Xiaomi, the tech giant and new EV maker, has revealed the significant amount of money it is spending to establish itself in the electric vehicle market. Despite only having one car, the Speed Ultra 7, Xiaomi plans to expand its range of smart vehicles in the future. However, the company reported a loss of $252 million for the second quarter, which equates to $9,200 lost per car.
Xiaomi made waves in March when its maiden electric vehicle sold out within a day, accumulating nearly 90,000 preorders. Despite its popularity, Xiaomi’s EV branch reported a loss of $252 million for the second quarter. However, the company remains confident that it will surpass its target of delivering 100,000 Speed Ultra 7 cars by November. In the second quarter alone, Xiaomi delivered 27,307 SU7s, leading to an average loss of $9,200 per car. The base price of the SU7 is approximately $30,000.
While Xiaomi’s per-car losses are substantial, the company did report a gross profit margin of 15.4%, higher than anticipated. CEO Lei Jun has previously acknowledged that the car was being sold at a loss, without specifying the extent. Citibank analysts projected that Xiaomi would only turn a profit after selling 300,000 to 400,000 vehicles annually, with estimated sales of 260,000 cars in 2026.
Xiaomi currently operates one EV factory and has been increasing production to surpass 10,000 cars per month. The company recognized the importance of scale in the auto industry and is focused on narrowing per-car costs. Xiaomi’s spokesperson noted that the investment cost for their first EV is relatively high, leading to a longer timeframe for recovering costs.
Despite facing tough competition in the Chinese EV market, with BYD selling over 426,000 cars in the second quarter, Xiaomi remains determined to establish itself. CEO Lei Jun has committed to investing “tens of billions” into building Xiaomi’s EV division and car technologies over the next few years. The company aims to create a smart car that rivals Tesla while remaining affordable for the average Chinese consumer.
Xiaomi’s ambitions for its EV range extend beyond the SU7 sedan. It plans to introduce self-driving and self-parking capabilities, as well as an audio-based artificial intelligence assistant, which is set to be fully integrated into its vehicles this month. Despite the challenges in the EV market, Xiaomi continues to attract customers, with an additional 13,000 vehicles sold in the second quarter and July combined.
Overall, Xiaomi posted strong results for the second quarter, with sales across all sectors increasing by 32% compared to the same period in 2023. The company’s net income also saw a significant rise of 38% compared to the second quarter of the previous year, reaching 5 billion yuan. While Xiaomi has not revealed what future EV models it plans to release, its commitment to the electric vehicle market remains unwavering.
