let's look at some design features of the car. Since I am not a car evaluator, I will be limited here. Later, we will look in more detail at electrification and autonomous driving, which are the two most important areas in which Tesla will compete with Tesla. First of all, it should be noted that the vehicle looks quite attractive. I liken it a bit to the Porsche Taycan. There were a lot of references to this issue on Twitter, too. It is an electric sedan but it has a sporty and youthful design. It looks really attractive. They have captured this blend of youth and sportiness with a low design and coupe-like roof line. When we look inside the vehicle, we see a fully digital driver display. There is a special compartment in the rear seats where you can place two Xiaomi tablets or Apple iPads. I think these Xiaomi tablets are the same as the higher models.
Of course, since it is a mobile phone manufacturer, Xiaomi has made the vehicle compatible with mobile phones. This is true both in terms of software and hardware. On the hardware side, there is a special phone holder with wireless charging feature. There are also special pockets on the door pad to put phones. There are also some very nice features inside the car. For example, a large glove compartment in which you can easily fit a laptop, a 4.6-liter refrigerator with an anti-wobble mat. I guess this is in the top model. Underarm umbrella holder is a very popular topic these days. 25 speaker sound system. Especially the glass roof is really nice. They also made strong UV insulation here.
The vehicle is larger than the Tesla model 3. This size is reflected both in its length and in the size of its trunk. The trunk at the front, specifically for electric cars called Frank, is larger than Tesla's. The rear trunk is slightly larger in Tesla. But it seems that it would be more accurate to compare this vehicle with the Model S and the Porsche Taycan, rather than with the Model 3 in terms of size. The vehicle is like this, it's up to your taste, I find it very stylish, I really think such vehicles are a bit too fancy. I still prefer the simplicity of the Tesla model 3. But these are matters of personal taste. Let's get to the main issues. First of all, we need to compare the vehicle with the Tesla Model 3 in terms of price. But more importantly, what is the electrification infrastructure and what is the status of autonomous driving?
Let's make a price comparison first. Of course, we base ourselves on prices in China. Tesla's cheapest model, the rear-wheel drive Model 3, has a starting price of 34053 dollars in China. Xiaomi's lowest model starts at $29898. So there is a price difference here of over $4000. Tesla Model 3 has a range of 606 km with rear-wheel drive. However, if Xiaomi's claim is true, it has a range of 700 km. When we look at the higher Tesla models, the slightly higher version of the Model 3 is sold for 34000 dollars, and the top model is sold for 40000 dollars. In the top model, prices match those of Xiaomi. However, it is important to remember here that a new version of Tesla Model 3 will be released. The top version is called Ludicrous. There may be a more ambitious price then.
But when we compare the price and range here, it is clear that Xiaomi is at the top. How does Xiaomi do this? He will definitely do so at a tremendous loss. Because remember, Tesla produces nearly 2 million cars. It has a very serious production scale and does this in its own factories. At Xiaomi, newer cars will start to roll off the production line. It does not produce in its own factory. It is carried out in the factories of BAIC, a large and state-owned Chinese manufacturer. Many other brands already produce there. That's why it has such a double-layer cost. So first he will pay the costs of that factory. That company will make a profit, and this place will make a profit. It's not possible here, the company doesn't make a profit anyway.
When we look at the Ford example, electric cars suffer huge losses in low production quantities. My guess is that he loses around $30,000 on a car he sold for $30,000. So it might make more sense for him to give the car as a gift. But of course the company is assertive here and says we will scale. "When we scale, a car will roll off our production lines every 76 seconds," he says. Maybe they will establish their own factories in the future. They have dreams of establishing some factories in Europe. This will make us the fifth largest company in the world, he says. But it is certain that there will be serious damage. For example, consider the 90000 car orders they have received so far. Let's round it to 100000. I guess he came there. They will have a turnover of around 3 billion dollars if base cars worth 30000 dollars are purchased there.
But I think they will make this much loss from these cars. So they will lose at least 3-4 billion dollars. That's why the company has to bear this loss. He probably has the support of the Chinese state behind him. Probably the manufacturing company will not fully reflect its costs here. So there's definitely a plan there. That's why Europe constantly files anti-dumping lawsuits against Chinese manufacturers. But somehow, no matter what, they bring this product to the market at a very good price. How long can they bear this loss? How much financial strength does this company have? We'll get to that in a moment. Of course, car enthusiasts immediately wonder about speed. More precisely, the Tesla base model accelerates from 0 to 100 seconds in 6.1 seconds, while Xiaomi's time is 5.28 seconds. While this is 4.4 seconds for the slightly more advanced model of Tesla Model 3, it goes down to 2.78 seconds for Xiaomi.
