TMTPost -- Latest data show Xiaomi Corporation is well on track to meet its annual delivery target for its electric vehicle (EV) unit.
Credit：Xiaomi
The delivery of Xiaomi『s first first EV model SU7 in August exceeded 10,000 units, and the delivery target of 100,000 EVs for the year is expected to be met in November earlier, according to a post of the company』s auto unit on Chinese social media platform Weibo. Xiaomi Auto noted its delivery has topped 10,000-unit milestone for the third straight month.
Through the post, Xiaomi reiterated its forecast that the annual delivery target of 100,000 units will be met in November, a month ahead of schedule.
Xiaomi officially launched SU7 on March 28, with starting price cheaper than its major competitor: Tesla』s affordable Model 3. The company disclosed at Chinese social media Weibo that it received more than 10,000 preorders in just four minutes since the launch, and preorders topped 50,000 within 27 minutes. These preorders come from customers who had paid a deposit of RMB5,000 that is refundable within seven days since the order is effective.
During his annual speech on July 19, Xiaomi founder and CEO Lei Jun said Xiaomi』s 100,000-unit delivery target of SU7 this year is expected to be met in November. It is expected that Xiaomi will open 220 retail stores for its EV business in 59 cities across China in December, Lei added. Reviewing the history of Xiaomi auto business, Lei said it is the U.S. sanctions on Xiaomi』s mobile phone business in 2021 that forced the company to decide to build cars. The chief executive said he personally led a team to visit many automakers, interviewed more than 200 industry insiders, and held four executive meetings to discuss the feasibility. In the end, his company made the decision to foray into the automotive industry.
In a financial report in August, Xiaomi first disclosed sales of its EV business. Revenue from smart EV and other new initiative reached RMB6.4 billion, including RMB6.2 billion from EV. The gross margin of the segment logged 15.4%. Chinese news media outlets noted Xiaomi lost more than RMB60,000 per EV sold, based on latest financial reports of Xiaomi.The company disclosed its smart EV and other new initiative segment booked an adjusted net loss of RMB1.8 billion in the quarter ended June 30, and it has delivered 27,307 SU7 Series vehicles that period. CEO Lei Jun then called for understanding Xiaomi』s heavy investments in its auto unit. 「Auomaking is tough, but success is certainly very cool. Hope everyone understand that Xiaomi Auto is still at an investment phase, 」 Lei said in a post at Weibo.
In a media call following the earnings report, Xiaomi's President Lu Weibing explained there are two main reasons for the loss of EV business. The first is that Xiaomi』s auto unit is still relatively small. It is very hard for the unit to turn a profit since the automobile industry is a typical manufacturing sector that its profitability relies on economies of scale. The second reason is that Xiaomi has had disproportionate input into its first EV model SU7. Lu pointed out CEO Lei has said many times that Xiaomi has input out-sized resources in its first EV model, ten times of that traditional automakers invest in a model. It will take some time to absorb such input, Lu added. Lu called the margin of Xiaomi』s EV segment a decent one in the eye of many investors, analysts and professionals in the news media, considering a very low margin that several automakers have delivered for along time.