Ford Worth Less Than China’s Xiaomi
Ford is a century-old car company. China’s Xiaomi, primarily a smartphone business, wants to be a car company now; Xiaomi’s move into the EV has caused a great surge in its market cap, which is more valuable than Ford’s. Ironically, a smartphone company that competes with Apple wants to be viewed as a car company. Car corporation valuations are usually below those of consumer electronics firms–by a wide margin.
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The fact that there is a waiting list for Xiaomi’s Speed Ultra 7 drove the stock higher and moved its market cap to $55 billion, slightly higher than Ford or GM. No one can say, outside company management, how long that waiting list is. The fact that it exists at all in an EV market as competitive as China is impressive.
China’s EVs
Xiaomi’s stock may have jumped because global car executives expected that the US, UK, EU, and other markets would soon be flooded with Chinese EVs. Because they are relatively inexpensive compared to cars from Tesla and Ford, there may be more than one Chinese winner. This happened when Toyota, Nissan, Honda, and Subaru entered the US market over half a century ago. It happened again when South Korea’s Kia and Hyundai pushed into the American market 20 years ago.
Xiaomi has an advantage over almost every new EV car company. It is already among the largest smartphone firms in the world, which means a vast and steady flow of revenue. While many EV “startups” suffer from weak balance sheets, Xiaomi can build market share while waiting for profits.
