Goldman Sachs stated that, given the strong sales of SU7 which exceeded expectations, and that YU7 has advantages in dimensions, power system, and range compared to similar SUV models, it has the potential to become one of the best-selling high-end new energy fund SUVs in China. Additionally, the SU7 and YU7 share the Xiaomi manufacturing platform, which is expected to improve the gross margin of the autos business.
Xiaomi's second car YU7 has revealed its appearance and performance, with goldman sachs expressing a very bullish outlook on Xiaomi's autos business. This SUV is expected to become one of the best-selling high-end new energy SUVs in china.
On December 9, Xiaomi submitted the filing for the second electric vehicle "YU7" to the Ministry of Industry and Information Technology and stated that this new SUV is expected to officially launch around June or July next year.
Regarding this new vehicle, goldman sachs expects an optimistic demand prospect and believes the YU7 has the potential to become one of the best-selling high-end new energy SUVs in china, competing with the Tesla Model Y and Li Auto L6.
Since the first model SU7 was launched in March this year, the SU7 has exceeded our initial expectations and continues to solidify its position as one of the best-selling high-end energy sedans, with an average monthly retail sales of 0.013 million vehicles so far this year, comparable to the Tesla Model 3, and monthly sales have exceeded 0.02 million vehicles since October 2024.
According to the filing information, goldman sachs believes the YU7 has advantages over similar SUV models in the following aspects:
Size: The dimensions of the YU7 are 4999/1996/1600 mm (30 mm wider and 150 mm taller than the SU7), with a wheelbase of 3000 mm (the same as the SU7), making the YU7 the largest in its class by wheelbase length.
Performance/Power System: The YU7 has a top speed of 253 km/h, close to the SU7 Max's 265 km/h, and is faster than other SUV models. The YU7 will be equipped with dual motors, with a total power of 508 kW, even exceeding that of the SU7 Max.
Range: Although the details regarding the range support have not been disclosed, the YU7 will be equipped with contemporary amperex technology (CATL) ternary lithium batteries, weighing 2405 kilograms (compared to the BYD lithium iron phosphate batteries used in the SU7/SU7 Pro and the CATL ternary lithium batteries used in the SU7 Max). We believe this means that long-range support may be a standard feature across different versions of the YU7.
Goldman Sachs further pointed out that if the official release version of the YU7 car is consistent with the regulatory documents so far, i.e., if long-range support and large battery capacity are standard configurations, we believe the average selling price (ASP) of the YU7 has the potential to rise. As a reference, in the china market, the starting price of the long-range version of the Tesla Model Y is currently 291,000 yuan (approximately 40,000 dollars), which is 41,000 yuan (5,600 dollars) higher than the standard range version.
Overall, Goldman Sachs expects the launch of more models from Xiaomi to improve the gross margin and has given Xiaomi a 'buy' rating:
We look forward to obtaining more detailed information on specifications and pricing within the next six months, with the scheduled launch timeframe being consistent with our assumptions. We believe the SU7 and YU7 will share Xiaomi's manufacturing platform, which may drive economies of scale and improve gross margin (GPM).
We assign a 'buy' rating to Xiaomi, with a 12-month target price of 33.3 Hong Kong dollars, based on the following SOTP (valuation method: 1) an expected enterprise value/net operating profit (EV/NOPAT) of 16 times for Xiaomi's core business in 2026; 2) a discounted cash flow (DCF) valuation of Xiaomi's electric vehicles at 23.6 billion dollars.
Editor/Jeffy
