
Xiaomi Auto: Can the Blazing Start of YU7 Dethrone Tesla's Dominance?
Xiaomi's latest launch event introduced a range of hardware products including AI glasses, but the main focus of market attention is the YU7. Although the company disclosed the main parameters of the YU7 configuration in last month's communication, the specific price remains 'secretive'.
For this launch event, the market is primarily anticipating the specific price of $XIAOMI-W(01810.HK) YU7 and its market performance in terms of order locking.
a) Final price of YU7: 253,500 yuan (Standard Edition) / 279,900 yuan (Pro Edition) / 329,900 yuan (Max Edition). Previously, the mainstream market expectation was between 250,000 to 320,000 yuan. From the final announced prices, the starting price of the Standard Edition meets market expectations, while the price of the Max Edition is slightly above market expectations.
Tesla's Model Y underwent a revision in January 2025, with current prices at 263,500 yuan (Standard Edition) / 313,500 yuan (Long Range Edition). The pricing of Xiaomi YU7 is closely aligned with Model Y, matching the price range, which will create direct competition. Additionally, Xiaomi's high-performance dual-motor four-wheel drive Max version is priced at 329,900 yuan, higher than the Model Y Long Range Edition, reflecting $Xiaomi Corporation(XIACY.US) confidence in its own product.
Comparing Xiaomi YU7 with major competitors: ① Xiaomi YU7 has a higher battery capacity than peer products, offering a significant range advantage; ② Xiaomi YU7 is equipped with panoramic display P-HUD across all products; ③ In terms of intelligent driving, Xiaomi YU7 uses NVIDIA Thor chips, with computing power close to the new Model Y, leading other competitors. Xiaomi YU7 is equipped with one more lidar than Model Y.
In other words, at a similar price, buying Xiaomi YU7 offers better configurations than Model Y. Previously, domestic brands struggled to challenge Model Y's market position, but the launch of Xiaomi YU7 is expected to bring a real challenge to Tesla's SUV in the Chinese market.
b) Order locking performance: The YU7 achieved over 200,000 orders in 3 minutes and surpassed 289,000 orders in 1 hour, which is quite exaggerated and far exceeds market expectations.
Previous SU7 order performance: Over 10,000 orders in 4 minutes, 20,000 orders in 7 minutes, 50,000 orders in 27 minutes, and 88,000 orders in one day. SU7 was Xiaomi's first car, and after SU7 gained market recognition, YU7 delivered such 'explosive' performance. With nearly 290,000 orders in 1 hour, this already exceeds the total delivery volume of Xiaomi SU7 since its launch last year.
The issue Xiaomi Auto faces is not demand, but supply-side insufficiency. The company's Phase I factory is working overtime to maximize monthly production capacity to 28,000 units, while Phase II factory only started mass production in July.
Estimated orders for Xiaomi Auto:
SU7: If ordered now, the delivery cycle still requires about 10 months. Combining the Phase I factory's near 28,000 units monthly full capacity, it is estimated that the company has about 280,000 SU7 orders in hand;
YU7: The company announced that orders surpassed 289,000 units in 1 hour, assuming YU7 orders reach 400,000 in one day;
Although Lei Jun announced that SU7 orders not delivered by June 29 can be converted to YU7, this can only affect a portion of customers switching orders. Due to the extended production cycle of YU7, some consumers influenced by vehicle usage needs will continue to hold SU7 orders (as they can get the car earlier than YU7), thus the total number of Xiaomi Auto orders (SU7+YU7) is expected to exceed 600,000 units. With the Phase I factory continuously at full capacity and Phase II factory ramping up production, the current orders in hand will take a full year to digest.
c) Investment perspective: The explosive performance of YU7 will drive the valuation of the automotive business.
Due to the differences between the automotive business and traditional business, Xiaomi's valuation is often divided into traditional business and automotive business. The strong response to the YU7 at this launch event will directly drive the valuation of the automotive business.
With the expansion of Xiaomi's shipment scale and the increase in overall average price due to YU7, the company's gross margin is expected to continue to rise (25Q1 was 23.2%), achieving a turnaround in the automotive business. Currently, many automotive companies refer to PS valuation mainly because they have not yet achieved stable profitability. When Xiaomi Auto achieves stable profitability, it can shift from a PS to a PE perspective.
As mentioned above, due to the 'supply shortage' situation of Xiaomi Auto, the performance of the automotive sector is mainly driven by the release of supply-side capacity, and the market's valuation of Xiaomi Auto is more based on order performance rather than current performance.
Driven by the mass production and shipment of YU7, Xiaomi Auto's business gross margin is expected to reach over 25%, with potential early profitability in the second half of 2025. From the current SU7 and YU7 order situation, the company's capacity for the next year will remain saturated. With the gradual mass production of Phase II and subsequent Phase III factories, Dolphin Research expects Xiaomi Auto's monthly production capacity to reach over 80,000 units by 2027. By then, the 'supply shortage' situation will be alleviated.
Specific valuation considerations are as follows:
① Specific valuation for the automotive part: Shift from PS to PE. Assuming 1 million units shipped in 2027, with an average price per vehicle of 255,000 yuan, and gross margin increased to 25.7%, Xiaomi Auto's post-tax core operating profit for 2027 is 22.1 billion yuan, a year-on-year increase of 43% (core operating expense rate 15.7%, tax rate 15%). If Xiaomi maintains its products in the 200,000-350,000 yuan price range, then after reaching 1 million units in annual sales, the growth expectation for the automotive business will show a significant slowdown. Giving Xiaomi Auto a reference PE of 25-30 times for the post-tax core operating profit in 2027, after calculating the corresponding valuation for 2027 and discounting to the present, it corresponds to an estimated valuation of around 500 billion HKD (reference discount rate of 10.16%).
