Xiaomi, a well-known tech firm, made a bold move into the electric vehicle market with the launch of its first car, the Speed Ultra 7. The company’s foray into the EV sector garnered significant attention, with almost 90,000 preorders for the SU7 within a day of its release in March. However, despite the initial excitement surrounding Xiaomi’s entry into the electric vehicle market, the company revealed that its auto branch incurred a substantial loss of $252 million in the second quarter ending June 30.
The financial results disclosed by Xiaomi indicated that the company lost an average of $9,200 per car, with 27,307 SU7s delivered during the second quarter. Despite the losses, Xiaomi reported a gross profit margin of 15.4%, exceeding expectations. The company’s CEO, Lei Jun, had previously acknowledged that the car was being sold at a loss, emphasizing that profitability would take time to achieve.
Xiaomi’s ambitious plans for its EV division include expanding its range of smart vehicles beyond the SU7 sedan. The company aims to compete with established players in the electric vehicle market, such as Tesla, while offering more affordable options tailored to the average Chinese consumer. Xiaomi’s vision for its EV range includes advanced features like self-driving and self-parking capabilities, as well as an AI assistant integrated into the vehicle.
To scale up its EV business and reduce per-car costs, Xiaomi has been focusing on increasing production at its EV factory. The company operates one factory dedicated to electric vehicle manufacturing and has been running double-shift operations to boost monthly deliveries. Xiaomi’s spokesperson highlighted the importance of achieving economies of scale in the auto industry to improve cost efficiency.
Despite the financial challenges faced by its auto branch, Xiaomi remains committed to investing heavily in its EV division and developing cutting-edge car technologies. The company’s long-term strategy includes launching a variety of EV models beyond the SU7 sedan, although specific details about future models have not been disclosed. Xiaomi’s strong performance in its second quarter, with sales across all sectors increasing by 32% and net income rising by 38%, underscores the company’s overall growth trajectory.
In conclusion, Xiaomi’s venture into the electric vehicle market represents a significant milestone for the tech firm as it seeks to establish a foothold in the rapidly evolving automotive industry. While the company faces financial hurdles in its initial foray into EV manufacturing, Xiaomi’s long-term vision and commitment to innovation position it as a key player to watch in the electric vehicle market. With ambitious plans to expand its range of smart vehicles and capitalize on emerging trends in the auto industry, Xiaomi is poised to make a significant impact in the EV sector in the coming years.