Xiaomi SU7 exhibited at Mobile World Congress 2024.
Arjun Karpal | CNBC
BEIJING – Chinese smartphone company Xiaomi’s new electric car is selling better than expected and close to breaking even, despite being priced below Tesla’s Model 3.
As of April 20, more than 70,000 orders have been received for Xiaomi’s electric sedan SU7, which is close to the company’s original delivery target for this year, said CEO ( CEO) Lei Jun told investors on Tuesday.
He said the company aims to deliver 100,000 new EVs this year.
Xiaomi launched and began deliveries of the SU7 in late March at a price about $4,000 cheaper than Tesla’s Model 3. The Chinese smartphone company will livestream car updates starting at 9:20 a.m. Thursday to coincide with the opening of the Beijing Auto Show.
“The break-even point will be achieved if annual sales reach 300 units.”[k]Citing Investor’s Day, Citi analysts said in a report that they have raised their gross profit forecast for the auto division to 6% this year from a previously expected 10% loss.
Citi analysts raised their earnings per share forecast for this year by 25% and expect Xiaomi to ship 100,000 cars this year, 200,000 next year and 280,000 in 2026.
Tesla China sold more than 600,000 cars last year, according to the China Passenger Car Association. According to the data, Li Auto, which technically sells mainly hybrid cars, sold 376,000 cars last year, while Nio sold just over 160,000 cars last year.
In the fourth quarter of last year, Li Auto’s gross profit margin was 23.5%, and Nio’s gross profit margin was 7.5%, both of which increased from the same period last year.
Tesla’s gross profit margin has declined sequentially over the past five quarters, hitting 17.4% in the first three months of this year. Gross profit margin figures do not include operating expenses.
When Xiaomi launched the SU7 last month, Lei said the company would sell each car at a loss.
But on Tuesday, he estimated gross profit margins for Xiaomi’s auto business at about 5% to 10%, noted that sales were better than expected, and thanked suppliers for cutting costs.
“We are currently in discussions with our supply chain partners on ways to increase production capacity and further support on cost,” he said, according to a CNBC translation of a Chinese-language Investor Day transcript provided by the company.
Lei has long-term ambitions to become one of the world’s top five automakers, and Xiaomi is investing heavily in its electric vehicle business.
However, for the next three years, the company plans to focus entirely on the domestic market, he told investors on Tuesday.
Lei pointed out that Xiaomi already does business in more than 100 countries.
“We have global influence and a base of Xiaomi fans,” Lei said. “Once we are ready to enter the global market, it will be natural.”
Xiaomi also plans to launch its next electric vehicle, an SUV, in the second half of 2025, Chinese business news site 36kr reported on Wednesday, citing people familiar with the matter.
When asked about the SUV plans on Tuesday, Ray declined to provide details.
“I think one of the reasons the SU7 launch was successful was the secrecy,” he added.