② As for the traditional part of the valuation, Dolphin Research still maintains the previous DCF valuation, approximately corresponding to 1.27 trillion HKD (based on WACC 10.16% and a perpetual growth rate of 3%).
The impressive performance of YU7 at this launch event mainly adjusts the valuation corresponding to the automotive business, while the traditional business maintains the original expectations. Combining ① and ②, Xiaomi's overall valuation corresponds to approximately 1.78 trillion HKD, equivalent to about 69 HKD per share. As long as the newly released YU7 orders remain full, the logic of Xiaomi Auto will be difficult to falsify, and it can inject confidence into the market again.
Appendix: Detailed content of the YU7 launch event
(1) Product positioning: High-performance luxury SUV, design philosophy is 'timeless', emphasizing proportional aesthetics and low-profile elegance.
(2) Design highlights
a) Exterior: Triple wheelbase ratio, 2.1 wheel height ratio, 1.2 fivefold width-height ratio, long hood design enhances safety and luxury.
b) Colors: Total of 9 color options, 5 new additions (Pearl White, Deep Blue, Danxia Purple, Shadow Green, Glazed Gold), continuation of 4 colors (Planet Gray, Lava Orange, Titanium Metallic, Gem Green).
c) Interior: New Iris Purple color, Nappa leather wrap, baby contact-grade materials, rear sleep headrest supports electric adjustment (maximum 135°).
(3) Wheels and comfort
a) Standard 19-inch diamond wheels, optional 20/21-inch (including forged sports wheels, floating car logo).
b) All models come standard with silent laminated glass, Max version upgrades to ultra-silent glass + soundproof film, NVH performance surpasses million-level luxury cars.
c) Sunroof sun protection reaches SPF100+/PA++++, Max version supports EC dimming sunroof (shade rate at physical sunshade curtain level).
d) Family-friendly design: Rear drawer, HEPA filter, child mode, car refrigerator, rear screen entertainment.
e) Apple ecosystem adaptation: UWB car control, Dynamic Island vehicle status display, CarPlay desktop stitching.
f) Peripheral products: Custom small folding phone, camping set, alloy car model (1:18/1:43/1:64), sunglasses, direct drinking cup.
(4) Power system
a) All models equipped with V6s Plus super motor (22,000 rpm, 528N·m torque, 288kW power), maximum horsepower 690, 0-100km/h acceleration 3.23 seconds (actual test excluding start time 2.98 seconds).
b) Maximum speed 253km/h, braking distance 33.9 meters, turning radius 5.7 meters.
(5) Range and charging
a) Standard Edition: Standard Edition CLTC range 835km (four-wheel drive version 770km), industry-leading; 15-minute energy replenishment 620km (800V high-voltage platform).
b) Intelligent chassis: Standard variable steering ratio (VGR), active suspension adjustment, road prediction function.
(6) Hardware configuration
a) Four-in-one domain controller (assisted driving, cockpit, vehicle control, communication module), 4nm chip + NVIDIA Orin chip, 700TOPS computing power.
b) All models come standard with lidar, 4D millimeter wave radar, end-to-end assisted driving (HAD).
c) Horizon screen: 1.1-meter three-screen projection display, supports blind spot imaging, AR navigation.
d) Xiao Ai: 5G voice interaction, multi-person speaking, end-side large model (circle selection follow-up, cross-screen interaction).
e) Ecosystem expansion: Magnetic accessories (tissue box, physical buttons), threaded interface power supply (27W), rear tablet expansion.
(7) Assisted driving:
a) 10 million clips training data, intersection understanding, obstacle avoidance humanization; upgrade to Shuqi Pro/Ultra version in July 2024.
b) XLA large model online in the second half of 2024, joint research with universities on medium and long-term technology.
(7) Safety and quality
a) Passive safety
2200MPa hot-formed steel used for AB pillars/roll cage, body high-strength steel + aluminum alloy accounts for 90.2%, torsional stiffness 47610N·m/°.
Exceeds C-NCAP/China Insurance Research standards, female dummy full condition development.
b) Battery protection
Ultra same bulletproof coating + 1500MPa scratch-resistant bottom beam, thermal diffusion/water immersion test exceeds 2025 new national standards.
c) Test verification
653 test vehicles accumulated 10.62 million kilometers, covering 53 cities, 539 days, completed 30,000 kilometers border line actual test.
24-hour endurance challenge: Continuous high-speed driving 3944 kilometers (average speed 210km/h), certified by China Automotive Center.
(8) Models and pricing
a) Standard Edition: 253,500 yuan (launch rights 55,000, including leather seats, lifetime HUD usage rights).
b) Pro Edition: 279,900 yuan (cheaper by 33,600 yuan compared to Model Y Long Range, same rights as above).
c) Max Edition: 329,900 yuan (top performance beast, 0-100km/h 3.23 seconds, rights 66,000).
(9) Optional and rights
a) Track package: Add 100,000 yuan (including coilover shock absorbers, carbon fiber components, etc.).
b) Colors: Gem Green/Lava Orange/Pearl White free, Danxia Purple adds 9,000 yuan.
c) Worry-free service package: 1,299 yuan/year (free glass replacement, painting, annual basic maintenance).
(10) Model Y comparison
(11) Extra surprise: Xiaomi SU7 order locking users can temporarily change configuration
Risk disclosure and statement of this article:Dolphin Research Disclaimer and General Disclosure