But let me remind you again, we do not know the performance of Tesla's new Ludicrous model. When we look at the maximum speeds, it travels between 200 - 210 km. The top model is Max, which has both rear and front drive. Xiaomi SU7 Max has reached 265 km/h. We will see the speed of Tesla's new model soon. Let's talk about the range. Tesla's most basic model has a range of 606 km, and in Xiaomi SU7, this range increases to 700 km. But actually they don't have such an efficiency chance here, they did this with a larger battery. Tesla's battery is 60 kW-hour, whereas Xiaomi's is 73.6 kW-hour. This of course increases the range. Of course, this also increases the cost. But as I mentioned, Xiaomi has currently ignored the cost. That's why it has a better range than Tesla. The top models have ranges of 830 and 800 km. These are truly horrors, compared to Tesla's 713 and 682.
Here, numbers coming from China can always be viewed with some suspicion. But some testers say that the vehicle actually reaches 670 - 700 kilometers in real Chinese conditions. It's hard for me to predict this, but they make these with big batteries. The top model has a 101 kW hour battery. They have ignored the impact of this on cost for now. 126 watts of electricity are consumed per kilometer in the top model. The lowest model consumes 105 watts. This seems to be the same as Tesla's base model. The Pro, which is a higher model, seems to have 114 watts. This is somewhere close to Tesla's similar vehicle. So there is no such masterpiece of efficiency. Rather, the main issue that is emphasized is large batteries. While we say that it does not have any efficiency benefits, it is better not to underestimate the vehicle in this respect. The basic two models used 100 volt electrical architecture. But they used 800 volts in the Max model. Just like Tesla's Cyber truck.
Also, the aero dynamics of the vehicle are truly incredible. It has a drag of 0.195 cd. This is the best among this type of tools. These add some amount to the natural data of the vehicle, but I must say that I do not see a serious difference in efficiency, at least in these numbers. Let's talk about charging time. Xiaomi seems to have a big advantage here. Charging the battery from 10% to 80% takes 25 minutes in a Tesla model 3. It's around the same 25 minutes on Xiaomi's base model. Tesla has 25 - 27 minutes on mid-range models. This is around 30 minutes on Xiaomi and goes down to 19 minutes at max. Because there is 800 volt architecture here. But the most striking part is the range the vehicle gains with each minute it is charged. Because remember, Xiaomi batteries are larger. Here we see that it is significantly superior to Tesla. If the numbers about Xiaomi Max are correct, it seems that the vehicle gains a range of 29.5 km every minute it is charged.
Of course, these are always controversial issues and need to be measured separately. But at least the claim is in this direction and it is possible for this claim to be true in an 800 volt vehicle. I guess they probably use batteries from the Chinese manufacturer Kettle, which are the highest quality batteries in the top vehicles. In this context, there is a vehicle slightly superior to the Model 3. To sum up, they are more economical cars than the Tesla model 3. These are superior in range and the cars charge more easily. On the other hand, they probably carry out these at higher costs and we will be faced with a super-loss-making company. At least until a certain annual production quantity is reached, my prediction is that unless the annual production quantity reaches 450,000 - 500,000, these losses will continue exponentially.
But all this is not enough to compete with Tesla. Because Tesla also has an autonomous driving weapon. Xiaomi has actually invested in this regard. Even before they started producing their cars, they started collecting data on Chinese highways with the cars they borrowed from BYD, and they claim that they will reach fully autonomous driving, at least on highways, by next year, and that even in its current state, Xiaomi can solve many issues such as finding a parking space and parking correctly. But its CEO was very clear about it. He said that our system is a bit complicated, Tesla solves this problem only with cameras. As you know, there are 8 cameras in Tesla. On the other hand, Xiaomi phones have 11 cameras. There are 12 ultrasonic sensors. There is one lidar, there are two radars. They use Nvidia's chips. That's why ours is not the ideal for this whole system. Ultimately, we want to be like Tesla. But we're not there yet. That's why we'll start like this, he said.
This means: They will solve this problem at a much higher cost. They will solve it with a much more complex system, but people will experience the feeling of autonomous driving sooner. So, if you do not aim for profit and are not afraid of loss, you can follow this path. But eventually their goal is to be like Tesla, and Tesla seems to be far ahead here. For example, BYD says that we have collected roughly 10 - 15 million kilometers of data from the roads so far. Tesla is way ahead of that, collecting it almost on a daily basis. Remember, 5 million vehicles are currently on the roads continuing to collect data. So, in this aspect, Tesla is clearly ahead. The manager already accepts this, but the consumer may not feel that way. Consumer lidar does not understand radar. He says my car drives autonomously, the price is reasonable, the Chinese State should subsidize it.
So, when we summarize all this, does Xiaomi look like a good investment opportunity? How do I see it against Tesla and how do I see it against Apple? We'll get into the financial statements a little later, but in essence, I think like this. First of all, this company has a lot of money and since the Chinese State is behind it, it can also access the money. Plus, he makes a certain amount of profit from his mobile phone business. Even if not as much as Apple, it has the chance to finance this loss with the support of the state. They are extremely knowledgeable about digital technologies. I think they have correctly analyzed the meeting of the car with the digital world from the very beginning. Probably the software inside is much higher than its European rivals and it can compete with Tesla. The vision of the company is also good. It sees the mobile phone and the automobile as very integrated, and I think it should be like that. I don't think we will buy a car in the future anyway. It is like an extension of our mobile phones, we will reach it from time to time when we need it. I find the vision very correct in that regard. They are in a very large market, the Chinese market. The brand is very popular in China. People eagerly await everything that the Xiaomi brand does. They also like the CEO very much.
