Xiaomi’s new electric vehicle, the SU7 sedan, has been selling better than expected, with more than 70,000 orders received as of April 20. The company’s CEO, Lei Jun, announced the goal of delivering 100,000 units this year, with hopes of reaching breakeven if annual sales reach 300,000 to 400,000 units. Citi analysts have raised their profit margin forecast to 6% for Xiaomi’s auto segment this year, up from a previous estimate of a 10% loss, and have increased their earnings per share forecast by 25%.
In comparison to other electric vehicle manufacturers in China, Xiaomi’s gross profit margin for its auto business is estimated to be around 5% to 10%. Tesla China sold over 600,000 cars last year, Li Auto sold 376,000 cars, and Nio sold just over 160,000 cars. Li Auto had a gross margin of 23.5% in the fourth quarter of last year, Nio’s gross margin was 7.5%, and Tesla’s gross margin in China has declined over the past five quarters to 17.4% in the first quarter of this year. Xiaomi initially planned to sell each SU7 car at a loss, but now expects a gross profit margin for its auto business.
Lei Jun has expressed his ambition for Xiaomi to become one of the top five automakers in the world and has heavily invested in the company’s electric car venture. However, for the next three years, Xiaomi plans to focus solely on the Chinese market before expanding globally. Xiaomi already has a strong presence in over 100 countries and aims to leverage its global influence and fan base when entering the international market. The company is in discussions with supply chain partners to increase production capacity and reduce costs for its electric vehicles.
Xiaomi has plans to release an electric SUV in the second half of 2025, following the success of the SU7 sedan launch. While Lei Jun declined to share specific details about the SUV plans, he emphasized the importance of maintaining confidentiality in product development. The company’s focus on quality and innovation has contributed to the positive reception of the SU7 sedan, with sales exceeding expectations. Xiaomi’s livestream of a car update coincided with the Beijing auto show, attracting further attention to its electric vehicles and future plans for expansion in the auto market.
