Xiaomi, the Chinese tech giant known for its smartphones, made a bold move into the electric vehicle market with the launch of its Speed Ultra 7 (SU7) sedan. The company’s new auto branch reported an adjusted loss of $252 million for the second quarter of 2023, despite strong demand for its electric vehicles. Xiaomi’s first car, the SU7, sold out quickly, with nearly 90,000 preorders within a day of its launch, signaling a promising start for the company’s EV division.
Losses per Car:
Xiaomi’s financial results revealed that the company lost approximately $9,200 for each SU7 it delivered in the second quarter. With a base price of 215,900 yuan (about $30,000), the per-car loss may seem significant. However, Xiaomi reported a higher-than-anticipated gross profit margin of 15.4%, indicating potential for improvement in the future. While the company is currently operating at a loss per car, it is actively working towards increasing its scale and reducing costs to achieve profitability in the long run.
Expansion Plans:
Despite the initial financial challenges, Xiaomi remains ambitious in its plans to expand its range of smart vehicles. The company aims to deliver 100,000 SU7s by November, with a forecast of 260,000 car sales in 2026. Xiaomi’s CEO, Lei Jun, has expressed his commitment to investing “tens of billions” in building the company’s EV division and advancing car technologies. The tech firm envisions creating a smart car that can compete with industry giants like Tesla while remaining affordable for the average Chinese consumer.
Operational Efforts:
Xiaomi operates one EV factory, which has been running double-shift operations since June to increase monthly deliveries to over 10,000 cars. The company’s spokesperson emphasized the importance of scaling up the EV business to reduce per-car costs and achieve economies of scale. Xiaomi recognizes that the initial investment costs for its electric sedan are relatively high, but it is confident in its ability to optimize production processes and improve profitability over time.
Future Innovations:
In addition to expanding its EV lineup, Xiaomi is focused on developing advanced features for its smart vehicles. The company plans to introduce self-driving and self-parking capabilities, as well as an audio-based artificial intelligence assistant, in its upcoming models. These innovations aim to enhance the overall driving experience and position Xiaomi as a leader in the electric vehicle market. Customers can expect cutting-edge technology and convenience in future Xiaomi EVs.
Financial Performance:
While Xiaomi’s EV branch reported losses in the second quarter, the company as a whole posted strong financial results. Sales across all sectors increased by 32% to 88.7 billion yuan compared to the same period last year. Net income also saw significant growth, reaching 5 billion yuan, up 38% from the previous year. These positive financial indicators demonstrate Xiaomi’s overall resilience and continued growth in the competitive tech industry.
Conclusion:
Xiaomi’s foray into the electric vehicle market has been met with both excitement and challenges. The company’s initial losses per car underscore the financial complexities of the automotive industry, but Xiaomi remains committed to its long-term vision of creating innovative and affordable smart vehicles. With a focus on scaling up production, reducing costs, and introducing cutting-edge features, Xiaomi is poised to make a significant impact in the EV market. As the company continues to expand its lineup and improve its financial performance, it is clear that Xiaomi’s ambitions in the electric vehicle sector are driving its success in the competitive tech landscape.