Looking at the negative aspects, there is still no production facility. In fact, he has never done this job before. So he has no experience. We don't know what these cars really do on the road. Some funny videos have already started to drop and they will cause a lot of damage. It has no scale and must bear a huge loss before it can scale. If the credit markets in China close and the state cuts its support, I'm not sure if it will get out of this situation. It is far behind in autonomous driving, which in my opinion has become the most important issue for automobiles. But believe me, it is already far ahead of the Europeans and may have some trouble opening up to western markets. Because, as you know, anti-dumping laws are very narrow against such companies.
So, let's take a look at the company's financial statements. The company currently has a valuation of $49 Billion, Tesla is valued at over $500 Billion. Apple, which Xiaomi rivals on the mobile phone side, is worth over 2 trillion dollars. It is a very small company compared to them. But if this company was in America and not China, it would not be worth 50 billion dollars. I think $200 - $250 billion would be comfortable. Unfortunately, the Chinese Stock Exchange cannot appreciate. When we look at the financial statements, this is a company that makes profits. They made a turnover of 38 billion dollars in the last 12 months. From here they have a gross profit of $8.097 billion. Their main operating profit is 2.3 billion dollars. The net bottom line is 2.4 billion dollars, which is the profit of the last 12 months. In this respect, it is positive, in other words, it seems that some of the damage on the automobile side is bearable.
When we look at profitability, it operates with a gross profit of around 21%. This isn't so great. Because this is the mobile phone side. Remember, Apple's profitability is higher here. You will see later that he has a lot of cash. There is around $15 billion in cash. He also has a receivable of $3 billion. The size of its total current assets reaches 28 billion dollars. Its total assets amount to 45 billion dollars. On the other hand, current debts are around 16 billion dollars. Total debts are 22 billion, so we have a company with strong capital. Let's compare it with its two American rivals. On the one hand, with Tesla because it is slowly becoming a car company. On the other hand, with Apple. Apple was afraid and could not enter into this business. It remained only in mobile phones, but Xiaomi is there too and it is a very strong player. In terms of valuation, I just mentioned that Tesla is valued at 536 billion dollars, Xiaomi is valued at 49 billion dollars, and Apple is valued at 2.6 trillion dollars.
If we look at the results of Seeking Alpha, it is a company that lags behind in terms of turnover growth. Tesla is growing faster. Maybe that's why Xiaomi is getting into this business. Apple isn't growing, and neither is he. Because the mobile phone market is generally not growing. When we look at profitability, Apple's profit margin is 45%, Xiaomi is 21%, and as a mobile phone manufacturer, it cannot even make half the profit of Apple. Tesla makes this gross profit while producing 18% cars. Xiaomi will start with a loss when producing cars. So these values will deteriorate even more next year. I won't go into too much financial statement detail.
My final verdict is that I think Xiaomi is Tesla's only serious rival in the world. Look, I say this very assertively. Of course, not in terms of financial statements, but rather it is far behind, and it is also behind in autonomous driving. But I think China's real rival to Tesla is not Xiaomi BYD. BYD is a very disorganized organization that produces a lot of different tools. I'm not too fond of their profitability either. BYD may be a massive manufacturer, but it is not a company that can compete with Xiaomi. Neo was a company I once believed in, but the difference with Xiaomi is huge. I see that Xiaomi is thinking much more comprehensively and much bigger. I see it much better here and in the combination with the digital world, and I think he is the Chinese CEO who comes closest to Elon Musk in terms of CEO quality.
I wouldn't consider investing in the company right now. It is not investment advice, but there is a high probability that the stock will go up. Frankly, I wouldn't do it right now because I'm a little afraid of China, otherwise it could be considered. But it is a company I will follow closely. I have a watch list like this. Because if this company can actually produce these cars at this speed and make a profit from them after a while, it will definitely be on my investment radar. Coming into a difficult world right now. Because there is very serious competition in China. On the other hand, it will compete with Tesla.
But the vision, the integration ideas, the fact that the first car was produced at this speed, only after 3 years, and the fact that this quality has emerged, so everything in the car seems to be in place. It is truly fascinating in that respect, I see Xiaomi as Tesla's real rival in the world and I think it is a company that will move forward with that vision. It's not on my investment radar right now, but it's on my tracking radar.
The information, comments and recommendations contained herein are not within the scope of investment consultancy. Investment consultancy services are provided within the framework of the investment consultancy agreement to be signed between brokerage firms, portfolio management companies, banks that do not accept deposits and customers. The comments in this article are only my personal comments and these comments may not be appropriate for your financial situation and risk return. For this reason, investments should not be made based on the information and comments in my articles.
