JP Morgan analysts found that the popularity of Xiaomi's electric vehicle Yu7 is driven by a scarcity-demand model similar to trendy toy brand Labubu after conducting in-depth field research at Xiaomi's flagship store in Shanghai.
According to news from the Chasing Wind Trading Desk, on June 29, JP Morgan released a research report stating that the product positioning of Xiaomi Yu7 goes beyond being a mere transportation tool, while the &#34;scarcity&#34; caused by production capacity bottlenecks amplifies market enthusiasm, and the differentiation of the target customer group avoids direct &#34;competition&#34; with domestic new car-making forces:
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Product positioning goes beyond transportation tools: The success of Xiaomi Yu7 lies in its attribute as &#34;an interesting big toy.&#34; Its appeal mainly comes from avant-garde design, precise targeting of young and female consumers, and a tech-savvy interior. This indicates that emotional value and trendy attributes are becoming key purchasing drivers in the current Chinese electric vehicle market.
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&#34;Scarcity&#34; amplifies market enthusiasm: Similar to the &#34;Labubu&#34; phenomenon of trendy toy brand Pop Mart, Xiaomi's current production capacity bottleneck (with Yu7 delivery waiting times of up to 6-8 months) and the resulting long waiting periods have instead intensified the product's scarcity, stimulating market demand and scalper activities. Investors' focus should shift from short-term order volumes to the actual speed of its production capacity ramp-up.
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Differentiated impact on competitive landscape: The report believes that Xiaomi Yu7 does not directly form a &#34;zero-sum game&#34; with domestic new forces such as Nio, XPeng, and Li Auto, due to significant differences in their target customer groups. Its true impact lies in accelerating the capture of market share from foreign brands.
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The research report pointed out that the success of Xiaomi's cars will accelerate the increase of Chinese brands' market share in the passenger car market, expected to rise from the current 70% to 80% in the coming years. In the short term, Chinese brands such as Li Auto, Geely, and Leapmotor are expected to benefit from upward adjustments in profit expectations, while traditional foreign brands, especially Tesla, may face market share pressure.
<h2>More than just a car: Unveiling the &#34;trendy toy&#34; attributes behind the hot sales of Xiaomi Yu7</h2>
JP Morgan analysts, through field visits to Xiaomi's flagship store in Shanghai and interactions with consumers, revealed the essence of the &#34;Xiaomi phenomenon&#34;: it is a successful product, but more importantly, it is &#34;an interesting big toy.&#34; Many consumers even placed orders without seeing the actual car or test-driving it, relying solely on watching the online launch event. The report attributes its explosive popularity to four key points:
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<li>Highly attractive exterior design: This is the most common reason consumers choose Yu7 over other brands. Its design language and unique body colors (such as green, pearl pink, silver-gray, etc.) precisely attract young and middle-aged buyers aged 20 to 40.</li>
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<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/f866abc9-8132-4fd5-83ed-146239270423.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/f866abc9-8132-4fd5-83ed-146239270423.png"/>
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Rise of female purchasing power: Similar to the first model Su7, it is expected that about 30-40% of Yu7 buyers will be female. This proportion is particularly prominent in the Chinese automotive market, where even many male buyers' car purchasing decisions are significantly influenced by their wives or female partners
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&#34;Labubu&#34; style scarcity effect: The capacity constraints faced by Xiaomi have led to delivery waiting periods of several months (Su7 requires a wait of 6-8 months, and if the Yu7 is ordered now, delivery is expected by the end of the year). This scarcity has instead stimulated consumer purchasing enthusiasm, creating a phenomenon similar to the &#34;Labubu&#34; effect in the trendy toy market.
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Cool tech interior: The interior configuration designed specifically for young, tech-savvy female users is highly attractive. For example, the projector dashboard that replaces the heads-up display, zero-gravity seats for front passengers, smart sunroofs that can adjust transparency via voice control, and onboard refrigerators all contribute to strong product appeal.
