The electric vehicle market is heating up, and electric vehicle giant Tesla (TSLA) has a lot more to face down than it ever did. In fact, Xiaomi (XIACF) is bringing out a car that should be an effective competitor to Tesla. But investors do not seem especially concerned, as they sent Tesla shares up fractionally in Thursday afternoon’s trading.
Confident Investing Starts Here:
- Easily unpack a company's performance with TipRanks' new KPI Data for smart investment decisions
- Receive undervalued, market resilient stocks right to your inbox with TipRanks' Smart Value Newsletter
The YU7 from Xiaomi is specifically targeted to take on Tesla, reports note, and is a “luxury SUV” that has one major advantage: its price. The YU7 boasts a price tag of 253,500 yuan, which compares favorably against the Model Y, which is priced at 263,500 for its base model in China. Earlier analyst reports suggested that the YU7 would be priced between 250,000 and 320,000 yuan, so Xiaomi has clearly brought the YU7 in at the lowest part of the range.
Further, analysts are looking for the YU7 to sell between 300,000 and 360,000 units annually. That may be a bit of a stretch given reports of economic trouble in China, but considering the sheer size of China’s population, it may find enough sufficiently well-heeled buyers to buy in at those rates. This is not the first time that Xiaomi has beaten Tesla in a battle of price tags, either; the SU7 sedan came in below the cost of Tesla’s Model 3. Further, reports noted, Xiaomi can match or beat Tesla on several metrics, with the major exception being driver assist technology.
An Electric Clown Car of Competition
But that is not all; as it turns out, four competitors are poised to take on Tesla in China just in the next month. There is the YU7, of course, but beyond that, Xpeng (XPEV) will roll out the G7 starting in the first week of July. Further, Nio (NIO) will come out with its Onvo L90, and Li Auto (LI) will complete the list with its i8 all-electric SUV.
Certainly, Tesla will have quite a fight on its hands here. With a growing panoply of competitors taking aim at Tesla’s markets share, and economic conditions in China being, well, less than optimal, making sales anywhere is likely to be a tall order. With a growing number of companies going after a pie in open decline, it is perhaps the most challenging of sales environments right now. The European sales plunge, meanwhile, is not helping Tesla’s overall look any.
Is Tesla a Buy, Hold or Sell?
Turning to Wall Street, analysts have a Hold consensus rating on TSLA stock based on 14 Buys, 12 Holds, and nine Sells assigned in the past three months, as indicated by the graphic below. After a 65.92% rally in its share price over the past year, the average TSLA price target of $287 per share implies 12.62% downside risk.
