Shares of Chinese smartphone maker Xiaomi soared by as much as 16% on Tuesday, marking the first trading day following the company's launch of its SU7 electric car ahead of the Easter holiday. Xiaomi's Hong Kong-listed shares reached 17.34 Hong Kong dollars intraday, the highest level since January 2022.

Xiaomi's entry into the electric car market demonstrates the fierce competition in China's automotive industry. The company announced that its SU7 would be priced approximately $4,000 lower than Tesla's Model 3, with claims of a longer driving range. As a result, Xiaomi's online store showed wait times of at least 5 months for the basic version of the SU7, with over 50,000 orders received within the first 27 minutes of sales commencement.

In response to Xiaomi's move, Chinese EV startups Xpeng and Nio announced car purchase subsidies of 20,000 yuan ($2,800) and 10,000 yuan respectively. These promotional deals follow the Chinese government's efforts to stimulate consumption through trade-ins. Despite the incentives, the growth of new energy vehicles in China, which include battery and hybrid-powered passenger cars, has shown signs of slowing down, with penetration surpassing one third of new cars sold in the country, according to the China Passenger Car Association.