Xiaomi’s new electric vehicle, the SU7 sedan, has been a surprising success, with over 70,000 orders received as of April 20. The company’s original target for deliveries this year was close to being met, prompting a new goal of 100,000 deliveries. The price of the SU7 is $4,000 lower than Tesla’s Model 3, helping to drive sales and move closer to breaking even. Analysts from Citi raised Xiaomi’s auto segment gross profit margin forecast to 6% this year, and predict annual deliveries of 100,000 cars this year, 200,000 next year, and 280,000 in 2026.
In comparison, Tesla China sold more than 600,000 cars last year, while Li Auto and Nio sold 376,000 and 160,000 cars respectively. Li Auto had a gross margin of 23.5% in the fourth quarter of last year, while Nio’s gross margin was 7.5%. Xiaomi initially sold each SU7 at a loss but now estimates a gross profit margin of 5% to 10%, thanks in part to reduced costs by suppliers. The company is in talks with supply chain partners to increase production capacity and further reduce costs.
CEO Lei Jun announced that Xiaomi will focus on the domestic market for the next three years, despite having a presence in over 100 countries. They plan to expand globally when the time is right, leveraging their existing influence and fan base. Xiaomi is also working on an electric SUV set to be released in the second half of 2025, although details are scarce. Lei emphasized the importance of confidentiality in the successful launch of the SU7 and hinted that a similar approach may be taken with the SUV.
Xiaomi’s investment in the electric vehicle industry aligns with Lei’s long-term ambition to become one of the top five automakers globally. The company’s success with the SU7 has positioned them well for further growth and expansion. With strong sales and improved profit margins, Xiaomi is on track to achieve its goals. The focus on the Chinese market for now allows the company to build a solid foundation before venturing into international markets. By staying true to their core market and building on their existing success, Xiaomi is poised for continued growth in the electric vehicle sector.
