Xiaomi, the Chinese smartphone company, has taken the electric vehicle market by storm with its new electric SU7 sedan. Despite undercutting Tesla’s Model 3 on price, Xiaomi has managed to surpass expectations by receiving over 70,000 orders for its electric vehicle as of April 20. CEO Lei Jun revealed that the company is on track to achieve its full-year target for deliveries, with plans to deliver 100,000 of its new EV this year. The launch of the SU7 in late March with a price tag $4,000 lower than Tesla’s Model 3 has certainly captured the interest of consumers.
According to Citi analysts, breakeven for Xiaomi’s electric vehicle venture would be realized if annual sales reach 300,000 to 400,000 units. The analysts have raised their autos segment gross profit margin forecast to 6% for this year, a significant improvement from the previously expected 10% loss. As a result, they have also raised their earnings per share forecast by 25% for the year, projecting Xiaomi to ship 100,000 cars in 2022, 200,000 cars in 2023, and 280,000 cars in 2026. These projections showcase the growing potential of Xiaomi’s electric vehicle business.
In comparison to other players in the electric vehicle market, Xiaomi’s rapid success is noteworthy. While Tesla China sold more than 600,000 cars last year, Li Auto and Nio sold 376,000 cars and over 160,000 cars, respectively. Both Li Auto and Nio have seen improvements in their gross margin figures, with Li Auto boasting a gross margin of 23.5% and Nio’s gross margin at 7.5% in the fourth quarter of last year. On the other hand, Tesla’s gross margin has experienced a decline to 17.4% in the first three months of this year. Xiaomi’s ability to compete with established players like Tesla, Li Auto, and Nio highlights its potential in the electric vehicle market.
Despite its current focus on the domestic market, Xiaomi has long-term ambitions to become one of the top five automakers globally. CEO Lei Jun emphasized the company’s foundation of global influence and Xiaomi fans in over 100 countries. While Xiaomi plans to enter the global market in the future, its immediate focus remains on strengthening its position in the domestic market. Additionally, Xiaomi has plans to release its next electric car, an SUV, in the second half of 2025. This strategic move signals Xiaomi’s commitment to expanding its electric vehicle lineup to cater to a broader range of consumers.
Xiaomi’s foray into the electric vehicle market has been met with success, with the company’s electric vehicle outselling expectations and positioning itself as a formidable competitor to Tesla and other established players. With strategic planning, strong consumer interest, and ambitious growth projections, Xiaomi’s electric vehicle venture has the potential to reshape the landscape of the electric vehicle market in the coming years.