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China’s Xiaomi raised $5.5 billion in an upsized stock sale as the company moves to expand its burgeoning electric vehicle business, following BYD’s (BYDDF-5.12%) lead.
The Beijing-based company sold 800 million shares for HK$53 ($6.82) apiece, increasing the scale of its offer. It had originally planned to sell 750 million shares for between HK$52.80 and HK$54.60. The funds will be directed toward accelerating its research and technology development.
Xiaomi is one of the latest EV entrants to China’s industry, better known for its smartphones and consumer tech than high-tech cars. But that didn’t stop it from launching the SU7 last year, an electric car that starts at around $30,000 and was designed to rival Tesla’s (TSLA+2.96%) Model 3.
Xiaomi has pledged to invest $10 billion to produce cars over a decade. CEO Lu Weibing has said the company aims to begin overseas shipping in 2027.
Last week, Xiaomi reported an almost 50% increase in fourth-quarter revenue and raised its target for EV sales to 350,000 units from 300,000. The EV business recorded 32.1 billion yuan ($4.4 billion) in revenue from the EV sector on more than 136,000 deliveries of the SU7.
BYD, China’s biggest automaker and chief rival to Tesla, raised $5.6 billion just a few weeks ago through the biggest share sale Hong Kong has seen in years, Bloomberg News reported. The Shenzhen-based firm sold 129.8 million shares for HK$335.20, up from initial plans to sell 118 million shares.
BYD on Monday reported full-year revenue of 777 billion yuan ($107 billion), a 29% increase from 2023, and profit of 40.3 billion yuan, a 34% increase. The automaker beat Tesla to the $100 billion revenue milestone, with its Austin, Texas-based rival breaching $97.7 billion in 2024.
The growth of both Xiaomi and BYD comes as Tesla continues to lose market share in the world’s largest auto industry to China’s domestic firms, which — bolstered by generous state subsidies — have been ramping up their work in recent years. That expansion has spread to foreign markets as well.
Chinese brands accounted for 4.2% of all new car registrations in Europe last month, while Chinese-owned brands made up 6.9% of registrations, Jato Dynamics data showed Monday. Tesla’s share of the market fell to 9.6%, the lowest it has been during the month of February over the past five years, the firm said.
“Tesla is experiencing a period of immense change,” Felipe Munoz, a global analyst at Jato Dynamics, said in a statement.
“In addition to Elon Musk’s increasingly active role in politics and the increased competition it is facing within the EV market, the brand is phasing out the existing version the Model Y – its best-selling vehicle – in anticipation of the introduction of a new refreshed version,” he added.