Chinese company Xiaomi sells so many electric vehicles that it is close to breaking even

BEIJING – Chinese smartphone company XiaomiThe new electric car is selling better than expected, bringing it closer to breakeven despite price cuts. TeslaModel 3 for the price.

Xiaomi had received more than 70,000 orders for its SU7 electric sedan as of April 20, close to the company’s original annual delivery target this year, CEO Lei Jun told investors on Tuesday.

The company now plans to deliver 100,000 of its new electric vehicles this year, he said.

Xiaomi released the SU7 in late March, priced at about $4,000 less than the Tesla Model 3, and has already started shipping. The Chinese smartphone company is set to livestream a car update at 9:20 a.m. on Thursday, when the Beijing Auto Show begins.

“Break-even will be achieved if annual sales reach 300[k]-400 thousand,” Citi analysts said in a report citing Investor Day. They raised their auto segment gross profit forecast to 6% this year, up from a previously expected loss of 10%.

Citi analysts raised their earnings per share forecast by 25% this year and now expect Xiaomi to deliver 100,000 vehicles this year, 200,000 next year and 280,000 in 2026.

For context, Tesla China sold more than 600,000 vehicles last year, according to the China Passenger Car Association. Lee Autowhich technically sells mostly hybrids, sold 376,000 vehicles last year, while Nio Just over 160,000 vehicles were sold last year, according to the data.

Li Auto had a gross profit by 23.5% in the fourth quarter of last year, while Nio Gross Profit amounted to 7.5%, which is higher than last year.

Tesla’s gross margin has declined sequentially over the past five quarters to 17.4% in the first three months of this year. Gross profit the figures do not take into account operating expenses.

When Xiaomi launched the SU7 last month, Lei said the company would sell each machine at a loss.

But on Tuesday he estimated gross margins for Xiaomi’s auto business at around 5% to 10% and said sales had exceeded expectations, while crediting suppliers for cutting costs.

“We are currently in discussions with supply chain partners on ways to increase production capacity and further support costs,” he said, according to a CNBC translation of an investor day transcript into Chinese provided by the company.

Xiaomi has invested heavily in its electric vehicle venture as Lay has long-term ambitions to become one of the top five automakers in the world.

But the company plans to focus entirely on the domestic market over the next three years, he told investors on Tuesday.

Lei noted that Xiaomi already does business in more than 100 countries.

“We have global influence and fans of Xiaomi,” Lei said. “When we are ready to go global, it should happen naturally.”

Xiaomi is also planning to launch its next electric vehicle, an SUV, to be launched in the second half of 2025, Chinese business news site 36kr reported on Wednesday. with reference to sources.

Ley declined to share details when asked about plans for the SUV on Tuesday.

“I think one of the reasons for the success of the SU7 launch was its confidentiality,” he added.