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<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/e8ea0b6d-93dd-463c-8266-0038e370cc80.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/e8ea0b6d-93dd-463c-8266-0038e370cc80.png"/>
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As of the time of the report's research, the pre-order volume for the Xiaomi Yu7 had reached approximately 300,000 units (requiring a deposit of 5,000 RMB). However, investors need to view this number with caution. According to estimates from store sales personnel, about 30-40% of the orders are cancellable or have been converted from original Su7 sedan orders.
Additionally, the market heat has given rise to &#34;scalper&#34; transactions. On platforms like &#34;Xianyu,&#34; sellers have appeared offering their locked order qualifications for prices ranging from 10,000 to 20,000 RMB, far exceeding the official deposit of 5,000 RMB.
<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/1bf06dff-c9d6-4da9-ad5a-03b0a93873d9.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/1bf06dff-c9d6-4da9-ad5a-03b0a93873d9.png"/>
While it is difficult to quantify the exact number, this indirectly confirms the market's popularity and consumers' willingness to pay a premium for early vehicle delivery. Regardless, long delivery waiting times will be the norm.
<h2>Reshaping the Landscape: Xiaomi Yu7 has not triggered internal competition; foreign brands are the real &#34;losers&#34;?</h2>
Under the assumption of a zero-sum game, the report analyzes the impact of the Xiaomi Yu7 on competing products in the same price range, concluding that its market segmentation is relatively clear:
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Tesla Model Y: Priced similarly to the Xiaomi Yu7, however, its brand halo is gradually fading among young consumers, especially in terms of interior design, non-leather seats, and the need to pay an additional 60,000 RMB for the FSD feature, where it has fallen behind.
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XPeng G7: Priced at 235,800 RMB, but its main target audience is tech enthusiasts seeking advanced driver assistance features, predominantly male, making the market relatively niche.
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Li Auto i8 and Nio/Leahead L90: Both models are positioned as larger SUVs, targeting the 6-7 seat family user market, which is distinctly different from the Yu7's target audience.
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BYD, Geely, Great Wall: Currently, Xiaomi's success has limited impact on these giants. The market generally expects Xiaomi's delivery volume in 2026 to be 600,000 to 700,000 units, which is only equivalent to BYD's current sales over about two months, posing limited impact on traditional leaders
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<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/b53d2803-7d86-4965-ad58-51e9a74d9ed6.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/b53d2803-7d86-4965-ad58-51e9a74d9ed6.png"/>
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The report ultimately concludes that Xiaomi's success is not simply about seizing market share from Chinese competitors, but rather about jointly accelerating the rise of domestic brands. Since the beginning of this year, the market share of domestic brands in the passenger car market has increased from 57% in 2023 and 65% in 2024 to 70%. The report predicts that this figure will exceed 80% in a few years, further squeezing the survival space of foreign brands.

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JP Morgan believes that the popularity of Xiaomi's electric vehicle Yu7 is driven by a demand model similar to the scarcity of trendy toys like Labubu. The Yu7 is positioned beyond just a means of transportation, with avant-garde design, precise targeting of young female consumers, and technological interiors giving it emotional value and trendy attributes. At the same time, the "scarcity" caused by production capacity bottlenecks amplifies market enthusiasm, and traditional foreign brands, especially Tesla, may face pressure on market share

- Morgan Stanley analysts found that the popularity of Xiaomi's Yu7 electric vehicle is driven by a scarcity demand model similar to trendy brands like Labubu.  
- The report highlights that the Yu7's appeal lies in its unique design, targeting young and female consumers, while its production bottlenecks create a scarcity that boosts market interest.  
- Xiaomi's success is expected to accelerate the rise of domestic brands in the passenger car market, increasing their share from 70% to potentially 80% in the coming years, while foreign brands may face market pressure.

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Xiaomi Corporation

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JPMorgan Chase

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BYD COMPANY

Still JP Morgan is "creative"! Xiaomi Yu7 is the Chinese electric vehicle version of "Labubu"