$XIAOMI-W(01810)$ has declared war with Tesla, as the Chinese electronics company turned Tesla-wannabe announced the rollout of its inaugural electric vehicle in China to take on the leading EV maker. Xiaomi has committed to invest $10 billion in its fledgling EV business, as part of the electronics giant's efforts to diversify its business amidst slowing demands for smartphones. While being late to the EV party, Xiaomi is proving to be a formidable force with its deep pockets and ambition to become one of the world's top 5 automakers. Furthermore, Xiaomi will be able to count on its smartphones' relatively strong brand and capitalize on followers for its products.
Unlike Tesla, the Chinese EV startup trio $NIO-SW(09866)$ , $XPENG-W(09868)$ and $LI AUTO-W(02015)$ appear to be adapting well to waning domestic demands with their lean cost structures, better knowledge of the local market and agility to adapt to intensifying local competition by sealing partnerships with automotive incumbents. Their sales have proven to be resilient despite slowing demands, as they have been able to defend their market shares, while their profit margins have remained stable amidst prevailing price wars as they have been able to contain their costs.
On the other hand, $Tesla Motors(TSLA)$ 's valuation is being questioned, as investors become increasingly concerned with its slowing growth and growing reliance on price cuts to boost sales, so much so that Wells Fargo's analyst has just labelled the leading EV maker as a growth company with no growth. With rising competitions in all its major markets, Tesla is facing growing headwinds to defend its market leadership, while prevailing price wars that it has ignited have been backfiring and leading to narrowing margins. It appears that this will be a challenging year for Tesla, as the Tesla-wannabes rise and the Magnificent 7 is at risk of shrinking its membership to 6.
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