In its unaudited results for the second quarter, Xiaomi reported that it’s losing $9,200 per car with its electric vehicles, despite achieving a higher-than-expected gross profit margin of 15.4%. The Chinese tech giant, known for its smartphones, ventured into the electric vehicle market with its first car, the Speed Ultra 7, which received an overwhelming response with almost 90,000 preorders within a day of launch.
Xiaomi intends to scale up its EV arm to narrow per-car costs as it aims to achieve its target of 100,000 deliveries of the SU7 by November. The company’s long-term goal is to create smart vehicles that can compete with the likes of Tesla but remain affordable for the average Chinese consumer. With plans to expand its range of electric vehicles, Xiaomi is looking to incorporate self-driving capabilities and an AI-driven assistant in its future models.
Despite the losses incurred in its EV segment, Xiaomi posted strong results overall for the second quarter, with sales across all sectors rising by 32% compared to the same period last year. The company’s net income also saw a significant increase, signaling growth and potential in its various business ventures.
### The Financials Behind Xiaomi’s Electric Vehicles
Xiaomi’s electric vehicle arm faced a significant loss of $252 million in the second quarter, amounting to $9,200 per car. This loss was reported despite a higher-than-expected gross profit margin of 15.4%. While the scale of Xiaomi’s EV business is relatively small at the moment, it aims to increase production to leverage economies of scale and reduce per-car costs in the future.
### Xiaomi’s Vision for Smart Electric Vehicles
Xiaomi’s vision is to establish a range of smart electric vehicles that can rival industry leaders like Tesla. The company aims to incorporate self-driving and self-parking capabilities, along with an AI assistant, into its vehicles. By focusing on innovative technologies and affordability, Xiaomi hopes to capture a significant market share in the electric vehicle industry.
### Growth Plans for Xiaomi’s Electric Vehicle Division
Despite initial losses in its electric vehicle segment, Xiaomi plans to expand its range of models beyond the SU7 sedan. The company aims to introduce new electric vehicles that cater to different market segments while maintaining its focus on affordability and advanced features. By diversifying its electric vehicle offerings, Xiaomi aims to establish a strong presence in the competitive EV market.
### Industry Outlook and Competition
Xiaomi faces stiff competition in the electric vehicle market, particularly from established players like BYD, which sold significantly more cars in the same quarter. To compete effectively, Xiaomi must continue to innovate, scale up its production, and enhance its technological capabilities. By leveraging its brand recognition and customer base, Xiaomi can position itself as a key player in the growing electric vehicle industry.
### Conclusion: Xiaomi’s Push for Electric Vehicle Innovation
Xiaomi’s foray into the electric vehicle market represents a strategic move to diversify its business and capitalize on the growing demand for EVs. Despite incurring losses with its initial vehicle, the company remains committed to expanding its electric vehicle division and introducing new models with cutting-edge features. With a focus on affordability, technology, and innovation, Xiaomi aims to carve out a significant market share in the competitive electric vehicle landscape.