Imagine making a quick fortune just by reserving a car! That was the dream with Xiaomi's SU7 and YU7 electric vehicles, but the reality turned into a nightmare for many. The market for 'flipping' pre-orders – buying a reservation spot and selling it for a profit – has completely collapsed, leaving speculators with reservations worth less than they paid.
When Xiaomi launched its first EV, the SU7, it wasn't just a car release; it felt like a hot tech gadget drop. Eager individuals, driven by either genuine interest or the allure of profit, rushed to secure reservations. The plan? To capitalize on the high demand and sell their place in the production queue for a handsome premium.
For a brief period, this strategy worked like a charm. The secondary market for Xiaomi SU7 pre-orders exploded, with reservation slots commanding premiums exceeding RMB 10,000 (approximately $1,400). People were willing to pay extra to jump the line and get their hands on the coveted EV sooner.
But here's where it gets controversial... This lucrative opportunity didn't last. Today, the market has imploded, leaving many amateur car flippers stuck with reservations worth significantly less than their initial deposit. Chinese media outlets report that dealers are now buying back SU7 reservations for a mere RMB 1,500 (around $210). This represents a substantial loss for those who jumped into the market hoping for a quick win.
Just a few months ago, the hype surrounding Xiaomi's entry into the electric vehicle market was palpable. Following the SU7's success, Xiaomi announced its second EV, the YU7, and secured an astonishing 240,000 orders within the first 18 hours of its launch. This overwhelming demand fueled a scalper's paradise, with desperate buyers willing to pay a premium for an early delivery.
Order transfers for the YU7 initially fetched premiums ranging from RMB 3,000 to RMB 20,000 (approximately $420 to $2,800). However, these premiums quickly plummeted, eventually dropping as low as RMB 2,000 ($280). Considering the initial deposit was RMB 5,000 ($700), sellers are now accepting losses of roughly RMB 3,000 ($420) simply to offload their reservations.
What transformed this potentially lucrative side hustle into a money-losing venture? The primary culprit is a classic case of supply and demand imbalance. The market became saturated with speculative orders. When a large number of people simultaneously pursue the same strategy – buying low with the intention of selling high – they inevitably create an oversupply. The market simply couldn't absorb the excess number of reservations being offered for sale.
There were simply too many sellers and not enough buyers willing to pay a premium. One car dealer succinctly summarized the situation to reporters, stating, "Two months ago, people were eager to pay a RMB 10,000 ($1,400) premium. Now, even with an RMB 3,000 ($420) discount, there are no takers." This starkly illustrates the dramatic shift in market sentiment.
And this is the part most people miss... Several factors contributed to the bursting of the speculative bubble. First, the official delivery timeline for new Xiaomi YU7 vehicles stretched to an intimidating 48 weeks for certain models. While this initially fueled the resale market, it ultimately acted as a deterrent. Potential buyers began to realize that they might as well place a new order directly with Xiaomi and wait, rather than pay a scalper for a marginally earlier delivery date.
Market sentiment was also reportedly negatively impacted by a high-profile accident in Chengdu, involving an SU7 that was involved in a fatal collision and subsequent fire. News reports emphasized that the vehicle's electronic doors could not be opened by bystanders following the crash. This raised serious safety concerns, potentially dampening the enthusiasm of some prospective owners. Could this be a design flaw, or an isolated incident magnified by social media?
While the market for flipping paper orders has soured, demand for the physical car itself 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 approximately RMB 10,000 ($1,400) above its original sticker price. This suggests that the vehicle itself is highly desirable; people are still eager to own the car, but they are no longer willing to pay extra for the mere promise of one. It's the instant gratification they're after!
For Xiaomi, this market correction is hardly a catastrophe. The company's overall performance remains robust. In September, Xiaomi sold 41,948 EVs, solidifying its position as the second-largest new energy vehicle brand in the Chinese market. Furthermore, the company is actively expanding its retail presence, with 402 stores now operating across 119 cities in China. This suggests a strong underlying demand for Xiaomi's electric vehicles, despite the collapse of the reservation flipping market.
So, what's the takeaway from this rollercoaster ride? The rise and fall of the Xiaomi SU7 and YU7 order-flipping market serves as a cautionary tale about the risks of speculative investments. While early adopters may have reaped substantial profits, the market ultimately corrected itself, leaving many latecomers with significant losses. It also highlights the importance of considering factors beyond initial hype, such as delivery timelines and potential safety concerns, when making purchasing decisions.
What are your thoughts on this situation? Do you think Xiaomi should have intervened to prevent the order-flipping market from developing in the first place? Or is this simply a case of market forces at work? Let us know your opinions in the comments below!
