Xiaomi Responds to Speculation of Loss in EV Business, Plans to Boost SU7 Production Amid Surging Demand

According to Citi’s estimates, Xiaomi Auto will lose an average of 6,800 yuan for each SU7 sold this year, accumulating a total loss of 4.1 billion yuan in its car manufacturing business. The bank expects the delivery volume of the Xiaomi SU7 to reach 5,000 to 6,000 units in April, with an annual delivery volume of about 55,000 to 70,000 units.

In response to this news, Xu Jieyun, Special Assistant to the Chairman of Xiaomi Group and Deputy General Manager of the China Market Department, said that this information might deviate “significantly from the actual situation”. He stated that the report came out on April 2, and at that time, analysts underestimated the sales boom of the Xiaomi SU7. In the past few weeks, orders for Xiaomi cars have been continuously increasing, and the company is striving to improve delivery levels.

Sun Shaojun, the founder of Carfans, also posted yesterday saying that the order lock volume of the Xiaomi SU7 has already exceeded 60,000, with a cancellation rate of about 55%. He also revealed that the production capacity of the Xiaomi SU7 will increase this week, and it is expected that daily production will increase to more than 400 units. According to Chinese media Jiemian, the previous monthly production of the Xiaomi SU7 was about 8,000 units.

At the Xiaomi SU7 launch conference, Lei Jun had stated that the first car would be sold at a loss, an important reason being the ongoing price war putting pressure on pricing. In the end, the standard version of the Xiaomi SU7 was priced 30,000 lower than the Tesla Model 3, with the top configuration priced at 299,000.

Earlier, media reports claimed that Xiaomi Auto has prepared for losses for more than 5 years in the future. Currently, the delivery waiting period for the Xiaomi SU7 is as long as half a year. If production capacity cannot meet demand, the brand might encounter development difficulties similar to those of the Xiaopeng G6 last year.

At present, Xiaomi Auto continues to release news related to increasing production capacity. The official statement last week was that a supply chain production increase meeting had already been held, a new work plan had been formulated, and adjustments to the estimated delivery cycle had been made. Consumers who have placed orders for the top configuration version told Jiemian News that the delivery date has been advanced by about a month. However, the waiting time for other configuration versions has not yet significantly changed.

Fitch Ratings believes that there is still uncertainty as to whether Xiaomi can successfully expand its production capacity. Considering the current fierce competition in the industry, it is still too early to judge whether Xiaomi‘s electric vehicle products and mid-term strategy can succeed. The agency expects that Xiaomi‘s electric vehicle business will find it difficult to achieve profitability at least within the next three years. After expanding the production scale, Xiaomi Auto’s sales, marketing and management expenses, as well as operating capital requirements, will also increase, in addition to R&D expenses and capital expenditures brought about by expanding production capacity.

SEE ALSO: XPeng Motors Sales Staff Respond to P7 Starting Price Drop to 140,000 Yuan