Imagine a frenzy so intense it rivaled the launch of the latest iPhone, but instead of a smartphone, it was for a car. That's exactly what happened when Xiaomi, the tech giant, unveiled its first electric vehicle, the SU7. But here's where it gets controversial... What started as a gold rush for tech enthusiasts and opportunistic entrepreneurs quickly turned into a cautionary tale about the perils of speculative markets. Let me explain.
When Xiaomi announced the SU7, the excitement was palpable. People weren’t just lining up to drive the sleek new EV—they were placing deposits with the sole intention of flipping their reservation spots for a quick profit. For a brief moment, it seemed like a foolproof plan. The secondary market for SU7 pre-orders was on fire, with premiums soaring above RMB 10,000 ($1,400). Fast forward to today, and that market has collapsed, leaving many amateur flippers holding reservations worth less than their initial deposits. Chinese media reports reveal that dealers are now buying back these reservations for a mere RMB 1,500 ($210). Ouch.
And it’s not just the SU7. Xiaomi’s second EV, the YU7, initially saw a similar frenzy. Within 18 hours of its launch, the company secured a staggering 240,000 orders. Scalpers were in heaven, charging premiums of up to RMB 20,000 ($2,800) for early spots. But now, those premiums have plummeted to as low as RMB 2,000 ($280). Sellers are cutting their losses, accepting a deficit of around RMB 3,000 ($420) just to get out. And this is the part most people miss... What caused this dramatic shift?
The answer lies in the age-old principle of supply and demand. When too many people jump on the same bandwagon—in this case, buying reservations to sell at a higher price—the market becomes saturated. There were simply too many sellers and not enough buyers willing to pay a premium. As one car dealer put it bluntly, “Two months ago, people were eager to pay RMB 10,000 extra. Now, even with a RMB 3,000 discount, there are no takers.”
Several factors popped this speculative bubble. First, Xiaomi’s official delivery timeline for the YU7 stretched to a daunting 48 weeks for some models. While this initially fueled the resale market, it eventually backfired. Prospective buyers realized they could just place a new order and wait, rather than paying scalpers for a marginally earlier delivery. Here’s where it gets even more interesting... A high-profile accident involving an SU7 in Chengdu, where the vehicle’s electronic doors couldn’t be opened during a fatal collision and fire, raised serious safety concerns. This incident likely cooled the enthusiasm of potential buyers, further dampening the market.
But here’s the twist: While the market for flipping paper orders has tanked, the demand for the actual car remains strong. In the used car market, a barely driven Xiaomi YU7 with less than 62 miles on the odometer still commands a premium of about RMB 10,000 ($1,400) above its sticker price. This suggests that the vehicle itself is highly desirable—people want the car, but they’re no longer willing to pay extra for a promise of one.
For Xiaomi, this market correction is far from a disaster. The company’s overall performance remains robust. In September alone, Xiaomi sold 41,948 EVs, cementing its position as the second-largest new energy vehicle brand in China. With 402 stores across 119 cities, Xiaomi is clearly expanding its footprint.
Now, here’s the question for you... Is this collapse a temporary setback or a sign of deeper issues in the EV market? Could Xiaomi’s aggressive entry have inadvertently created a speculative bubble? And what does this mean for other tech companies venturing into the automotive space? Let’s discuss in the comments—I’m curious to hear your thoughts!
