Xiaomi is proving not all EVs are doing well and that they don’t need to be so expensive
It appears not all electric vehicle (EV) makers are turning a profit, as highlighted by a recent report from a tech website. Xiaomi, the Chinese tech giant known for its smartphones, revealed that it is currently losing money on each unit of its electric car, the Speed Ultra 7 (SU7).
The company’s CEO, Lei Jun, disclosed that Xiaomi incurs a loss of about USD9,200 (roughly RM41,044) for every SU7 delivered, despite the vehicle being priced at approximately USD30,000 (about RM133,833). Xiaomi entered the EV market with great fanfare in March, when it launched the SU7 and received almost 90,000 pre orders within a day.
Moreover, despite this initial excitement, the company’s auto division posted a substantial adjusted loss of $252 million for the second quarter, which ended June 30. This was Xiaomi’s first full delivery quarter for the EV business, and the results reflect the growing pains of its new venture.
Xiaomi also indicated that it was still on track to surpass its goal of delivering 100,000 units of the SU7 by November, having already delivered 27,307 vehicles in Q2. On average, Xiaomi lost $9,200 per car in Q2. Despite this, the company reported a higher-than-expected gross profit margin of 15.4 percent.
Xiaomi has also long anticipated that its EV segment would require time to become profitable. CEO Lei Jun had mentioned back in April that the company was selling the SU7 at a loss, though the exact figure was not disclosed. Analysts from Citibank have predicted that Xiaomi will likely start seeing profits once it reaches annual sales of 300,000 to 400,000 units.
On top of that, Xiaomi operates a self-built EV factory and has been running double shifts since June to increase monthly deliveries, with the goal of surpassing 10,000 cars per month. A spokesperson explained that Xiaomi is focusing on scaling up its EV business to lower per-car costs.
The spokesperson also noted that Xiaomi’s first EV, a pure electric sedan, involves higher initial investment costs, which will take time to recoup. In comparison, rival Chinese EV maker BYD sold 426,039 cars in the April-June period alone. Nevertheless, Xiaomi remains optimistic about its future in the EV market.
The company is investing heavily in developing advanced technologies for its cars, such as self-driving and self-parking capabilities, as well as an AI-powered audio assistant, which is expected to be rolled out this month. Funnily enough, this also proves some EVs are ridiculously overpriced and can be cheaper here. I won’t name names, but we all know what I’m talking about.
We got all this from Business Insider and their full article is linked here. Thank you Business Insider for the information and images.
