Despite impressive sales momentum, Xiaomi’s EV division reported an adjusted loss of $252 million for the second quarter ending June 30—the company’s first full quarter of deliveries, according to its unaudited financial results released on Wednesday.
Deliveries Surge but Profits Remain Elusive
Xiaomi is on track to exceed its 100,000-delivery target for the SU7 by November, having already delivered 27,307 vehicles in Q2 2024. However, this equates to an average loss of $9,200 per car, despite the base price of the SU7 being 215,900 yuan ($30,000).
The company did report a higher-than-expected gross profit margin of 15.4%, indicating progress toward efficiency, but Xiaomi has previously acknowledged that its auto segment will take time to become profitable. CEO Lei Jun confirmed in April that the SU7 was being sold at a loss, though he did not specify the exact amount.
Scaling Up to Reduce Costs
According to Citibank analysts, Xiaomi will likely break even only after reaching annual sales of 300,000 to 400,000 vehicles, with estimated sales of 260,000 cars in 2026.
To accelerate production, Xiaomi has ramped up operations at its EV factory, which it built in-house. Since June, the plant has been running double shifts to push monthly deliveries beyond 10,000 cars.
A Xiaomi spokesperson told Business Insider that the company is focused on increasing production volume to lower per-car costs:
“The scale of Xiaomi's EV business is relatively small at the moment, while the auto industry relies on economies of scale.”
For perspective, BYD, a competing Chinese EV maker, sold 426,039 cars in the same April-June period.
The spokesperson also highlighted that the SU7 is a premium pure-electric sedan, which required high initial investment, making early losses expected.
Long-Term Vision and Expansion Plans
Lei Jun has pledged to invest “tens of billions” over the coming years to expand Xiaomi’s EV division and develop advanced car technologies.
The SU7 is positioned as a Tesla competitor but priced more in line with the average Chinese consumer's income. Xiaomi aims to offer cutting-edge features, including:
- Self-driving and self-parking capabilities
- An AI-powered voice assistant, launching this month
Xiaomi has also hinted at expanding its EV lineup beyond the SU7 sedan, though specific models have not yet been revealed.
Strong Overall Financial Performance
Beyond its EV segment, Xiaomi posted a 32% year-on-year revenue increase, reaching 88.7 billion yuan ($12.2 billion) in Q2 2024. Net income rose 38%, climbing from 3.6 billion yuan to 5 billion yuan ($690 million).
With continued consumer demand—13,000 more SU7s sold in Q2 and July combined—Xiaomi remains confident in its long-term EV ambitions, despite short-term financial hurdles.